Some more investment activity across the fintech space covering financial operations, which has been on a tear during the past year as the lingering pandemic has refocused eyes on the need for business transformation to digital systems and processes. This piece is posted at Tech Crunch and points to a $50 million cash infusion for the California fintech Paystand, a payments-as-a-service outfit using blockchain and cloud tech to offer a billing and payment platform. We again see a non-traditional model that de-emphasizes transaction fees, instead creating a flat monthly fee model.
‘It’s pretty easy for individuals to send money back and forth, and there are lots of cash apps from which to choose. On the commercial side, however, one business trying to send $100,000 the same way is not as easy….Paystand wants to change that. The Scotts Valley, California-based company is using cloud technology and the Ethereum blockchain as the engine for its Paystand Bank Network that enables business-to-business payments with zero fees.’
As we have been advising now for years, the bulk of corporate investment in digital financial operations during the past five years or so has been more focused on the payables side of the business, but not always in a comprehensive strategic manner. In the 2021 Outlook, we pointed out that managing the financial cash cycle involves systems and processes touching everything from procurement to payables, trade financing, receivables, and reconciliation.
The cash conversion cycle for corporations is the time from inventory investment to receiving cash for a sale. Those firms that do a good job of understanding how to best organize these operations have a distinct advantage over laggards. As this brief article points out, Paystand solutions are more directed towards the receivables part of the puzzle, which has been receiving a greater share of digital transformation focus during the past couple of years. We see this as a continuing trend for some time, and in our view companies not transitioning will be finding themselves at a competitive disadvantage not too far into the future.
‘Paystand’s view of the world is that the accounts receivables side is harder and why there aren’t many competitors. This is why Paystand is surfing the next wave of fintech, driven by blockchain and decentralized finance, to transform the $125 trillion B2B payment industry by offering an autonomous, cashless and feeless payment network that will be an alternative to cards, Almond said…… The company said it will use the new funding to continue to grow the business by investing in open infrastructure. Specifically, Almond would like to reboot digital finance, starting with B2B payments, and reimagine the entire CFO stack…. As part of the investment, Jazmin Medina, principal at NewView Capital, will join Paystand’s board. She told TechCrunch that while the venture firm is a generalist, it is rooted in fintech and fintech infrastructure. She also agrees with Almond that the B2B payments space is lagging in terms of innovation and has “strong conviction” in what Almond is doing to help mid-market companies proactively manage their cash needs. “There is a wide blue ocean of the payment industry, and all of these companies have to be entirely digital to stay competitive,” Medina added. “There is a glaring hole if your revenue is holding you back because you are not digital. That is why the time is now.”’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
