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US accounts payable payments-as-a-service company, Finexio, has raised $14 million in the initial close of its $30 million Series B funding round.
The company will use the new capital to expand its client base in the accounts payment and procurement software industry, grow its team, and accelerate product development.
The funding round, co-led by Mendon Venture Partners and National Bank Holding Corporation, puts the fintech’s valuation at $100m.
Discover Financial Services, Post Road Partners, The Banc Funds, and EOM Investments joined a mix of existing and new investors to participate in the growth round.
“This Series B growth investment comes behind Finexio’s already strong momentum in the market as the B2B embedded payments partner of choice for AP2P (AP and procure to pay) software and will support additional investments in API and infrastructure technologies to support large complex AP2P software and financial institution partners,” said Ernest Rolfson, founder and CEO of Finexio.
According to Finexio, three of the top 15 largest AP2P providers use its software as a service infrastructure, serving nearly 3,000 customers with $160 billion of B2B spending in the US.
In 2021, the group reported its revenue increase by 236% and its Gross Dollar Volume by 211%.
Finexio embeds B2B payment-as-a-service capabilities into AP2P companies, providing predictive payment and cashflow analytics, supplier identity and fraud prevention technology and exception processing automation.
Finexio builds on 2021 momentum
The initial close of the Series B round comes less than a year after it completed a $10 million funding round in January.
Kirk Wycoff, managing partner of Patriot Financial Partners, Finexio’s lead investor, had said, “the track record and impact of Finexio continues to impress, especially as it expands further into the embedded finance space and partnering with technology-leading financial institutions.”
Since the January funding, the company has added new partnerships.
Last week, Finexio partnered with payables automation provider, Scrypt, to offer a combined solution encompassing Scrypt’s AI-driven payables platform and Finexio’s cloud-based infrastructure for B2B payments.
In May, Finexio entered into a partnership agreement with Banc of California, agreeing to power the latter’s account payable B2B payment solution, Banc PremierPay.
Before that, the fintech company collaborated with the real-time accounting platform SoftLedger to release its new AP payment solution, SoftLedger Pay.
Firms see AP automation benefits but slow to adopt
Finexio’s capital raises highlight the growing opportunity for investors in the accounts payable space that has slowly begun to adopt digital solutions.
In 2020, Business Insider highlighted in its report that the $22 trillion B2B US payments market was still slow to digitise, with 36% of firms using paper invoicing, 47% relying on manual processes for approval, and 49% of payments made by cheque.
In a 2022 study on automation, Kofax found that among the 800 respondents, comprising C-suite level executives and business leaders globally, none of them had fully automated any of the “high-value workflows they report as being critical to their digital transformations.”
Despite the lack of adoption, 96% of the respondents believed that digital transformation would boost the efficiency of their operations, while 94% said it would lead to reduced costs.
Although firms have been slow to fully automate processes, account payables solutions have continued to generate interest from firms and investors.
Earlier this month, Capital One announced a strategic partnership with B2B payments platform Melio to launch a fully integrated accounts payable solution, enabling Capital One small business cardholders to pay their vendors and suppliers with a card directly from their business account.
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