Twenty years ago there were men on trading floors wearing yellow jackets screaming at one another negotiating a price in real-time. These trades had to be verified by the Mercantile Exchange, confirmed by a team of people in the brokerage’s finance department, and checked again by the actual buyer’s finance team. It was very much a manual process.
As electronic trading became common, volumes increased and high-frequency trading (HFT) took hold of capital markets, the challenge of matching orders to receipts was no longer a human-scale problem and the spiky-haired geeks like me were asked to lend a hand.
I wrote a piece of software that automated the process of matching trade requests with the corresponding confirmations from the Mercantile Exchange to create an efficient, scalable way to do this work with a higher level of quality.
About a decade later I found myself in advertising where billions of digital ads were processed per day, each flowing through a variety of ad networks, real-time exchanges, and DSPs. Each new campaign required a new insertion order (IO) generating volumes ofmonthly invoices. Even in a fully digital world, inaccuracies were rampant so we hired a services firm to manage accounts payable to avoid wasted spend. Further compounding the problem was the variability in price across different media channels including, digital, broadcast, regional and local TV,and out of home.
It was 2015. This time in the shipping industry. I was searching for a solution to match the highly variable freight costs of our customers to their invoices from the shipping lines, 3PLs, and suppliers. The only option available was professional services groups who would take documents such as an ocean freight contract and match it to the eventual invoice for a given shipment. Understanding these service solutions were simply people with knowledge of shipping we hired a small team in the Philippines and sold a freight auditing solution to our customers, none of which had an existing solution in-house or otherwise. Even at software prices, our service had an immediate ROI.
In the first year, we processed more than $25M in freight invoices and discovered more than 30% were incorrect. The following year, nearly $100M and the inaccuracies were overwhelmingly in favor of the shipping lines.
The reality is that every Controller, VP Finance, and CFO knows there is gold in their invoices but the cost of discovery is simply too high. It requires teams of people who are themselves prone to the same errors that created the original inconsistencies. Some large companies make the decision to outsource discovery to large consulting firms which according to Gartner saves companies on average 53%. Others choose to outsource auditing to payment networks thus being required to hand over the keys to their payment process, a less than desirable situation for all but the most desperate firms.
Technology allows humans to accomplish things they otherwise could not. We created OpenEnvoy because eliminating AP fraud is no longer a human-scale problem.
If your company pays for variable costs such as freight, media, or even legal fees, we would love the opportunity to help. Try us and if you don’t see an ROI in the first 90 days, we’ll give you your money back.
Matthew Tillman
