Tech series: Automating the payment process

Can you tell us about Tipalti and how it came about?

Tipalti automates pay bills for a wide range of companies – generally mid-sized companies. What’s interesting is this group of companies already understand the challenges of payments, tax compliance, payment compliance, reconciliation, all of the things a corporate company cares about, but it is not where resources are invested. Accounts is one of the last parts of the organisation to receive any resources. By and large, they default to executing these tasks manually – and these tasks are anything from supplier onboarding, supplier vetting, tax compliance, and reconciliation, to benefit execution. Tipalti does all of that in a very clean, highly integrated, organically-developed solution, that is easily consumed by these companies, and easily affordable for these companies

What is your business background?

I come from a telecoms background. I have been an executive all my life, and sold another company in around 2010. At some point I was getting ready to go back into technology, and was talking to a friend. He told me that he was chairman of an online advertising company, and the founder of that company had been complaining about the challenges of making payments. Ad networks have hundreds if not thousands of publishers where they place ads, and they need to pay those people. Those people can be all around the world, and some want to be paid through PayPal, some want it wired, and some in this currency and that currency – and the regulator in India has one request, and the regulator in the UK has a different request. And the tax compliance for the IRS is different to other authorities. Vetting suppliers that you work with is different to the way a manufacturing company does it. These are lightweight relationships, and you want to make sure that you are not paying bad actors. You want to make sure they are not people who are abusing your system for money laundering, or other crimes. These were the challenges that this gentleman was facing. He presented the problem to me on a silver platter, and said to me if you can solve it, we will be your first customer.

What makes Tipalti stand out in the market?

It is a true hybrid of payments and business process, which is very atypical. Usually you find your payment companies, or your business software companies, and we are truly unique as we are deeply into both. Most competitors we have are one or the other – you can reach out to your bank, you can reach out to PayPal, you can pay using one of the other means of making payments, but if you really want to solve [the payment challenge] for the high-value and low-value payments, your domestic and international payments, you need to use a mix of all these solutions. Then the challenge is what does the regulator in this country require when you send a wire payment? How do you reconcile all the payments across all your payment platforms? What do you do when a payment gets rejected through PayPal, or gets rejected through the bank? Then the problems intensify.

Does it save time and money?

Before using Tipalti, our customers would probably do less than what we offer them, and do it manually. These tasks were time-consuming, and risky because you are dealing with compliance. It was expensive, because if a payment fails, it can take a week or two weeks before it is returned, and most banks would charge you $100 for that. Just on the labour, we would save up to 85% of the labour associated with the set of tasks which I have described. We accelerate the speed of financial close by 25%, we will definitely make the organisation much safer in terms of compliance, and making sure they are sending payments to legitimate organisations and people, and making sure they capture the tax information correctly. We can even help the accounts payable department in these organisations become a source of revenue for the organisation, by layering supply chain finance or dynamic discounting on top of their payment flow.

Could Tipalti be used to make the audit process more transparent and accurate?

Everything in the accounts payable side of things will be transparent, automated, and because this is our day job, we will do it to a higher standard than our customers would likely do. If they want to get reports on tax compliance, the withholding rate, money laundering compliance, this is all taken care of by Tipalti. By the way, the word Tipalti in Hebrew means ‘I took care of it.’

What have you done to make sure it is easy to use?

Because we know that many companies don’t have the resources or the ability to invest heavily, our strategy is around relieving them as much as we can from as many of the tasks as we can. On the one hand, we empower the supplier to do more, and that’s how we relieve our customers from a lot of the work. The supplier will onboard themselves, we provide our customers with a supplier portal, they will enter their details, and go through the tax compliance portion, they will do the anti-money laundering portion, they will select their payment method, and answer the questions that their regulator wherever they are requires them to answer. A lot of the work is done by the supplier. That makes it very simple for our customers to execute. They just need to choose the amount and which supplier to pay – they don’t even need to know where that supplier is.