Exclusive Q&A with Karla Friede, CEO at NVoicePay

Portland-based NVoicePay, is aiming to digitize the way B2B companies handle their accounts payables. We speak with Karla Friede, Founder and CEO at NVoicePay about the value proposition of going paperless, the challenges of serving large-scale enterprises, and changing the way businesses fundamentally do business.

Kevin Xu: Let’s start with a breakdown of NVoicePay.

Karla Friede: NVoicePay does something that’s simple at the highest level but sophisticated and powerful as you drill down into the workflow and value it provides. At the highest level, we make it very simple for enterprises, large or small, to pay invoices from their accounts payable department electronically, instead of writing checks. We have found the majority of enterprises today are still bound by paper process in accounts payable. Most are trying to find a way to move off paper based processes and get rid of paper checks. We make that process very simple. Our solution enables the customer to manage multiple payment types through one workflow; making it extremely efficient. We combine this with the services enterprises need to be successful, and provide Payment Optimization to ensure each payment is made in the most beneficial manner for the customer. Once companies move to electronic payment, they can truly streamline accounts payable, migrate off paper and get to a hundred percent electronic payments in one workflow.

Okay. How long have you guys been around?

We started NVoicePay in 2009. 2009 was a significant year, the technology landscape changed, cloud computing became a reality while the economy was in decline. Responding to rising needs from the marketplace, we built a cloud-based payment hub that allowed us to combine the services to make the customer successful at a price that is low enough cost that we can serve both mid-sized businesses and large enterprises as well.

What’s your business model like?

Our model is a low price transactional model. We make a little bit on the payment, so obviously we make more money as we have larger volumes.

How are businesses taking advantage of the savings; what’s your business proposition to them?

Its very compelling. Customers that move to electronic payments save 80 percent of the costs in their accounts payables. That can add up to a significant number including hard cost savings and time savings through increased productivity and efficiency, also customers can choose to use one of our integrated accounts payable cards, earning a rebate that increases that ROI.

The benefit for example, for a company doing $500 million in payables would receive benefits of roughly $500k a year.

It’s compelling for even mid-sized school districts. As in the example of our customer Downingtown Area School District they are realizing $50,000 a year in real reduction of hard cost and the additional rebate. This means they have more money to put back into the school program. It’s an important source for school districts that are constantly under pressure to do more with less and fewer resources.

So would you say your client base is more large-scale enterprise businesses or do you have solutions for small businesses as well?

We don’t serve small businesses today. For small businesses that are doing only a few payments, they probably are fine using traditional methods. But for companies that are doing thousands of payments a year the complexity and need is great — think about thousands of vendors, all with different payment method preferences and thousands of checks. The value proposition and the need to move away from paper based payments is greater for large enterprises so it becomes more compelling. We started with a focus on key vertical industries including automotive when we initially entered the market and we have since expanded to reach customers across all industries. We have customers today in many verticals including , manufacturing, distribution, retail, restaurant franchisees, hospitals. We have construction firms, school districts, non-profits and a little bit of everything today.

What are some of the unique challenges that B2B companies face?

Karla: The hard work in B2B payments is enabling vendors for payment. It’s called supplier enablement, and it’s critical to the entire process. Today, you could go to your bank and they say ‘sure, I’ll send an ACH for you.’ But then they’ll ask you what the bank account number and routing numbers are for where that ACH goes. And it’s the responsibility of the enterprise to gather that information and maintain it over time as it changes. Many solutions that are available today through banks or other vendors haven’t taken on the supplier enablement in a scalable way that makes it easy enough for enterprises to move to electronic payments. So it’s common to find enterprises with an ad hoc, piece meal approach to payments that ultimately leads to diminishing returns and ultimately greater inefficiencies. Enterprises might have adopted some kind of solution over time for example maybe they started with their bank’s payment card products or maybe they tried to do a few ACHs through their bank or maybe they even tried one of the solutions that was introduced early into the market. Those solutions — because they didn’t take on that enablement, have prevented the customer and the enterprise to wholly transition to B2B payment. At NVoicePay, what we do that is unique is we take on the maintenance of supplier information. We don’t just reach out and enable a few suppliers when the customers start with our solution, we do it continuously. We’re reaching out, enabling the suppliers, gathering the information required to pay them electronically, and then updating that information to ensure correct information is available to pay that supplier. What that means is more payments electronically and much less work for the customer. That makes NVoicePay unique. We maintain that supplier information we provide visibility into the payment through the entire payment lifecycle and we provide end-to-end payment support.

Okay. Yeah it makes absolutely no sense to carry boxes of papers around to pay people. You’re absolutely right.

They’re doing it today. Almost every enterprise we talk with today is moving paper around their building.

And it makes no sense

Shocking yes.

I’d like to delve deeper into some of the technology you’re using to carry out your payments, specifically cloud technology.

Our payment technology is built on Microsoft Windows Azure cloud-based technology. The cloud gives us a couple of benefits: One, it gives us the ability to drive down the cost of collecting and managing and updating supplier and payment information through time. It’s absolutely an essential part of our business model. Two, the cloud gives us something else, and that is a very flexible user interface. The customers that use our solution have visibility and control of their payments. This is very different than if you were using a bank based solution with very rigid requirement for how you submit a payment file and if one piece of information was wrong that entire batch of payments would fail. Our solution is interactive, it allows the customer and their authorized accounting rep to control and view those payments all the way through the process. And if a customer for example, wanted to stop or hold a payment, they have the flexibility to do that. the cloud gives us a couple of things- the ability to deliver valuable ongoing supplier enablement at lower costs, and two, the flexibility and control at the individual payment level.

Okay. Can you speak to some of the security measures you have in place? Payments and security go hand in hand.

Certainly. As a payment platform, NVoicePayconnects customers’ payment processes to the card network and to the banking network and provides visibility throughout. Security is the foundation ofour business. We are a financial services firm and our solution is PCI compliant which is the highest security standard in the payment industry. It was created by the card industry, but I expect that the banking industry will adopt that security standard. So we have in place that security standard, but we also built our technology and built our solutions with security in mind. We don’t send private information in our payment files. We collect information from suppliers at a single point in time, and then we lock that information up and securely store it, and match it to the payment information right before the payment is dropped into the banking or card network. NVoicePay’s solution is designed architected to be secure and we also adhere to those PCI standards,

Can you speak to some of the clients that you have and the feedback you’re getting? Seems you’re making things a lot easier for them.

The exciting thing about B2B payments is when somebody moves away from paper checks to electronic payments, its this amazingly wonderful feeling — kind of like in some ways going from paper and pencil to Word processing, and the freedom of that and that it brings. People are excited, accounts payable teams are excited that it makes their job more efficient, and CFOs are excited by bottom line results. our clients have in common really is the desire to move off paper, and to create a more efficient process and to drive costs out of their accounts payables.

Okay. Let’s shift to you a little bit, how did you start NVoicePay?

I started NVoicePay in 2009 with two other founders. Tana Law, our VP of sales who came out of the card industry, worked for Discover Cards for years. Shaun McAravey, who is our CTO and absolutely brilliant in terms of solving complex problems in a very elegant and simple fashion. We started NVoicePay in 2009, and when we started NVoicePay, we were thinking, why are B2B payments so hard? This shouldn’t be this hard. It’s ridiculous. We started with the simple idea that for businesses it should be a lot easier to make payments electronically. The idea of making it very simple and giving control to the customer. My background, I started in finance, moved into marketing, product management, worked in technology for twenty years in large companies and small companies. And so I had always wanted to start something and this was the opportunity at the time. But I have to say that 2009 was not a great time to start something. The economy was crashing, and the recession was hitting in waves across the country. But it was also a great time, I think, to start a new company in that it forces you to be very efficient with your resources, to make really good choices, to be really tough and scrappy at the early stages, and it forces innovation. Those are good things that have served us well through time.

Any advice to people wanting to start a payments company?

Karla: I don’t know that there’s one “best” way to start a company, I think there are multiple ways. But my advice for somebody starting today would be to get a product in to market as quickly as possible. To use as much of your own resources as you can, and establish customer success, customer pilot, and then go out and look for funding. I think those kind of companies are more successful as as they grow through time.

About Karla Friede
Karla Friede is Chief Executive Officer, co-founder, and member of the Board of Directors at NVoicePay. Friede has 20 years of experience in management, finance, and marketing roles in both large and early stage companies. Along with the founding team, she has grown NVoicePay into the leading provider of simple B2B Payments. Prior to founding NVoicePay, Friede was President and CEO of privately held Zevez Corporation; VP of Marketing for GeoTrust (acquired by Verisign in 2006); Co-founder of The Ascent Group, a strategy consulting firm serving technology firms in the bay area; Director of Marketing at Mentor Graphics, and part of the PBAS team at KPMG. Friede received an MBA from Harvard Graduate School of Business and a BS in Accounting from University of Idaho.