Speaker 0: The Payments Podcast from Bottomline.

Owen McDonald (host): Welcome to the Paymode edition of The Payments Podcast. I'm Bottomline Managing Editor, Owen McDonald. This series of Paymode themed podcasts explores the highest trends in business payments with Paul McMeekin, Vice President of Marketing at Bottomline, along with expert guests. In this episode, Paul welcomes Tom Dolan, Chief Revenue Officer, North America Corporate at Bottomline, as they look at innovations that are transforming accounts payable and discuss negative consequences of letting payments technology fall behind. Here's Paul McMeekin and Tom Dolan.

Paul McMeekin (cohost): Thank you for joining the podcast. Today, I'm delighted to say I'm joined by Tom Dolan. Tom, welcome.

Tom Dolan: Thank you, Paul.

Paul McMeekin: And if you'd like to, give the listeners a quick introduction about yourself, your role here at Bottomline, then we can dive into the questions.

Tom Dolan: First off, so excited to be here. Thank you for the time. Tom Dolan, I lead our revenue efforts here for Bottomline North America. Largely, our Paymode business operations make a big part of that. So, I represent everything customer facing.

Paul McMeekin: Excellent. Thank you. Today's focus is going to be around how innovation can transform accounts payable and receivable processes. A lot of the podcasts we're recording around Paymode are talking about the outcome, the good stuff which happens when you do it. I want to take a different twist today and talk a little bit about the negative consequences of outdated technology.

So, a big question, you can unpack it whichever way you want. What are the before scenarios? What should someone look to understand where, hey, I need help, and what are the negative consequences of having those before scenarios or the technology specifically for accounts payable or accounts receivable? Big question.

Tom Dolan: That's a good question. I think on the AP side, paper invoices and paper payments represent the costly endeavor. I think over the last few years, in particular, companies have been focusing on a more digital strategy there. Negative consequences to not doing is really just time and cost. And I'd say more so on the invoice side, but as well as the payment side.

And then when you think about just enterprise payments and enterprise AP, a before scenario that we should talk about is just the management of an ongoing vendor base. So, any company is going to change who they're paying on an annual basis, between 15 and 35 or 50% depending on the industry. Right? And, onboarding those new vendors, managing existing vendors in the change process, and managing the risk around that process really becomes just an expense, as well as prone to potential fraud on that standpoint.

Paul McMeekin: When they hire an accounts payable person, they're probably not hiring someone who's onboard a vendor before. Right? And their skill set attitude may not be lined up with the task that they've been given.

Tom Dolan: Absolutely. And, just to your point, there is a focused expertise on building a process to be able to onboard vendors, pay them digitally, manage those digital payments to avoid the risk of payment fraud. That does take an investment if you don't have that today, without a doubt.

Paul McMeekin: So, the starting through there, 15, 35, 50% change in vendor base. That seems to be pretty common. Are any industries in particular you've seen which see a lot more change in vendors than other ones?

Tom Dolan: Yeah. Well, building anything, construction, real estate those industries where they're spinning up a new property in a new region, they're going to have a whole new set of vendors that they're paying. Right? And so, I'd say, that's probably the highest. Health care has a healthy amount as well.

Those two industries seem to have the most from what we've seen, but any company is going to change in terms of the number of companies that they're paying and sourcing goods and services from. Any company is going to see 15 to 20%.

Paul McMeekin: That makes perfect sense. So, if I were to summarize, the expertise and skill set of onboarding vendors, but also time it costs goes back to it. And today's environment, can you do things more efficiently? Can you do things cheaper or faster?

Tom Dolan: That's mirrored on the receivable side. Right? So, there's been a fragmentation of sources of payments over the past decades or so, whereas it used to most payments were coming maybe from a handful of bank portals, in terms of being able to access that remittance information. That's been fragmented in the industry today. And so, really, when you talk about the before scenarios for a receiver or a vendor, it's just managing that cash application process in terms of where they're getting that remittance information, how many portals are they logging into, and what is the manual effort to be able to get all that information and tie those invoices back to those payments.

Paul McMeekin: So, the challenges on the AP side are reflected on the AR side? 

Tom Dolan: Absolutely. 

Paul McMeekin: Good stuff. Alright, we'll move on. What innovations are shaping the future of AP and AR? And, of course, in 2025 when we're recording this, what role will AI play?

Tom Dolan: I think AI has a role in payments, corporate payments. Absolutely. The one that jumps out to me is the fraud prevention. And we deploy, here at Paymode, teams of people and tools, that I think are right for market consolidation that AI can drive some optimization around. Just speaking for ourselves, I know we have a portfolio software, but then often pages and pages of process that we make sure is consistent to avoid fraud. So, I just think there's a lot of room for AI to have an impact across the tools and the people there.

Paul McMeekin: Outside of AI, is anything you've seen in the marketplace that may change either the AP or AR side for the better?

Tom Dolan: I'm continually curious what blockchain can be in payments, when it comes to what we're seeing as far as AP in the U.S. It's not a predominant sort of trend now, but that's an area that I'm curious to see how it continues to develop.

Paul McMeekin: Yeah. I remember when I first looked at blockchain, it was 14, 15 years ago. The biggest thing for consumer payments, it takes too long to settle. But if you're sending a ten-thousand-dollar payment, you can wait a couple minutes, right?

Tom Dolan: Right.

Paul McMeekin: Pivoting slightly, can data provide insights to improve decision making for either AP or AR?

Tom Dolan: I think treasurers and CFOs in general, more so today than before, are looking at opportunities to optimize their investments, whether it be payments or receivables. And we're seeing that happen in the market, certainly with compression around virtual card payments. Companies are making choices on where they're paying for payments from what customers, and what areas, and whether that's on the AP side or AR side. I see a lot of focus in optimizing that investment based on the data that those payments are generating.

Paul McMeekin: Okay. That's interesting. So, let me pivot slightly to a little bit of a cash forecast, and let me give you some context. I was on the phone with a potential prospect who said they have a ten-million variance on a $150,000,000 forecast, which in my head is seven and a half percent, if my math is right. And we start asking questions and they're doing it in Excel.

And he asked the question, is there a better way to do it, to move outside of a spreadsheet, to move to something more dynamic and use data in real-time to do cash forecasting?

Tom Dolan: I think there's a lot of potential for the treasury management platforms out there. We do a lot of business with property management companies and bank accounts for every one of those property management, and being able to manage the cash balances across those bank accounts and the payments across all of the bank accounts is a complex operation. And we've had to build out features and even services around how we integrate to their payment process to be able to help with that. So, I think there's a ton of opportunity for those treasury management systems that can help reconcile cash balances across those many banks and accounts.

Paul McMeekin: Taking feeds from multiple bank accounts, from ERPs, provide multiple currencies, provide a real-time view. So, in the example I talked about, multiple bank accounts, and what he says, a spreadsheet doesn't solve for them. It doesn't. You're still going off, you're updating the assumptions every time, and it was pretty, pretty inefficient and highly inaccurate as he said. And they couldn't make anything more than a week out in the cash forecasting.

Okay. So, this last question, I ask this question to everyone. If you could give one piece of advice to CFOs or treasurers about the future of payments, what would it be?

Tom Dolan: You know, it's really interesting. I think this is a fascinating time in payments. There's a ton of legacy architecture in the banking system, and we've never seen as much transformation and as much time as we are right now. The availability of software and services available to companies to reduce risk, to optimize cash flow, improve efficiencies, has never been greater. And so, my piece of advice is, keep your eyes open.

Venture out to Money 20/20, see what's out there, and put some effort into really understanding the market and how it can impact your company because I think there's a ton of options, more so than ever before.

Paul McMeekin: So, the old adage of, the best time to modernize was five years ago. The second-best time is today. Right?

Tom Dolan: That's right. Yeah. Yeah.

Paul McMeekin: So, do you have the understand the use cases, see what technology exists to help you evolve the business.

Tom Dolan: That's it.

Paul McMeekin: Yes. Well, thank you for joining me today, Tom, and thank you to the audience, for listening to our Paymode podcast.

Tom Dolan: Super exciting. Thank you, Paul.

Owen McDonald: Thanks to Bottomline's Tom Dolan and to cohost Paul McMeekin. To our fantastic audience, thanks for listening. Hit subscribe. Catch us again on your favorite podcast platforms, including Apple and Spotify. Bye for now.

Speaker 0: The Payments Podcast from Bottomline.