The Account Payables Series: UK Players changing the game (Part2)

Note: any of the information shared in this article is from publicly available sources. I am not affiliated with any of the companies outlined in this blog.

In my last article I outlined the existing problem that's prevalent in account payables, particularly focused on paying supplier bills. If you missed that you can find part 1 here. This time, I will be giving an overview of all the players in this space that are innovating the way that Account Payables are being done in the industry today for both accounting partners and small and medium sized businesses.

Market overview

Figure 1 below gives an overview of the key players and how they fit in the overall market. Since 2019, the number of solutions for this space has grown and a lot of these players are still shiny and new (Particularly in the app partner category).

Under the Accounting software segment, it just feels like a logical step to incorporating payments capability within accounting software, since business owners can then do the job of accounting and paying suppliers at the same time in one bit of software, which would be a very streamlined process for those purely wanting to save time.

Spend Management is an interesting segment. The initial offering is automating business spending and tracking expenses in the first instance. With Pleo customers already paying a monthly subscription, being able to pay bills additionally with the balance is e-wallet is quite compelling (more on this later).

Payment services like PayPal and Wise have some integration capability with accounting software to sync bills and thus enable payments for suppliers; however that's not apart of their core payment solution, but again interesting when talking about account payables.

App partners. This segment is where fintechs have either added this capability onto their existing payment proposition or they're focused on doing account payables exclusively.

Capability & Solution Overview

The more that one particular solution is going to be able to do means increased value that an individual is going to get in terms of real time savings.

Glancing at figure 2, we might say that Sage offers the best value for money, given its able to do account payables, payroll and account receivables however all of these solutions are bundled up and offered in their own unique and wonderful way in terms of pricing model, so gauging value in real terms sometime isn't obvious.

Competition in this space has started becoming fiercer in 2023, where domestic payments made in real-time being done for bills being the standard regardless of whether its done via open banking, e-wallet or the standard bank transfer as outlined in figure 3 below.

Where we see solutions starting to stand out is by offering additional capabilities such as payroll, international payments and scheduling payments, which then makes the SaaS package more valuable. These features in itself become performance item and delighter, especially if we're considering what helps maximise time savings and is functional for our SMB/accounting users.

Looking at fig 2 and 3, on face value most of these products have more similarities however we still need to dig into detail of what an account payables process should accomplish.

Process overview of account payables

At the basis of account payables there are 6 steps. In order to ensure both accounting and payment process are done in accordance, the steps outlined in fig 4 need to be undertaken. Within these steps, there are certain features that help with the process like OCR scanning for bills uploaded, approval flows where there's different users preparing and approving bills/payruns.

Diving deeper into what each solution provides in figure 5, we can start to see where some might work better for some rather than others.

If we take Xero and Sage, these are the most comprehensive because they enable full end-to-end management of the payables process from within the accounting software. Though where Xero falls weaker is with limited approval rules for bill management based on user roles; which means only a single approval is required to turn a payment from Awaiting approval to Awaiting payment as demonstrated in figure 6.

Other solutions which are both agnostic of accounting software and similarly comprehensive as shown in figure 5 are Comma and Nook. The value add they bring by simply being able to integrate with Xero, Quickbooks and Sage is nice, particularly where some need more advanced functionality for bills approvals so that specific individuals or multiple individuals require approvals for bills above a certain value.

Additionally with reconciliation, Nooks automates that process completely, whilst users of other solutions still have to go into accounting software to reconcile the bank transfer that was made. This itself would probably fall into the delighter category of the Kano model outlined in figure 3.

Considering these though weaknesses with Crezco, telleroo and Credec.

Summary

The job of paying supplier bills as a business owner or accountant/bookkeeper is never going to be an easy job. But today we have a range of solutions available today, be it with accounting software or with an agnostic provider is something that helps smooth out that pain of it being an eternal time sink.

From an analyst perspective on this problem of paying bills being a time sync all comes down to finding the right software to meet a workflow need. The winner in feature richness will always be the solution that is able to do more such as international payments, payroll and multi-user approvals, because maximising on time-savings using one solution is a dream.

But since having app partners and spend management software, these provide users more options in the way of payments and optimising workflows by way of being agnostic of accounting software. Without delving into detail of cost for software (which will be covered in another blog), it would become very hard to distinguish between solutions as feature parity becomes apparent; thus requiring these competitors outlined to focus on things like market positioning or even expanding capabilities where it makes sense (e.g. Pleo expense management and bill payments)

In the next blog, I'm going to be talking about the payment methods that encompass these solutions. If you enjoyed reading this, please feel free to give me a follow, like or comment below.