Upflow, a French startup we’ve been covering for quite a while, originally focused on managing outstanding invoices. The company is now announcing a shift in its strategy to become a B2B payment platform with its own payment gateway to complement its accounts receivable automation solution.
Like many software-as-a-service products, Upflow started by building a central hub specifically designed for one job in particular: CFOs. From the Upflow dashboards, CFOs and finance teams could see all their company’s invoices, track payments, communicate with team members, and send reminders to clients.
It integrates nicely with other financial tools and services to automatically import data from those third-party services. And a tool like Upflow can be particularly important as many tech companies struggle to raise their next funding round and want to improve their cash balance.
But that was just the first step in a bigger roadmap.
“Basically, my vision has always been that the real problem is payment methods,” Upflow co-founder and CEO Alexandre Louisy (pictured above) told TechCrunch. “Today, when you pay in a store, you pay with your phone. When you pay for your Spotify subscription or your Amazon subscription, you don’t even think about how you pay.”
“But when you look at B2B payments, the way you pay today hasn’t changed in the last 50 years. And for us, that’s why people struggle with late payments. The thing I’m really trying to fight against is the idea that late payments are linked to bad payers.“
According to him, around 90% of B2B payments still happen offline in the U.S. It’s still mostly paper checks. In Europe, it’s a different story as companies have adopted bank transfers. But transfers “are completely unstructured and require manual reconciliation,” Louisy said.
Upflow sells its accounts receivable automation software tool to midsized companies with a revenue between $10 million and $500 million per year. The company’s biggest client generates around $1 billion in annual revenue.
“But when you ask [CFOs], ‘What’s your strategy for setting up direct debit on part of your customer base?’ They don’t have a solution,” Louisy said.
Upflow helps you set up incentive strategies so that a portion of your client base moves to online payments, such as card payments or direct debits. The idea isn’t that all your clients are going to pay with a business card overnight. But Upflow can help you change the payment method for something like 20% or 30% of your client base.
Just like CRMs help you manage your sales processes with clients, Upflow now wants to be a financial relationship management (FRM) solution. It’s an interesting strategy as it shows how a startup like Upflow is thinking about diversifying its revenue sources.
“With our model shift, we’re moving from a model where we are 100% based on SaaS revenue to a hybrid model where we have SaaS revenue and payment revenue because we have our own payment gateway that we’ve set up with Stripe,” Louisy said.
Payment is the second brick in Upflow’s product suite. Up next, the company plans to integrate financing options with B2B “buy now, pay later” payment methods on the supplier front and factoring for a company’s outstanding invoices.
“We evaluate solutions … that provide embedded finance,” Louisy said. ”It’s not our core business to perform risk assessment. On the other hand, what’s interesting is that we can bring them useful data for credit scoring that they don’t necessarily have when they just connect to one of our users’ accounts.”