Latest / Leaders In Payments / Modern Finance: AP Automation with Steve Buchberger and Heather Dawood from Deluxe | Episode 431

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Modern Finance: AP Automation with Steve Buchberger and Heather Dawood from Deluxe | Episode 431 · Leaders In Payments

• 0:01
  Speaker 1: Welcome to this special four-part series titled Modern Finance, sponsored by Deluxe, where we explore the future of financial automation.
• 0:09
  Speaker 1: From treasury to accounts payable and receivable, we're diving into how AI and intelligent automation are transforming every corner of finance.
• 0:19
  Speaker 1: In each episode, you'll hear from leaders at Deluxe who are driving innovation and delivering real-world results.
• 0:26
  Speaker 1: Whether you're navigating compliance, fighting fraud or connecting the financial dots, this series is packed with insights you won't want to miss.
• 0:35
  Speaker 2: Hello everyone and welcome to the Leaders in Payments podcast.
• 0:37
  Speaker 2: I'm your host, greg Myers.
• 0:38
  Speaker 2: This episode is part of our four-part series titled Modern Finance and is being brought to you by Deluxe.
• 0:41
  Speaker 2: Four-part series titled Modern Finance and is being brought to you by Deluxe.
• 0:43
  Speaker 2: We kicked off the series with a fascinating episode with Yogesh J Prakasam from Deluxe, where we discussed how AI is influencing the payments ecosystem and, specifically, treasury management.
• 0:55
  Speaker 2: In the second episode, I spoke with Pat Moy about accounts receivable automation.
• 0:58
  Speaker 2: Today, we'll be discussing accounts payable automation with two very special guests Steve Buchberger, who is the Executive Director of Payables Product Management at Deluxe, and Heather Daywood, payments Industry and Treasury Management Expert at Deluxe.
• 1:12
  Speaker 2: So, steve Heather, thank you so much for being here and welcome to the show.
• 1:15
  Speaker 3: Thanks for having us.
• 1:16
  Speaker 3: Greg, Pleasure to be here.
• 1:17
  Speaker 2: Thank you.
• 1:18
  Speaker 2: So, steve, let's start with you.
• 1:19
  Speaker 2: If you don't mind, tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that.
• 1:30
  Speaker 3: Yeah, sure, I grew up in a small northwestern part of the state in Wisconsin, marathon Wisconsin.
• 1:32
  Speaker 3: I still live in Marathon Wisconsin.
• 1:34
  Speaker 3: I've made it as far south and actually I've lived in Wisconsin all my life.
• 1:37
  Speaker 3: I made it as far south as Milwaukee.
• 1:41
  Speaker 3: At one point after college I've actually.
• 1:42
  Speaker 3: I went to college and got my bachelor's degree in management information systems, which is a combination of a computer degree with a business emphasis and then a master's in finance, both through the inverse Wisconsin system.
• 1:55
  Speaker 3: So lots of Wisconsin.
• 1:57
  Speaker 3: I've worked in payments now for 30 plus years and time flies and been in the industry now for quite a long time.
• 2:06
  Speaker 2: Okay, great.
• 2:06
  Speaker 2: Well, tell us about your role today at Deluxe.
• 2:09
  Speaker 3: Sure, I'm in charge of our payable solutions, so helping any solutions that help businesses make payments, whether it's paying a supplier, consumer, so B2B, b2c.
• 2:19
  Speaker 3: I also manage our strategic partnerships within our B2B payments area.
• 2:23
  Speaker 3: So we have quite a few companies that we partner with that embed our solutions in their technology and take it to market as part of a broader solution that they offer.
• 2:32
  Speaker 3: So I'm responsible for those partnerships as well as our payable solutions overall.
• 2:38
  Speaker 2: Heather over to you Same question.
• 2:40
  Speaker 2: A little bit about yourself and then also about your role there at Deluxe.
• 2:43
  Speaker 4: Sure, a little bit about yourself and then also about your role there at Deluxe.
• 2:46
  Speaker 4: Sure, so I'm a Boston girl, born and raised in Boston and moved 40 miles south of my childhood home and now live in Providence, rhode Island.
• 2:52
  Speaker 4: I like to say I like to be in, on or near the water at all times.
• 2:56
  Speaker 4: I studied at the University of Massachusetts for my undergrad and then I did the executive leadership program at Babson, and I like to say that I grew up in banking.
• 3:06
  Speaker 4: So I spent the first 15 years or so of my career working in banking, serving in the business banking and commercial banking space, really focused on payments and treasury, and then moved on to RevCycle software and served the upstate market where I was on the road pretty constantly.
• 3:28
  Speaker 4: I called it an aging, fattening and lonesome role.
• 3:31
  Speaker 4: I spent about 30 hours a week behind the wheel.
• 3:34
  Speaker 4: I'm delighted to have joined Deluxe in the fall of 2024.
• 3:39
  Speaker 2: Okay, okay.
• 3:39
  Speaker 2: So the common theme is you both were born and moved a little bit south.
• 3:43
  Speaker 2: I think that's what we got out of that.
• 3:45
  Speaker 4: That's one of many things that Steve and I have in common.
• 3:48
  Speaker 2: Okay, I'm sure we'll learn more throughout the conversation.
• 3:50
  Speaker 2: So, Heather, just sticking with you if you don't mind.
• 3:53
  Speaker 2: For those in the audience that may not know much about Deluxe, could you kind of tell us about Deluxe, what you do and kind of how Deluxe fits into the payments ecosystem?
• 4:01
  Speaker 4: Sure, to the payments ecosystem Sure.
• 4:05
  Speaker 4: So here at Deluxe, I work as a director and then serving the mid-market space, and we help our clients with automated payables, integrated receivables, and ultimately, what we do is we help our clients to pay, get paid and thrive.
• 4:17
  Speaker 2: Okay, so let's go ahead and dive into the topic at hand, which is really rethinking accounts payable through intelligent automation.
• 4:24
  Speaker 2: I know that's a mouthful, but I think we'll unpack that along the way.
• 4:28
  Speaker 2: Steve, to set the stage, can you describe what accounts payable function typically looks like, and maybe what size companies or financial institutions that you most often work with?
• 4:38
  Speaker 3: A sweet spot for us is the mid-market business.
• 4:40
  Speaker 3: We do work with large corporates and other size small businesses as well, but in the mid-market I think we find it's a good mix, where there is complexity in the process but also we're able to, in a fairly straightforward way, help them become more streamlined in their payables processes and so when you think about payables overall and what businesses are doing, it sounds pretty straightforward, right?
• 5:04
  Speaker 3: You have a supplier, they've done something for you, provided a product, provided a service.
• 5:10
  Speaker 3: You owe them some money for that service, so you're going to make a payment.
• 5:14
  Speaker 3: Where the complexity is is just all the steps to that and the different people that might be involved.
• 5:20
  Speaker 3: From you know, when you look end to end, from invoice receipt through the approval process to make sure that invoice is accurate, that the products and services described have been fulfilled, approving that and then the fulfillment of the payment.
• 5:34
  Speaker 3: And I think that area is getting more complex too because there are more payment options in the industry, different ways the supplier needs to want to get paid and then ultimately reconciling that payment through your system.
• 5:45
  Speaker 3: So it is a process that businesses do all the time, but I'd say the complexity there are areas of complexity.
• 5:54
  Speaker 3: There are areas of inefficiency, and mid-market is a good size company where we can help them solve that complexity with solutions that we offer.
• 6:02
  Speaker 3: Financial institutions for us are really a channel I think is the best way to look.
• 6:07
  Speaker 3: We have very strategic partnerships with many financial institutions.
• 6:10
  Speaker 3: In the case of our B2B payments, financial institutions really serve as a way for us to get to more businesses because they have a trusted relationship with their business clients and providing payment services for them as a bank, and so Deluxe is a technology services provider to financial institutions, ultimately helps financial institutions in the types of sophisticated payments products they provide and helping those businesses solve their problems.
• 6:42
  Speaker 3: So really a good channel for us to get to more businesses and extend our reach.
• 6:47
  Speaker 2: Heather Deluxe's research highlights that over 80% of businesses still use manual or semi-manual AP processes.
• 6:54
  Speaker 2: To still use manual or semi-manual AP processes.
• 6:57
  Speaker 2: So why do you think so many organizations remain stuck in kind of these outdated methods?
• 7:01
  Speaker 2: Obviously they're inefficient.
• 7:03
  Speaker 2: So why do you think they just continue to do that?
• 7:06
  Speaker 4: Well, I think that modern day finance teams have highly skilled people inundated with manual processes working as the frontline against fraud and don't have enough time put aside to be able to really focus on strategy and how they can improve efficiencies, work in a safer, more efficient manner, because they're in the trenches, really navigating on a daily basis through the inundation of paperwork, touching paper multiple times, going through physically handing people documents for approval.
• 7:41
  Speaker 4: We have a kind of joke amongst some friends and colleagues talking about CFO Tuesdays, where we've got clients who have CFOs working remotely but they come into the office specifically on a day of the week to manually comb through all of the ACH.
• 7:57
  Speaker 4: We've got again highly skilled, highly compensated employees taking on the responsibility of managing bank account information for the vendors, going through the process of identifying who they're talking to, how do they verify whether or not they are dealing with a business email compromise.
• 8:15
  Speaker 4: Through all of these daily issues they don't have enough time to kind of hit pause and reflect on how they can implement some of the great resources made available to them today.
• 8:27
  Speaker 2: Okay, sounds like you know.
• 8:29
  Speaker 2: Getting unstuck from what you do every day on a daily basis is part of the challenge.
• 8:34
  Speaker 2: So, heather, we'll stick with you.
• 8:36
  Speaker 2: What are the primary operational and compliance risks that arise from these manual workflows?
• 8:45
  Speaker 4: like you mentioned, paper invoicing, check processing and things like that.
• 8:47
  Speaker 4: So we have an incredible amount of human error.
• 8:49
  Speaker 4: There's human key error.
• 8:50
  Speaker 4: There's things that are delayed payments maybe that are delayed because of the manual processes and going through the invoicing authorization process, maybe going through the payment approval process, so we've got reputational risk with vendors.
• 9:06
  Speaker 4: Then we're dealing with check fraud.
• 9:08
  Speaker 4: Checks are sent out in the mail.
• 9:11
  Speaker 4: There's so much fraud, the activity that's happening around that.
• 9:15
  Speaker 4: I used to say that financial fraud was a white collar crime.
• 9:18
  Speaker 4: Now it's an everyone crime and so there's risk there.
• 9:22
  Speaker 4: And then, of course, managing vendor bank account information is a tremendous responsibility and a huge burden on the financial teams.
• 9:32
  Speaker 2: All right.
• 9:32
  Speaker 2: Well, we've kind of level set on kind of who Deluxe works with, the size of companies, the AP function and obviously some of the negative things that's going on kind of in that space right now.
• 9:45
  Speaker 2: So let's turn to how Deluxe is helping with automation in this space.
• 9:50
  Speaker 2: So Steve, talk a little bit about Deluxe's AP automation solutions.
• 9:54
  Speaker 2: And how does Deluxe identify the critical pain points of these merchants that maybe are still doing things manually?
• 10:01
  Speaker 2: So how do your solutions, you know, solve for those critical pain points?
• 10:06
  Speaker 3: If you look at, like I was saying before, that there's multiple ways that you may pay a supplier and there's different reasons why you might pay them one way or the other.
• 10:15
  Speaker 3: Whether you have their banking information to do ACH, the supplier may have a preference of how they want to get paid and there are obviously new, different ways to pay some of the real-time payment options that are emerging.
• 10:27
  Speaker 3: And so a business, as we look at these businesses, and if they're just working off of kind of, I'd say, the legacy way of doing things, they're often going to different ways to make those payments.
• 10:39
  Speaker 3: If it's ACH, there's a file that they might be providing.
• 10:43
  Speaker 3: If it's a check, they might be printing the checks themselves and putting them in the mail.
• 10:47
  Speaker 3: If it's a wire, there's a different system that they can go to to initiate a wire.
• 10:51
  Speaker 3: So each of those systems have their own processes.
• 10:54
  Speaker 3: Often it's outside of the ERP itself, so they're going to do something outside of their ERP.
• 11:00
  Speaker 3: So where we really focused is really helping the business work within their ERP systems, like the mid-market and the prevalent ERP systems that they work with, and so trying to make it as simple as possible.
• 11:11
  Speaker 3: So, really, what are they trying to do?
• 11:13
  Speaker 3: They're trying to pay a supplier.
• 11:14
  Speaker 3: So really, what are they trying to do?
• 11:16
  Speaker 3: They're trying to pay a supplier.
• 11:17
  Speaker 3: How they pay the supplier is a level of complexity that we can remove because the system, our system, can manage that.
• 11:21
  Speaker 3: So the business itself that's making the payment doesn't have to do something different, depending on how they pay, and they also don't have to be the one responsible for gathering supplier information and storing sensitive banking information and things like that within their systems.
• 11:38
  Speaker 3: That that can all be managed through a payable solution that helps them to do that, and even all the way to the reconciliation that that payment was made the supplier and getting that back into your ERP, so to be able to work from your ERP system, do what you want to do in the most streamlined way is really what we're striving to accomplish with our customers.
• 12:01
  Speaker 2: Okay, so, steve, sticking with you.
• 12:03
  Speaker 2: In early August, deluxe acquired Checkmatch from JP Morgan, which will help expand your Deluxe payment network.
• 12:10
  Speaker 2: The announcement can be found, obviously, on the website, but a few questions about it.
• 12:14
  Speaker 2: Why did Deluxe choose to do it, what does it mean for your clients and how does it fit into your overall payment solution?
• 12:21
  Speaker 3: So let me start by talking about what CheckMatch does, and actually Deluxe had a similar solution.
• 12:26
  Speaker 3: We call the Deluxe Payment Network and it's focused on the idea of when a business, or actually an aggregator, a company that's printing and mailing a lot of checks on behalf of many businesses, when you're printing the check and sending it, it's often going to on the payee or the recipient side, it's often going to a lockbox.
• 12:47
  Speaker 3: A lockbox is a service for businesses that receive enough payments in check that they've automated through lockbox processing, enough payments in check that they've automated through lockbox processing, and it's an efficient way to process those check payments and get that cash applied for the businesses that are receiving those payments.
• 13:03
  Speaker 3: So in that ecosystem, a check is being printed and mailed, received by a lockbox, and then it's being turned digital, it's being imaged, and so what we look to do is to fit in the middle of that and that's the same thing that Checkmatch was really working to solve and have a way to send a check, with any associated remittance, digitally to the lockbox.
• 13:27
  Speaker 3: So, instead of going through the United States postal system, we can deliver those checks in a much more secure and efficient and cost-effective manner, and the lockboxes are joining me because it actually saves them labor and time to receive those check payments digitally.
• 13:43
  Speaker 3: So really, when you think about sending a check, there's some risk inherent in terms of it goes through the postal system and it may take a varying degree of time to get to the recipient.
• 13:55
  Speaker 3: It may also have some risk of being exposed during the postal system.
• 14:00
  Speaker 3: It may also have some risk of being exposed during the postal system.
• 14:03
  Speaker 3: So these networks help to solve that by being a much more controlled time, faster, at a lower cost and in a much more secure way.
• 14:08
  Speaker 3: So both the locks and JPMC Morgan with their check match application, we're building these networks, signing up lockbox providers to join and through the acquisition now we are bringing these networks together and it's really about scale.
• 14:25
  Speaker 3: So what it means is now we have more lockbox suppliers using lockboxes in our network, which means we can get more checks through this network more efficiently as we combine the two networks and that's going to drive value for all participants.
• 14:41
  Speaker 3: The lockbox will get more digital, which saves them labor and time, and the partners we're working with that are sending the checks will be able to route more checks this way, more secure, at a lower cost, more efficiently.
• 14:53
  Speaker 3: So we're really excited about it.
• 14:55
  Speaker 3: We believe this can have important impact on the industry in terms of reducing check fraud and the risk associated with mailing check payments.
• 15:04
  Speaker 3: And we know there's still a lot of check payments because, again, it is something that's ingrained in many businesses' systems the pay-by-check, and you don't need to gather sensitive banking information or anything like that to send somebody a check.
• 15:17
  Speaker 3: You just need to know their address and how much you owe them and you can send a check.
• 15:22
  Speaker 3: So now we're allowing businesses to send checks more efficiently, at a lower risk, when they do choose to send a check.
• 15:30
  Speaker 2: So Heather over to you.
• 15:31
  Speaker 2: So what are some of the metrics that companies that adopt the AP solutions from Deluxe, what are some of the metrics that they measure and where do they see improvement?
• 15:41
  Speaker 4: So speed and accuracy are ways that our clients are measuring the benefits of using our solutions.
• 15:47
  Speaker 4: We're able to take a single file transfer and we will initiate payments on behalf of our clients.
• 15:53
  Speaker 4: We are sending payments to the vendors, we're verifying who's receiving the payments and we're giving the vendors payee choice.
• 16:02
  Speaker 4: So this improves the vendor relationship.
• 16:04
  Speaker 4: It improves efficiencies and manual processes are eliminated, and also reduces risk, which leads to a reduction in fraud overall, which allows these highly skilled finance team members to focus on more productive efforts to contribute to the bottom line of an organization.
• 16:25
  Speaker 2: Okay.
• 16:25
  Speaker 2: Well, let's turn to a subject that maybe doesn't get talked about a lot, and that's how getting payments right can lead to better vendor relationships.
• 16:34
  Speaker 2: We haven't really discussed that, so, heather, sticking with you, how does AP automation translate into improved vendor satisfaction and building those stronger, trust-based relationships?
• 16:46
  Speaker 4: Well, I think for our clients who are paying vendors, we're simplifying the process so they have ease in payment.
• 16:54
  Speaker 4: We're then looking at speed to pay, which is really important when you're negotiating terms.
• 17:00
  Speaker 4: If you're able to actually determine when a payment arrives, you're able to have strength in the relationship, strength in negotiations.
• 17:09
  Speaker 4: And then, of course, when we're giving vendors the option to receive payment however they like.
• 17:16
  Speaker 4: Do they want to process an e-card?
• 17:18
  Speaker 4: Do they want to receive an e-check?
• 17:20
  Speaker 4: Do they want an ECH transaction?
• 17:22
  Speaker 4: Some vendors don't want to share that bank information, but if they're able to actually log into the portal and provide this in a safe environment, then they're actually able to receive funds faster and more efficient manner and also be able to log in and verify payments and look at the history.
• 17:36
  Speaker 4: It's just all about creating transparency, meeting and exceeding expectations in those relationships.
• 17:42
  Speaker 4: And, again, when you're able to let the vendor really determine how that payment is processed, it's just a win for our clients.
• 17:54
  Speaker 2: Okay, so, steve Heather, this has been a great discussion so far.
• 17:58
  Speaker 2: Steve, if there's one key insight or piece of advice that you want Treasury and financial leaders to take away from this conversation, what would that be?
• 18:08
  Speaker 3: I mean from a business perspective.
• 18:09
  Speaker 3: I think the natural thing is to just keep forging ahead.
• 18:13
  Speaker 3: Here's another payment methodology we might start to use.
• 18:16
  Speaker 3: Some suppliers are looking for it, but if you just continue down the way you've been going, the complexity continues to grow.
• 18:21
  Speaker 3: And to take that step back and really look at what you're doing and why you're doing it, and is there a way to make this more efficient and manage your risk, whether it's the risk of fraud, the risk of storing sensitive information more effectively.
• 18:36
  Speaker 3: So that's really what I think is important for businesses to do Look at the bigger picture and where you'd like to get.
• 18:44
  Speaker 3: And then how do you get there?
• 18:46
  Speaker 3: Through solutions like Deluxe and others offer to the market.
• 18:50
  Speaker 2: Heather, same question for you.
• 18:51
  Speaker 2: What would your last piece of advice be to the audience?
• 18:54
  Speaker 4: I get it, change is difficult and sometimes just identifying a partner who has the experience, and sometimes just identifying a partner who has the experience, who's done this time and time again, who can help to alleviate some of the stressors, to simplify the process, minimize the load on the work, the work on the front end, to help you to have a better experience, and all of the things we've just talked about.
• 19:15
  Speaker 4: Just know you don't have to go it alone, that we're here to help.
• 19:19
  Speaker 2: Okay, great, steve Heather, thank you so much for being on the show today.
• 19:22
  Speaker 2: I know your time is very valuable, so thank you for being here today.
• 19:25
  Speaker 3: Yeah, thank you, Greg Pleasure.
• 19:27
  Speaker 2: Thank you, greg, and to all you listeners out there, I thank you for your time as well, and until the next story.
• 19:34
  Speaker 1: Thank you for listening to today's episode.
• 19:36
  Speaker 1: If you'd like more information on the transformative potential of AI and automation in modern finance, please visit wwwdeluxecom.
• 19:46
  Speaker 1: Slash receivables hyphen management.
• 19:48
  Speaker 1: Slash cash hyphen application.