Upflow, a French startup that we've been covering for quite some time, originally focused on managing unpaid invoices. The company is now announcing a shift in its strategy to become a B2B payments platform with its own payment gateway to complement its accounts receivable automation solution.
Like many Software-as-a-Service products, Upflow started by building a central hub specifically designed for the specific role of the CFO. From the Upflow dashboard, CFOs and finance teams can see all of their company's invoices, track payments, communicate with team members, and send reminders to clients.
It integrates well with other financial tools and services and automatically imports data from third-party services. And tools like Upflow could be especially important as many technology companies struggle with their next round of funding and want to improve their cash balances.
But it was just the first step in a larger roadmap.
“Basically my vision is that the real problem is how to pay,” Upflow co-founder and CEO Alexandre Louisy (pictured above) told TechCrunch. “Today, when you pay in a store, you pay with your phone. When you pay for a Spotify subscription or an Amazon subscription, you don't think about how you paid.”
“But when you look at B2B payments, the way we pay today hasn't changed in the last 50 years. For us, that's why people are suffering late payments. What I'm really trying to fight is , the idea is that late payments are related to bad payers.”
About 90% of B2B payments in the U.S. are still done offline, he said, and are still mostly paper checks. In Europe, the story is different as companies have adopted bank transfers. However, the transfers are “completely unstructured and require manual coordination,” Ruizy said.
Upflow sells accounts receivable automation software tools to mid-sized businesses with annual revenue of $10 million to $500 million. The company's largest customer generates approximately $1 billion in annual revenue.
“But when you ask; [CFOs]'What's the strategy for setting up direct deposit for a portion of our customer base?' They don't have a solution,” Louie said.
Upflow helps you set up incentive strategies to shift a portion of your customer base to online payments, such as card payments or direct debits. The idea is not that all customers will start paying with business cards overnight. However, with Upflow, you can change the payment method for 20% or 30% of your customer base.
In the same way that a CRM helps you manage the sales process with your customers, Upflow aims to be a financial relationship management (FRM) solution. This is an interesting strategy for how startups like Upflow are thinking about diversifying their revenue streams.
“With a model shift, we are moving from a model that is 100% based on SaaS revenue to a hybrid model where we have SaaS revenue and payment revenue because we have our own payment gateway that we have set up with Stripe,” said Louise. said.
Payments are the second block in Upflow's product suite. The company next plans to integrate B2B “buy now, pay later” payment methods for suppliers and factoring financing options for companies' unpaid invoices.
“We are evaluating solutions that provide embedded finance,” Louise said. “While doing risk assessments is not our core business, what’s interesting is that we can provide users with data that helps with credit scoring that you wouldn’t necessarily get by just connecting to one of their accounts. ”