Case study: SmartShoot’s financial transformation
By Chen Amit, CEO of Tipalti
July 16, 2018
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By Chen Amit, CEO of Tipalti
July 16, 2018
https://www.accountancyage.com/2018/02/08/best-accounting-software-businesses-uk/When organizations think of financial transformation, it often involves adding some automation tools or hiring staff. Very rarely does it involve completely reforming the company while also reshaping the economics of an entire industry. Yet this is the story of SmartShoot, a fast growing marketplace with a simple premise: enable the on-demand creation of photo and video content through a large, global network of freelance photographers and videographers.
In the company’s original iteration, the approach was to enable businesses to book and hire video and photo services from a cadre of freelance providers. With small businesses needing to showcase their businesses on Yelp and other reference sites, the company grew quickly. But its operations were entirely manual, with large support staff in both accounting and customer service, so management decided to wind down its current infrastructure.
With those lessons learned, they relaunched SmartShoot, reestablishing itself with automation in mind, knowing that was the proper way to scale the business. Today, the company is completing over 20 times the number of monthly jobs without support staff, effectively achieving a 40-time productivity improvement as an organization.
One major finance problem from their previous company was that accounts payables mechanics ate directly into their profitability, particularly the operations of paying worldwide partners en masse. After every completed job, the filmmaker would send a PDF invoice that had to be manually keyed in to their accounting software. Someone would double check invoices, then another would have to schedule a payment run. They’d make payments through their bank, through manual print-and-sign checks, and through PayPal for international payees. And of course, they’d have to reconcile this accordingly. This effort was substantial, as nearly 20% of its network was international. John Pfeister, their Head of Finance, estimates it took almost two full days of effort per month for payment runs just at the 500-job workload. Imagine increasing those hours to keep up with 5,000 jobs every month.
Today, SmartShoot leverages payables automation technology that streamlines multiple phases of the process. A single system encapsulates filmmaker onboarding, collecting and validating their tax identity information for compliance, scheduling payments (including across ACH, eCheck / Global ACH, wire transfers, and PayPal), notifying payees about payment status, and reconciling results. With their custom backend, they’ve also replaced the invoice process with a streamlined and automated order-to-booking-to-completion workflow that drives payment runs into their payables automation system. They’ve also been able to enter new countries that weren’t sufficiently serviced through PayPal, and they’ve minimized their costs throughout.
Automating payables has reduced time spent communicating with their partners to resolve payment issues. It also enables the entire payment operation to be managed in a single location, rather than dispersing it across several point solutions or banking rails.
This lean operating model has also reduced the need to raise funds to the extent that other startups require.
“We didn't really want to follow the traditional path of a lot of tech companies, which is grow then raise more money to grow,” says Pfeister. “We want to run just ahead of profitability and self-fund as much as possible. To date, we've only raised $750,000.”
Much like how Uber and Lyft have reshaped the economics of ride-share services, one unique aspect to SmartShoot is how it’s changing the economics of “hired gun” photography and videography services. Because much of what they do is in the service of scaling the operation, they’ve signed package deals with companies like delivery and real estate services, meaning a cheaper “per shoot” cost. At first, this rankled their partners, as they’re accustomed to being paid more for their services.
But the way SmartShoot alleviates that is by providing a larger volume of work, while also making the process as frictionless as possible. By removing the headaches around booking, as well as from payment processing, they’re able to keep their supply chain happy. In fact, the added transparency in how they’re paid, as well as potentially adding early payments later, are ways in which they can maintain a strong ecosystem of providers.
Pfeister is the only finance person at SmartShoot, and one of the keys to that has been the automated payables process. He’s overseeing payables, receivables, tax, HR, corporate development, financing strategies, planning & analysis, all with the focus around enabling the company to grow, scale, and operate as lean as possible. And it’s allowed Pfeister the ability to focus on more value-added areas of the business.
“When my CEO comes to me with a new project, he doesn’t want to hear ‘Oh, I need to process payments,’” says Pfeister. “I now have time for all the other strategic initiatives that help us grow.”
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