Why Payments Belong at the Start of Procure-to-Pay

The Payments Podcast by Bottomline

Episode Transcript

Owen McDonald (host): Welcome to the Paymode edition of The Payments Podcast. I'm Bottomline Managing Editor Owen McDonald. This series of payment themed podcasts looks at the hottest trends in business payments with Paul McMeekin, Vice President of Marketing at Bottomline, together with expert guests. In this episode, Paul welcomes Kristian O'Meara, Chief Commercial Officer at PairSoft. KO and Paul explore important details in the procure to pay process, including invoice cycle times, automated invoice matching, and the beauty of straight through processing.

Here's Paul McMeekin and Kristian "KO" O'Meara.

Paul McMeekin (cohost): Before we dive into the questions, KO, can you give me a little bit about your background? You're relatively new to PairSoft, but not new to the industry.

Kristian "KO" O'Meara (guest): Before we jump into an introduction to myself, I want to take the opportunity to thank you for your participation in this podcast. It's an honor to be selected as a guest, to have the opportunity to share my perspective and insights on the B2B payment space. I think it's an exciting and evolving space. 

I'm typically referred to by 95% of the people on this great earth as KO. Kristian O'Meara is my full name.

As you said, I've recently joined PairSoft in an executive leadership role. I have a career that's knocking on the door, or the edge of thirty years, where I can proudly say I've worked in just three companies. I started my career in supply chain consulting for Ernst and Young, which became Capgemini, back then big four, which is today big four consulting, but back then was big six consulting. And I spent the better part of twenty-five years at Jagger across 10 different roles that had a very cross functional experience.

From my perspective, I'm passionate about working across all stakeholders in the B2B SaaS enterprise space. So, those varied roles, let's call it a dozen different roles over the past thirty years, have ensured that I can help folks really identify, find value, unlock value, and optimize value within their organizations.

Paul McMeekin: Oh, I love that. As you said, you spent a few years or more than a few years, working across procure to pay and API automation. From your perspective, what's still most misunderstood about P2P and finance organizations today?

Kristian "KO" O'Meara: I actually look at theP2P as a subset of activities in the broader source to settle space in remit, that most organizations talk about their supply chain. Oftentimes in my past, I had the downstream or P2P or payments referred to as the execution arm or the tactical leg of the supply chain. Whereas category management, sourcing, things like supplier risk management are often viewed as like the strategic disciplines. With finance, and I'll call it more broadly, if you're talking about P2P, procurement in general, I think from a broader executive team leadership perspective, I've generally found that most organizations struggle with metrics.

Metrics for me are core value. I'm in the commercial side of the business. It's very easy to measure salespeople, revenue people on their bookings, and on their achievements of quarter over quarter performance. But I think few other disciplines in my experience in our customers' organizations are as metric driven and focused as they need to be. I'm a big fan of setting the North Star, making sure that all stakeholders internally and externally, which we'll talk about, I think, throughout the course of today's discussion of having a North Star.

What's the place that you're trying to run towards collectively? What does success look like, sound like, feel like? What are the metrics underpinning that? So, if we talk about the P2P space, things like invoice cycle time, how do I get from, say, thirty days, which is present in most manual processes down to a best in class that's sub five days? I've seen customers deliver less than a day, for example, on things like invoice processing cycle times. Rec to PO, PO to invoice match rates, like, often called two- and three-way match. And then as we talk about something like payments, how do I get to straight through processing? Ie, touchless, the gold star. 

Where the most mature organizations are cresting 70%, 90% in the most elite of organizations where there's truly touchless invoices, meaning they're processed without a human being involved. So those are the types of metrics where I can look at AP or finance and say to you, look, your manual processes are oftentimes, let's call it 15 to 25 dollars in cost. And I expect you, I've seen some as abysmally high as 50 to 60 dollars per invoice.

But I can work with you in finance and say, I can legitimately create value for your organization with you, for you, with solutions such as, the Bottomline and PairSoft solutions to drive that down closer to $2 to $5 an invoice. And that has a meaningful impact to your stakeholders. As just an example of if I'm truly metric focused and driven, that is the most repeated, I think, challenge I see across acutely finance in particular, or procurement more broadly and extending that even farther to supply chain, if that makes sense.

Paul McMeekin: It does make sense. I think focusing on those metrics and that that ultimately one of what is the cost of process is is super key. So, you mentioned payments, and payments are often treated as the last step in the workflow. I would love to get your point of view on payments and the need to be designed earlier in the pre procure to pay process.

Kristian "KO" O'Meara: Well, I think for me, this is where the kind of plays off where I just finished to some degree. If payments aren't deliberately thought of from day one as part of your overall supply chain strategy, oftentimes less mature organizations, it simply looked at as well, it's something finance needs to take care of at the end of the process. You miss the opportunity to deliver to those stakeholders and to generate the outcomes we talked about. If you're just focused on it being a transactional thing of, I have an invoice, I must pay them.

So, when I think about that in the payment space, things that we're trying to prevent, if I design with the end in mind, I'm trying to prevent duplicate payments. I'm trying to capture early payment discounts. I'm trying to improve working capital, DPO, cash flow optimization. I'm trying to enhance the invoice accuracy rate. Things that are done deliberately earlier in the process are critical to the success. 

If you talk about a multi way match as a gold standard, like a three-way or four-way match, you have to have the right contracts. You have to be buying via the right channels. You have to be compliant in your spend.

So, I think it's absolutely fundamentally critical that it not be treated as the last step in the process, but rather an integrated, deliberate, purposeful thing. Things like change management, which I can talk in more detail about, can really help drive that mentality because you're designing from upfront the I'll call it the WIFM, the old Xerox mentality of what's in it for me, and for the stakeholders in general.

Paul McMeekin: That's super interesting. So, you've mentioned metrics and you've mentioned, change management. And this is this is a broad question that it could take us could take us anywhere here. But from your seat, how should finance leaders think about balancing cost control, fraud prevention, and supplier experience when modernizing payments?

Kristian "KO" O'Meara: I think this is where the proverbial rubber meets the road from my perspective. I mentioned change management. Let's start there because I think there's a good framework. I've adhered to there's a company called Prosci that's out there in the public domain. They have a methodology called ADKAR.

Awareness, Knowledge, Desire, Ability, Reinforcement. And if you think about that, and you map out in a simple matrix, who are my stakeholders in this process, both internally and externally? Whether that's AP clerks, whether that's the CFO, whether that's your supplier. You must treat each of them as a stakeholder, and you must think about the end in mind. What are we trying to accomplish together?

So, I in metrics, often paired with metrics in that North Star is, what are the benchmarks for framing it up? How do I move from a traditional AP organization that's transactional in nature to a more mature organization that's focused on high straight through processing, that's focused on data driven insight from real time analytics, that's focused on controlled procurement activities, that's focused on OTIF, on time and in full, from a payment perspective, from an invoicing perspective, so that we reduce the friction throughout the supply chain. Thus, not only satisfying our stakeholders, but possibly even delighting them. 

Having that North Star documented, what is success? What are we trying to achieve? What are the numbers behind that? What is our cost per invoice over time? What is the number of invoices that are truly touchless? Those are all incredibly dynamic ways in which to engage with the stakeholders from a change management perspective and personalize the impact that you and your organization from a finance perspective are having on the overall stakeholders.

Paul McMeekin: So, switching topics from payments to AI, AI is showing up everywhere in finance today, but often, in our experience, in very tactical ways. Where do you see AI creating meaningful value in procure to pay today, and where do you think the hype currently outweighs the reality?

Kristian "KO" O'Meara: I think for me, Paul, AI is something I've been passionate about, not just for the last twelve or eighteen months, but really, I've been focused on it for the last twelve to fifteen years. I had the privilege of, in that concept of paying it forward, mentoring the AI leadership at my prior company. 

Here at PairSoft, we've been leveraging AI. It's not sexy. It's not talked about at cocktail parties, but machine learning, where you fed it thousands or tens of thousands or even millions of examples is something PairSoft has excelled at, in helping people leverage AI. While the more splashy, more recent publicity and all the sort of conversations around ChatGPT, OpenAI, Claude, etc. are eye catching, eye popping in their results, AI has been around as a discipline for a long time, and some of the legacy methods are actually quite a bit more effective than just jamming an LLM towards something by way of example. 

But if I try to break it down for you and the audience from my perspective, having been involved with this for a really long time, the places that AI, and I'll call it modernized AI in the LLM sense, or the, the Claudes and the ChatGPTs, or where everybody's starting to incorporate those 65% of searches are now happening with AI generative results, right? I think about a progression. I think about a copilot concept. I think about an autopilot concept. I think about this. I always use this concept of human in the loop. 

How do I do and leverage AI to project, to do work for me? So, beyond the hype results implemented in customers today, I think are real life examples of some things that historically in the P2P space, like PO matching, have been miserable and difficult to accomplish. Often time consuming, fifteen to thirty minutes to match an invoice to a PO, by way of example with a human being doing it. 

We now see routinely results that are in the 70s and 90% depending on the complexity to dispense of the customer. In the GL account code, something is super sexy and exciting in the finance world as GL account coding, used to be again, a very painful, the loudest point of friction for CFOs and CPOs was, I have to, in my P2P solution, select a GL account code. No one wants to do that. I now can very effectively assign those with a great deal of accuracy in an AI use case.

And the third case, which I think is really transformational from a savings perspective and from a stakeholder delightment perspective, is this concept of support case deflection, allowing me to self-serve. And what I say when I do that, I can now use these LLMs. I can load them with a rag model. So, it's trained specifically acutely for my policies, my procedures, my fraud, positioning, my change management, my organizational structure. And when I incorporate all those things in, it's giving me tailored support rather than generic support.

And I can get into support case deflection, or I can decrease the time support cases are logged with my tier one or help desk type of resources because I can now chat real time with it. Those are three absolutely successful. And then if I transition that into where is the hype outweighed, there's a lot of people trying to run at, applying things from Amazon or from Claude, and just run at how do I use these to automate my invoice processing. I've seen nine failed projects for every successful project. I'm convinced that organizations are like, we can do this ourselves. We can eliminate SaaS software. There's no need for it. 

I can tell you from experience, I've been on the receiving end of more phone calls and engagement from executives who have tried and failed at that because it takes discipline. It takes purpose. It takes structure. It takes data to sit over the top of to really make AI 

So that's where it's still in the hype phase. We're using it internally at scale, but I think organizations independently trying to apply it, the majority of them are failing by and large.

Paul McMeekin: You mentioned something super key there. I think it's data, we've appointed data, the point of view that, data is the fuel for AI. Right? It's probably not a unique point of view. But if you don't have your data structured, you don't have it right, you don't have the connections to that data, then the project will ultimately fail.

So, moving on to the last question, KO. It the same question I ask everybody. If you had one piece of advice about the future of payments for CFOs, treasurers, heads of procurements, what would that piece of advice be?

Kristian "KO" O'Meara: I think select your partners and vendors carefully and deliberately. Why I say that? I've been in this space a long time. I started a payments program, with Bottomline at a previous employer. Here at PairSoft, I think we have a clear concrete vision as to what a multi-year, two, three-year plan looks like in payments in general.

Most of the folks I engage with in the C-suite of our customers today have five to seven different technology platforms or ways of paying their suppliers. They pay them one way with wire, another way with check, another way through their bank, another way through their ERP. And it's not a unified experience. It's not simple. It's not friction free.

So, find providers like PairSoft and Bottomline together united to simplify this landscape for you and with you, to be attentive, to be listening, to be concerned with your success, to be attuned to the change management necessary both internally and externally to guide your success. That is the overwhelming thing I try to communicate to your listening audience here from my perspective is find the right partner and make sure they have the right long-term vision that is about you, about eliminating your pain and your friction and creating success and value for you.

Paul McMeekin: Super helpful. That's a great way to close, KO. Thank you for joining me today.

Kristian "KO" O'Meara: Thank you, Paul.

Owen McDonald: Preventing duplicate payments, capturing early payment discounts, improving DPO, working capital, and cash flow optimization, enhancing invoice accuracy. These are all worthy objectives for B2B payments teams at a time of competing priorities. Thanks to PairSoft Chief Commercial Officer, Kristian O'Meara, and to cohost, Paul McMeekin. To our audience, the smartest people in B2B payments, thanks for listening. 

Our thanks again to a great guest, Bottomline's Gareth Priest. To our audience, the smartest people in B2B payments, thanks for listening. Hit subscribe. Catch us again on your favorite podcast platforms, including Apple, Spotify, Blubrry, iHeartRadio, and YouTube. Bye for now.

The Payments Podcast from Bottomline.