Pandemic fuels growth in B2B payments sector

Investors and clients rush to B2B payments innovators

The B2B payments space has been hot for a while. But now mass adoption of digitizing finances – fueled largely by the COVID-19 pandemic – is only driving demand in the sector.

Startups and enterprise players in the segment are adding to their offerings, while at the same time seeing more interest in their existing services. Meanwhile, other companies continue to raise funding.

Two cases in point. This morning, Scotts Valley, Calif.-based Paystand, a blockchain-enabled B2B payments platform, revealed that it’s seen 200% year-over-year monthly payment volume. The startup said it’s also seen the number of businesses paying through its “zero transaction fee” network jump by 40% to 140,000 compared to this same time last year. Revenue is up two and a half times year over year as well, the company said.

Paystand operates its commercial payments platform under a Payment-as-a-Service model.

Also, over the past 12 months, Paystand launched what it described as the industry’s first no-fee corporate card to help businesses “further accelerate the shift to digital-first payments.”  It also released AR automation capabilities for NetSuite, Xero and Magento, as well as collections automation in an effort to make invoicing, payments, and reconciliation “a seamless, intuitive” process through the Paystand dashboard or any ERP.

“This year illustrated that doing business ‘the old way’ is no longer economically viable. In fact, it’s a recipe for going out of business,” said Paystand CEO and co-founder Jeremy Almond.

Meanwhile, on the East Coast, an already well-funded B2B payments company AvidXchange quietly raised an additional $118.9 million in equity, according to a filing with the U.S. Securities and Exchange Commission (SEC). The Charlotte, North Carolina-based fintech unicorn had already raised $378 million this year across two tranches of a Series F funding round, in addition to another $8 million in May. With this latest infusion, AvidXchange has now raised over $1.1 billion across a mix of venture, private equity and convertible note financings since its founding in 2000, according to Crunchbase data.

In a statement to the Charlotte Business Journal, the company said of the latest funding: “Due to the high interest in our previous round, we decided to return value to our early shareholders with a secondary offering. Our business continues to appeal to the foremost capital management firms because of our growth rate and success in helping customers automate the way they pay bills.”

AvidXchange, a provider of accounts payable (AP) and payment automation solutions for the middle market, believes there’s still plenty of opportunity.

Only 40 percent of U.S. businesses automate their accounts payable processes, noted AvidXchange CEO and co-founder Michael Praeger, in a written statement at the time of the company’s April raise.

“We continue to solve a real problem for companies that still rely on paper invoices and checks, fundamentally changing the way they pay their bills,” he said. “This has become even more evident as we see businesses implementing continuity plans and shifting to work from home models, making automation essential to support mission-critical processes and keep operations running.”

AvidXchange’s single software-as-a-service (SaaS)-based platform is aimed at giving businesses a way “to gain efficiency and visibility into payments by eliminating the paper invoice and paper check.” The company says it processes over $140 billion transactions annually across its network of more than 600,000 suppliers. It has 6,000 customers.

Both Paystand and AvidXchange made the 2020 Inc. 5000 with the former ranking No. 454 with 1,007% three-year growth and the latter coming in at No. 2,958 with three-year growth of 133%.

As further evidence that this space is hot: Earlier this month, Billtrust announced that its Business Payments Network — created in collaboration with Visa — saw a 118% increase in payments volume in the first half of 2020 compared to the same period in 2019. Billtrust says its goal is to accelerate cash flow by automating credit decisions and monitoring, invoice delivery, payment capture, cash application, and collections.

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