Automated accounts payable platform Tipalti raises $270M

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Tipalti, a platform used by major enterprises to automate common accounts payable tasks, has raised $270 million in a series F round of funding, valuing the company at a cool $8.3 billion.

Accounts payable (AP) refers to any money owed by a company to its various suppliers. Processing and reviewing all internal and external transactions (e.g. paying invoices and reimbursing expenses), ensuring that all liabilities are met, is a resource-intensive process — one that typically requires a lot of manual data capture and management across various internal systems.

The accounts payable software market was pegged as a $8.77 billion market last year, a figure that’s predicted to more than double within seven years. And with Tipalti’s valuation more than quadrupling from the $2 billion at its previous fundraise last year, this serves to underscore the size of the pie Tipalti is chasing. Cofounder and CEO Chen Amit said that Tipalti’s target market constitutes nearly 700,000 companies, with only 4% of that currently penetrated.

“The addressable market is large, as solutions for payables and finance operations are not widely adopted, and none are as integrated as Tipalti’s approach,” Amit told VentureBeat. “Many organizations still struggle with manual processes. The pandemic’s impact on remote work and scalability issues also accelerated the need to turn finance processes into digital workflows — a trend that will not be reversible.”

Payments automation

Founded in 2010, Tipalti offers tools that enable companies such as Twitter, GoDaddy, and Twitch to automate most of their AP tasks, spanning invoice management, supplier management, purchase order (PO) matching, payment reconciliation, tax compliance, fraud detection, and more. With invoices, for example, suppliers can upload their bills either through Tipalti’s portal or by email, and track the progress online. On the AP (i.e. payer’s) side, optical character recognition (OCR) serves to remove manual data entry, so that the details within all invoices are automatically extracted ready for review.

This automated workflow includes various smarts such as duplicate invoice alerts, which help ensure that a company doesn’t inadvertently pay the same invoice twice. And Tipalti also leans on machine learning (ML) to improve over time, so that if it detects frequent manual data overrides carried out by someone in AP, it will apply that similar logic to future invoices.

Elsewhere, Tipalti also uses historical and real-time data to carry out risk checks on payees — this includes establishing whether they are connected in any way to other blocked payees, for example, or whether there are multiple different accounts with the same associated payment or contact details.

High-velocity enterprises

Automation is playing an increasingly bigger role in the financial services and software sphere, with countless companies getting in on the act. Back in October, Stripe acquired Recko, a platform that automates the payments reconciliation process by comparing internal accounting records against external bank statements to ensure there are no discrepancies. And in the past year, we’ve seen businesses such as automated spend-management platform Ramp raise gargantuan sums at billion-dollar valuations.

Tipalti, for its part, had raised  some $295 million before now, including its $150 million series E round last October. Today, the San Mateo, California-based company claims that it’s processing more than $28 billion in annual payments for two thousand-plus customers, representing a 100% year-on-year growth.

According to Amit, Tipalti’s focus is more on fast-growing, “high-velocity” enterprises, because they don’t want or have the kind of expenses and resources that larger enterprises typically consume on maintaining complex architectures, often constituting a mix of custom integrations and IT outlays.

“The key challenge our customers face is that they themselves would rather focus on something else — the product, sales, customer experience, and so on — than on the back-office and suppliers,” Amit explained. “And the back office must keep up with and enable the front-office’s growth goals. They’re more modern in thinking, and adopt best-in-class, highly scalable solutions that don’t require a lot of maintenance.”

With another $270 million in the bank from backers including lead investor G Squared and funds managed by Morgan Stanley’s Counterpoint Global, the company is well-positioned to “accelerate its product roadmap” and global expansion plans. This will include rolling out new ways to manage spending through a corporate credit card, as well as a feature that will help teams “use invoices as a point of social engagement,” according to Amit. This will be less about morphing into a social network, than it will be about making it easier to glean answers from across an organization around “specific areas of spend.”

Looking further into the future, Amit said that the company plans to look beyond accounts payable. “We’ll be developing more product offerings that improve finance operations even more — right now, we’re focused on accounts payable as it is the least efficient process in finance, but we’re also expanding into other areas with the same approach,” Amit explained.

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