AvidXchange held its annual user conference, Revolution 2018, in Chicago last week and we both attended the full conference and the pre-conference partner meetings. AvidXchange, a North Carolina-based provider of invoice automation and payment processes for mid-market companies, has experienced phenomenal growth in recent years. That alone doesn’t make it unique since the ePayables market is one with large opportunities for solution providers. What makes Avid unique is that it has generated such significant growth by focusing on the mid-market, making it one of the few in the industry to be able to do so. Last year, Avid added almost 700 new customers on the buy side and is approaching 6,000 total buy side customers; its Value Xchange network now includes more than 160,000 suppliers, and is adding 1,200 more each week. The impact of the network growth is most evident by the fact that new buy side customers joining the Avid network now see, on average, that 28% of their current suppliers are already active participants on the network.
Mike Praeger, Avid’s Founder and CEO, kicked off day one with a keynote presentation that outlined Avid’s key themes and strategies for 2018. Avid’s core purpose is to “revolutionize how companies pay their bills,” and for Mike, this means that his company has to provide the technology infrastructure to support the underlying business B2B payment processes of its customers. [Sidebar: the savvy industry analyst/expert and now Avid VP, Henry Ijams, likens what Avid is trying to do as becoming the BillPay service (that many consumers use to pay bills) for its customers with complete coverage of supplier payments.]
In 2018, Mike says that the company is focused on reimagining its business to become a platform that provides value to all network participants (buyers/payers and suppliers), while also extending its business upstream into procurement and full supply management. The opportunities ahead for the company remain largely greenfield ones where there is no current automation in place. Mike also expects that Avid will sign roughly 1,000 new customers in 2018, and believes that Avid’s transition to a full-fledged network provider, its more broad-based horizontal sales approach, and its ability to build out its supplier-centric value proposition, will be keys to getting there. Mike laid out three primary strategies for Avid in 2018: (1) Distribution and Scale (2) Expand Offerings (3) Build a Great team that we will discuss below.
Distribution & Scale
Avid checked the distribution and scale boxes last year when it announced a $300 million investment to help accelerate its growth and scale its operations. One of the lead investors in this round of financing was MasterCard, which also announced a partnership with Avid focused on delivering accounts payable and B2B payment automation to small and mid-sized enterprises. The exclusive partnership matches Avid’s expertise in delivering ePayables solutions to the mid-market, with MasterCard’s payment network and processing, specifically the MasterCard B2B Hub. The solutions are delivered via the bank partners, and while card solutions will play a prominent role, the focus of the partnership is to include the full range of B2B partners. The partnership opportunity remains massive and is a key part of Avid’s future growth.
Expand Offerings
Avid’s plan to expand its footprint was explained by a simple “Step to the Left and a Step to the Right” approach. The “Step to the Left” includes a move upstream to offer customers expanded spend management capabilities including analytics, contracts, and full Procure-to-Pay. Avid accomplished this via its acquisition and product integration of Ariett, a Massachusetts-based Procure-to-Pay solution provider that targeted mid-market enterprises. The first product integration, which was completed back in April, enables Avid to offer full P2P functionality to mid-market enterprises whose options were previously somewhat limited.
The second part of the two-step approach, the “Step to the Right”, includes a focus on adding value to the supplier experience via new offerings and services. This will be accomplished by providing enhanced invoice and payment visibility to suppliers via Avid’s Cashflow Manager solution, and providing suppliers with the ability to accelerate payments via Avid’s Invoice Accelerator solution. From the supplier perspective, Avid plans to add services built around payment delivery, payment information and financing services.
To continue to grow the network ecosystem, Mike believes that a balanced approach must be taken by the provider to deliver value and value-added services to all participants (buyers and suppliers). He defined the key network value drivers for suppliers as (1) enabling better and more timely information, (2) improving control, (3) providing a platform that supports sales growth, and (4) helping companies improve their business margins and economics. Likewise, Mike sees the key network value drivers for buyers as (1) helping to improve speed and transparency, (2) lowering operating costs, (3) reinforcing relationships and reputation, and (4) accelerating supplier enablement.
Build a Great Team
Avid has been in fast growth mode for the past few years and now has roughly 1,200 employees. One of the strategies that will help Avid onboard and optimize its resources is its plan to map staff into 4 key areas: (1) Growth Delivery to ensure the company continues to scale in proportion to, and in support of, its top-line growth (2) PMO to ensure that high-impact projects are well-designed and well-executed (3) Corporate Operations to manage overall growth and (4) Customer Delivery to ensure customer retention and drive customer satisfaction.
Final Thoughts
Small and Medium-sized companies beware, AvidXchange is coming after you – and, that is a good thing! Avid is laser focused on providing a mid-market payments network with upstream (procurement), AP automation in the middle, and downstream (Supply Chain Finance) services. They are one of the few successful players in the mid-market, and are uniquely positioned to become a major player in this space. Avid has a very strong partnership with MasterCard that will help fuel opportunities for its growth, including expanding its bank partner base, improving payment options and adding new supply chain financing options. As Avid grows, so will its network. Network growth presents new opportunities over the long term for Avid to provide additional benefits for both buyers and suppliers, such as 3rd party value-added services. The AvidXchange Revolution 2018 customer conference was a well-attended, high quality event. From everything we saw and heard at the conference, Avid seems to be headed in the right direction to capitalize on the underserved mid-market.
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