TATC Ep 2- Apruve A New Credit Management Process for B2B Ecommerce

TATC 02 | Apruve

On today’s episode of Thriving at the Crossroads, I introduce Michael Noble, CEO of Apruve. He’ll introduce us to a new concept- credit management as a service. We’ll discuss easier and better credit management for B2B eCommerce.

More details on Apruve can be found here: https://www.apruve.com
In the second segment of the show- I will review Anthony English’s LinkedIn article challenging how we need to see projects from the eyes of business users.

Apruve – A New Credit Management Process for B2B Ecommerce

Hello, fellow Thrivers. Welcome to episode two. I’m Amber Christian, your host. It’s a beautiful fall day here in Minneapolis. Today, I had the opportunity to interview Michael from Apruve. Apruve is in the process of making credit management a service, taking some old archaic processes and bringing them up to date. Welcome to the show, Michael.

Thank you. I appreciate you having me.

Michael, tell me a little bit about Apruve and tell me about the industry problem that you guys are working on.

We are a software platform that manages credit programs for B2B merchants. One analogy that people use in the retail space, lots of people have custom branded credit cards, the Macy’s card with a Visa logo on the front and a US Bank logo on the bank. We’re the Visa component but designed for the way businesses buy things from one another. We use third party banks to underwrite and finance all the invoices generated by our customers in order to get them out of the whole credit risk equation.

The big problem we’re solving, it’s a very classic software eats old school back office issue. When businesses buy from one another, they do so on terms, that’s pretty standard stuff. They have a room full of humans doing accounts receivable. They’re getting credit applications faxed to them. They are manually doing collections and invoicing. The CFO of that company is extending his own cash or their own cash for 45 days or so, waiting to get paid. It’s a very cumbersome process and it’s a very expensive one. We wrote software that automates that entire AR component and then we use third party banks to, as I said, eliminate that credit risk and our sellers can extend terms to their customer but they get paid within 24 hours and completely get out of the whole collections credit game.

It sounds like you’re really at play in the DSO space. You can really take them from having all that AR on their balance sheet to effectively eliminating that, from what I understand of your process.

TATC 02 | Apruve

Apruve: As far as the seller is concerned, whatever they just sold has been paid for.

Absolutely. The receivable goes away. As far as the seller is concerned, whatever they just sold has been paid for. That’s how it shows up in their books and that’s how it shows up on their balance sheet or it doesn’t show up on their balance sheet. We’re taking the collections risk in managing that customer and making sure they extend terms. Sellers need to extend terms. It’s a competitive advantage for them to do so. It’s much harder for your customer to go to a competitor if you’re extending terms to them. It just is a painful process to manage. We’re out to make it easier.

Someone that’s actually going to integrate it and work with your platform, walk me through how that fits in and how does that work with some of their legacy systems. Can you talk us through the process and where you pick up and how it fits in?

Our first version of the software, we wrote for eCommerce. When business buyers are purchasing online, there’s a ton of friction between the buyer and the seller when they want to buy on terms. eCommerce platforms were written to collect credit cards and to collect payment at the point of checkout, where when you’re buying on terms you’re not actually doing that. Our first point of integration is with various eCommerce platforms. We have an open API and we’ve written extensions and plugins for a number of eCommerce platforms, from Magento, Shopify, WebSphere, Spark Pay, BigCommerce and a ton of others. Hopefully, Hybris is on our roadmap here in the next few weeks.

Our second point of integration is with the ERP for orders that are placed offline. If a buyer is actually making a purchase through the phone with a sales rep or through fax or some other old archaic method of B2B ordering, which is still very prevalent today, our API integrates with the ERP in order to manage and finance that order. We have a separate process that is non eCommerce related in order to do that.

It’s amazing how we have not managed to kill the manual order or the fax, in my business too. How often is fax the backup? It’s reality.

We walked into credit departments and seen like three or four fax machines just sitting in the back and people trying to read them. That’s the other amazing part. There’s still bad. It’s still bad technology.

Exactly. Like, “What does that say?”

It was never good.

Exactly. In terms of customers, because I’m talking with a lot of startups, in terms of your customer base, I like to walk people through just transparency and where you’re at. Because for a lot of companies, things are about simply planning how integrations work. You’ve got this great new way to actually eliminate DSO, which is usually promising. Anybody coming through some of those eCommerce platforms and things. At the same time, I will hear people say, “Do they have any customers? What’s an integration look like?” Let’s talk through where you’re at in your customer base. I have my rating scale, my ABC, which is alpha beta customer, for our listeners. D, which is I’ve done it at least once, somewhere between one and five times. E is an existing customer base of at least five. You’ve really got this down to a science. Tell me a little bit more about where you’re at in the customer space.

We’re probably in the D range but growing quickly. Our pipeline has really accelerated lately as our team has grown and we’re able to market more effectively. We have our first Fortune 500 going live, knock on wood, January 1st. That will help. We’ll be able to publicize who that is at that time. I think it’ll go a long way toward continuing our acceleration.

What you’re really saying is people should stay tuned for that announcement in early January as we go live.

Our customer base, we have a number of smaller customers up and running as well. Having a more reputable name is something all startups I think aspire to. It’s a great case study for us moving forward.

Absolutely. It sounds like you really proven the motto with the smaller companies first, done a fair amount of learning and are working your way up. Is that an accurate statement of your strategy?

TATC 02 | Apruve

Apruve: You need to cut your teeth somewhere and there is no smooth and easy path without customer feedback.

I think that’s a standard path for a lot of startups, especially in the B2B space. You need to cut your teeth somewhere and there is no smooth and easy path without customer feedback. You need that in order to continue to crawl upstream.

How does your customer feedback process work as you’ve been iterating through this? How deeply involved have some of your first customers been in your processes?

We look for feedback anytime we can get it, positive or negative. We have a support line, we get a lot of emails to that. Less phone. We get a lot of feedback just within the sales process as we’re talking to prospects and learning. One of the challenges in B2B is that everyone’s different. Various verticals work differently with each customer type and everyone has an existing process that they want us to adapt to. Part of our challenge is saying yes to certain things and then the other part is saying no and trying to really solve the problems we can solve. A lot of the times when you get into things with big companies, they will ask for the world. It can drown you.

Or you can end up with something that is unsaleable to the next customer. If you don’t know your boundaries and you aren’t careful about your boundaries, sure, you might solve it for one customer but where does that get you in the long run? It sounds like you’ve got a pretty good handle on where you want to be overall in the market and in terms of what you’re trying to accomplish.

I think so. We’ll always continue to evolve, especially as we grow.

Where do you see or where do you get the greatest interest? When people contact you, is there any one particular piece that they say is the worst part of the process that they’re really looking to get rid of? What do you hear? Because there’s a lot of components you talked about in this process, but what are the worst pain points that you hear from customers?

I think one in terms of big customers that we talk to or big prospects, the one that jumps out in my mind is their ability to manage smaller accounts. It costs just as much to manage a smaller account as it does a larger account, but the return is less. It’s a great candidate for automation, to go and attack a subset of their customer base first. The other universal pain point for a lot of B2B companies is figuring out eCommerce. They’re all trying to do it and they’re all trying to move their customer base there. The buyer profile is changing, their buyer is becoming someone who doesn’t know what fax machine is. All they know how to do is order on Amazon.

TATC 02 | Apruve

Apruve: It’s a window to really go out and make your business better as a whole, not just the order management piece.

If as a B2B company, if you aren’t catering to that need, you’re going to be losing business. If you launched this eCommerce site and it’s supposed to be the next greatest thing and it’s efficient and then all of a sudden, you present a credit app for them to fax in, you just created a ton of friction in the sales process and you basically reverted back to managing things the old school way. If you really want to make your business more efficient through eCommerce, eCommerce opens up this window to find new areas of efficiency in other aspects of your business. For us, it’s the way you manage credit programs. That’s my message a lot to some of these B2B guys that are just trying to figure out eCommerce, is that it’s a window to really go out and make your business better as a whole, not just the order management piece.

I think you’re right. When you have to go back to these paper processes and faxing things, it just disrupts the process.

Tons of friction.

It introduces errors and various problems. Did I get the form filled out right? I go back and forth twelve times because, “Oh, I missed this field, now refill this out again and re-fax it to me.” They send it again. I think you’re right. It’s an interesting thought process of you’re removing the bottlenecks in the credit management process. That’s what I really think I’m hearing, and the back and forth. Then you can essentially enforce that they’re actually followed and get everything right or at least closer in the first try in that process.


Sometimes I hear people say, if you’re working with smaller businesses, we talked about some of the smaller companies might have less ROI, you have to expend similar resources associated with them but they may have smaller ROI. In the space I work in, often they say, “Small businesses are hugely resistant to electronic payment types, moving to electronic payment types.” Which I’m not completely convinced of that myself to be honest. I think it’s more of an education conversation. Do you find small businesses averse to necessarily moving to ordering and self-service and especially even around this credit process, is there much pushback from the small businesses?

It depends on the vertical.

Expand on that a little bit. Share some lessons learned there.

A restaurant works different than a hospital. Hospitals are more familiar with various forms of EFTA and procurement and whatnot. We have two prospects right now that sell fruits and vegetables and food commodities to restaurants. Some of these restaurants are still just very, very old school in their ways and their process. With Apruve, we still let people close an invoice with a paper check. That’s part of our process actually. We knew that if the customer wants to pay, we’re just going to take their money.

You need to get the money.

Paper checks still exist. I think last year 20 billion were written in the US, which is four times what all of Europe wrote. We still hold on to those for whatever reason.

For a variety of them.

In the B2B world, one checkbook is a way to control cash. For a small business especially, keeping it in that drawer is a way to make sure that people aren’t spending …

Dipping in the toes, so to speak.

TATC 02 | Apruve

Our value is to the seller. We want to make the seller’s customer happy.

Non judicially or whatever it is. Our value is to the seller. We want to make the seller’s customer happy. We eliminate that DSO for the seller, we manage their whole credit program. If the customer wants to pay by check or carrier pigeon or whatever, we’re going to figure out a way to make that happen. Checks are actually sent directly to the bank who’s doing the financing. As our electronic funds transfer, we’re not involved in that process. Apruve, when you think about it, we’re just a really efficient way to deliver a receivable to be financed. It happens to be in this program with a corporate account. Buyers will continue to adapt electronic payment methods for sure. Today, the reality, if people are being honest, is that checks are still being cut in a number of verticals for certain things.

It also strikes me, we talked a lot about the credit as a service, even as we’re expanding on this and the whole collections process, that for certain companies, by getting out of the receivables business and effectively getting the cash from you, the charges and things that occur with that, but then as part of that, they also get rid of the cash application headaches because that goes to someone else. That’s effectively part of what’s being paid for and that gets collected separately. If I’m a customer that has an electronic payment that’s eventually being received for that receivable and there’s no remittance on it, it’s not my headache as a corporate anymore because you have given them that cash. The efficiencies as we’re talking through this, I see is even more than the credit as a service and in eliminating the DSO, the headaches in the cash out process. There’s a productivity play here as well.

Absolutely. I gave the Macy’s card analogy. To build on that, all of these retailers rolled out these programs in the 80s. That was when it started. Saks card and the Macy’s card and the Sears card and all this stuff. Fast forward to today, those programs still exist but they are not managed by the merchant. It became very clear to them and their investors, because most of them were public companies, that carrying these receivables on their balance sheet was not a sound practice, and combine that with the overhead and cost around managing these things and that just became untenable. That’s where Visa came in, that’s where Wells Fargo and US Bank and Citi Group came in to fund these programs and manage them for the retailers. We’re playing off that same paradigm but in the B2B space, not the consumer side.

Fantastic. Wonderful. Thank you so much. This is fantastic information. Before we wrap things up, I do have a final question I like to ask my guests. Please tell me your favorite travel destination you’ve ever been to and why.

I would have to say Japan. I went to Tokyo. I was traveling by myself, I just ended up having random adventures with random people, a bunch of US Marines. I ran into the crew for Australia’s version of Air Force One.

Very cool.

The pilots and the cabin people and the engineer that flew the Australian Premier to Japan for a conference or something. We went out. They’re Australians, we had fun. I went up to the mountains. I found one of the best sculpture gardens I’ve ever been to, sat in a hot springs with a bunch of old Japanese guys. Fun. It’s a beautiful country, beautiful food, clean, respectful. I just loved it and I can’t wait to go back.

Fantastic. Tell our listeners where they can find out more if they want to track you down or if they want to follow you, how do they get more information?

Apruve.com is our website. My email is just Michael@Apruve.com.

Fantastic. I’ll include this in the show notes as well so people can click on that and get more information.


Thank you so much for joining us.

Thanks, Amber.


Industry Article Review

Welcome back to the second segment of our show where we feature an interesting industry article I’ve read in the last week. Today’s article is a LinkedIn post published by Anthony English entitled IT Projects and Business Value. Anthony starts out the article talking about how when large enterprises have a problem, IT has the solution. Well, sometimes. I think he’s really right in his assessment of the problem. Often we can try to use technology but miss the business problem that we’re trying to address. This is what Anthony talks about in this article.

TATC 02 | Apruve

Why is it that sometimes IT projects could be technically successful but completely fail to address the underlying business problem they were meant to solve?

He says, “Why does that actually happen? Why is it that sometimes IT projects could be technically successful but completely fail to address the underlying business problem they were meant to solve?” It often happens because we don’t ask the question about what exactly the business problem is. Think about it. These large massive budgets get put together for these projects and they’re a myriad list of business problems that we’re trying to solve. It becomes very difficult to actually see and know, what is the underlying problem that really has to be solved as part of a project?

Anthony goes even further and says, “Before you undertake a project, before you bring in those external consulting resources and experts on a particular technology, that there’s certain questions that need to be asked. Some of the best consultants will actually ask you these questions before you start the project.” The questions that you should address are things like, why is it a problem that has really become an issue? What is it about it now, not six months ago, not six months from now? What is really the urgency? How painful is this problem? Have you tried to fix it yourself? Can you fix it yourself? Would you fix it yourself?

Only once you’ve addressed whether you can handle all of these or what the answers to these questions are should you actually go forward with hiring external consultants. It really changes the dynamics about when you’ll bring in third parties and puts you in the forefront and the driver’s seat to make sure you clearly understand the business reason that you’re undertaking a project. The whole concept really is if you know where you’re going, you’ll have a better idea of whether or not you’re on track. I think this is good food for thought. It’s a good way to step back, look at why are we undertaking these problems in the first place and be more articulate and thoughtful about the reasons so that we as organizations are all moving toward the same goal.


How to find the podcast:

We are currently available in the following locations:

iTunes store

Google play music


Subscribe to our podcast feed to hear when the latest episodes are releated: http://tatcshow.libsyn.com/rss
Listen to our latest episode of Thriving at the Crossroads

By | 2018-01-31T17:41:13-05:00 November 2nd, 2016|