Why would Coupa take on the corporate payments market? A look inside Coupa Pay's big push

July 3, 2019

Dyslexia mode

Summary:: At Coupa Inspire, Coupa declared their seriousness on e-payments with a series of Coupa Pay announcements. But why is Coupa doubling down on Coupa Pay? Where do they see potential where others have struggled?

At Coupa Inspire 2019, I asked customers for their take on Coupa's moves with Community Intelligence and Coupa Pay, some of which you can see in World Vision Canada on the art of modernizing procurement - and their views on Coupa Pay.

But I left on something of a cliffhanger:

Why would Coupa move into a market like e-payments, which has roughed up many companies already?

On the final day of Coupa Pay, I put that question directly to Ravi Thakur, Senior Vice President, Business Acceleration at Coupa Software (pictured right). Thakur told me:

We started the journey with Coupa Pay about 18 months ago. We started with early pay discounts, moved on to virtual card for purchase orders, and what [CEO Rob Bernshteyn] announced yesterday is general availability of invoice payments.

There are specifics in terms of which new payment features are available when. Before I get to those, why did Coupa double down on payments? And why have e-payments turned out to be a difficult terrain for vendors? Thakur responded:

I think what you're asking here is, "Why are people getting payments wrong?" The only people who have tried it have been the banks. The banks have been trying to do it, and they have been doing it. The challenge is the bank will do it for their bank. But for any company that's operating globally, you're going to have multiple bank accounts.

What about the fintech disruptors?

Some of the fintechs like PayPal have been around for a bit. They're handling things in a very specific way. There's a firm that we're using - a technology company called Conferma, that helps us with the virtualization of the cards. TransferMate, who I mentioned earlier today - they've been working over the past decade to get the banking licenses they needed to get to where they are today.

Coupa Pay - behind the announcements

The opportunity has arrived:

What's happening is these infrastructure companies are starting to come up, and we can now start to leverage them in ways that haven't been available in the past.

Which brings us to the latest Coupa Pay announcements:

More specifics: Coupa announced the general availability of invoice payments. Citi payments is available now for virtual cards on purchase orders. The Paypal integration is coming "soon", though an exact timeframe was not yet provided. Invoice payments via virtual card are also on the way, and will be incorporated into the other banking partnerships. Gist: Coupa is looking to ease payment friction by providing customers with a host of options, aka "payment rails," for what they need to address - rather than trying to force fit onto one rail.

But there's a bigger problem Coupa needs to solve here. Even if an e-payment provider figures out how to handle multiple rails, that's not the heart of it. It's really a workflow problem. Thakur:

Payments is really about AP automation. A lot of these payment companies, they have the ability to upload a payment file, but they're not solving the manual aspect. You're still manually dealing with AP and with Coupa.

If you don't automate that workflow, you've got a modest improvement at best:

A very modest improvement. So what we're bringing to the table is: we already have best in class AP automation. Then even being able to bring some of those payment rails back to a purchase order. In the future, we're going to be doing employee expense reimbursement. We've bringing the breadth of the different aspects of how we can pay, to the different core elements within Coupa.

Coupa Pay and community intelligence

There's one more piece of this, the so-called "community intelligence" theme Coupa was pushing across products at Coupa Inspire. Thakur sees the potential in payments as well. Example: fraud detection.

At the conference so far, customers have been asking us, "Tell me about fraud detection," or those types of risks. The biggest differentiator for us is: once we get this flywheel going around, getting customers onboarded and doing transactions, now we can look at a supplier. Now I can tell you that suppliers' bank account information has changed recently - not only for you, but for other people in the Coupa community.

If it has changed for you, but not for anyone else, we know that's a red flag. We're going to flag that payment make sure you don't pay it. There's this whole data and AI aspect around our community that we're going to be able to leverage, to help people de-risk the whole concept of payment.

As for public use cases, it's still early days. But Thakur shared a story from an early adopter:

One of our customers for early pay discounts, they went live about eight months ago. The thing with Accelerate is you get an invoice, then the supplier determines if they're willing to take a discount, and then the buyer determines if they want to pay early in order to get the discount.

So for this particular customer, with no supplier enablement yet, day one of going live they had about 700,000 invoices immediately present themselves, as suppliers wanting to take payment early for a discount. These suppliers already set themselves up on Coupa with global preferences, where they were saying for other buyers, they'd be willing to take these discounts. Our customers flipped the switch, turned early pay discounts on, and said "Wow, here's all these invoices I can pay early."

My take - SaaS should deliver on aggregated data

Coupa argues that Business Spend Management (BSM) is an entire category, as relevant to companies as CRM and ERP. Coupa Pay will be a good test of that view.

You can see how Coupa's existing customers, who speak highly of Coupa's UX, would give this a hard look. That's similar to what World Vision said to me - and with 4.6 Coupa apps per customer, there is fertile sales ground to build on. Whether Coupa Pay will draw in net new customers is a question that will have to wait for now, but it will be a good one to revisit at next year's show.

Other aspects of Coupa's Community Intelligence functionality have already been adopted by customers; I tweeted a memorable example.

I like Coupa's push to deliver on so-called "true SaaS." No, Coupa is not the only SaaS company to bring aggregated insights back to their customers. But Coupa wants to prove that turning data back into "smart actions" customers can use, with the aid of "AI" and automation, is the way forward.

I like this approach because it pushes vendors who waffle on multi-tenancy to show how they can deliver this same kind of crowdsourced intelligence - or fall behind. Now let's see how the Coupa Pay use cases pan out.

There are potent questions on how much the payment scenarios of the future can be automated - and what role for humans will remain. Thakur and I talked through that a bit, but for now, the level of automation should fit in with the goal of making procurement pros more strategic - not replacing those teams entirely.

Oh, and for those wondering about Coupa's aggregated data and opting out, Coupa CMO Chandar Pattabhiram confirmed that any customers can opt-out of community intelligence, benchmarking and other aggregated features. The vast majority choose to remain opted in - but opt-out should always be an option in these SaaS scenarios, so that's a good practice.

Updated, 1pm July 5, with additional links and a few small tweaks for readability.