Although finance teams ultimately control budgets within their companies, investment in technology under the CFO has been limited — at least until recently. This is confirmation Tesorio CEO Carlos Vega, who notes that before the pandemic, most cash management operations were run in spreadsheets and Word documents.
Cash has become the number one priority for all institutions. The industry’s main contender is the inertia of doing it the old-fashioned, though manual, error-prone, and very inefficient way… Suddenly, [tools like automation] It has transitioned from a vitamin to a pain reliever,” Vega told TechCrunch via email. “At current inflation rates, companies are losing more than 2% in real terms every 90 days they sit on their receivables. That might not sound like a lot, but for a mid-market company with a receivable balance of $10 million, that costs them $210 per quarter or the equivalent of two employees for a year.”
Of course, Vega has a product to promote – Tesorio sells automation solutions designed to help customers manage their accounts receivable. But at least one source supports his claim that automation can transform accounts receivable workflows for the better. In April 2022, American Express and Pymnts.com published a survey that found that about two-thirds of companies with automated accounts receivable operations benefit from Enhanced Days Pending Sales (a measure of the average number of days it takes a company to collect payments after a sale is completed), while About half said they had lower lag rates.
“Historically, the accounts receivable process has been driven by tribal knowledge within the accounting team,” Vega said. They “know” based on personal experience that a particular customer always pays “X” days late and another customer delivers on promised payment deadlines, while another set of customers can be relied upon to pay early when asked. If someone leaves the company or is abroad on vacation, that data will be lost.”
Tesorio tries to capture this knowledge by using AI models that look through a customer’s payment history and predict exactly when they will pay. Vega co-founded the company in 2015 with Fabio Fletas, whom he met while studying business administration at the University of Pennsylvania’s Wharton School.
Tesorio was originally focused on supply chain financing, helping companies save by paying small and medium-sized business sellers early. But a year later, the startup focused on “a direct service to payroll companies,” as Vega puts it.
Investors seem to favor this move. Today, Tesorio closed a $17 million Series B round led by BAMCAP Ventures with Posting from Madrona Venture Group, First Round Capital, YouTube CEO Susan Wojcicki and her sister, co-founder and CEO of 23andMe Ann Wojcicki. Floodgate, FundersClub, Hillsven, Mango Capital, Carao Ventures and Xplorer Capital also contributed, bringing Tesorio’s total to $37.6 million.
Businesses can use the Tesorio platform to automate parts of their accounts receivable workflow. Image credits: Tesorio
“I’ve spent about a decade working in finance, most recently at Lazard Investment Banking in Latin America. I co-founded a factoring company as a side business to fund receivables for small and medium-sized businesses. However, it looked like payday lending to a business and wanted to find A better way to help businesses with cash flow,” Vega said. In March 2017, [the modern] Tesorio is reborn with Couchbase and Veeva Systems among our top three customers. “
Tesorio customers can connect their ERM and CRM systems to the platform to train the payment prediction AI models mentioned above. Training takes about 30 days, Vega says, with the average set-up being around 5 days.
“The models … are able to train themselves by looking through our entire data set from the anonymized billing history, spanning billions of transaction volumes, to further improve and improve forecast accuracy,” Vega added. “If companies can get paid when they expect it, their cash flow becomes more predictable so they can better plan for their growth, become more resilient, and can do their own job without relying too much on outside sources of capital.”
Tesorio also allows customers to create email reminder templates and self-service payment gateways. And on the back end, the platform hosts digital workspaces that allow teams to share notes and aggregate accounts receivable data in one place. From workspaces, teams can also track metrics and monitor cash flow performance, either using ready-made reports or creating their own from scratch.
Lots of vendors compete for business in the accounts receivable management space. There’s Upflow, Tipalti, and Quadient-owned YayPay, which offer software-as-a-service products that focus on getting paid for bills due. Yaydoo aims to simplify groups at a larger scale. Another startup, Churpy, recently raised $1 million to help companies settle and manage payments across Africa.
One notable challenge facing Tesorio and its competitors is persuading companies that they need the software. It’s a hurdle in any industry, but especially in finance, where teams are more likely to see their operations modern enough. according to study By Billtrust, while 86% of accounts receivable teams rate their department as “very” or “somewhat” modern, 40% do not offer self-service capabilities while over 60% have not digitized the majority of their bills.
Vega believes economic headwinds may help Tesorio’s case. Although the startup isn’t yet positive in terms of cash flow, Vega claims to have more than 130 clients, including Slack, Box, Twilio, GitLab and Bank of America.
This funding comes after a third consecutive year of triple-digit revenue growth. “We expect the strong growth trend to continue over the next two years, especially with the market’s renewed focus on cash flow,” Vega said. “Although the current economic climate with inflation and rising interest rates has given pause to decision makers regarding spending, it actually highlights the value of Tesorio in a big and positive way. In a world where cash is the feature and the cost of capital is no longer token, the Having a product like Tesorio that enables an organization to free up and manage its money more effectively is more important than ever.”
Vega says the proceeds from Tesorio’s latest funding will go toward expanding the company’s market access and product development efforts, growing its team from “north of 50” employees to about 90 employees over the next year.
