By: Felipe Rivas
2 min read May 2020—Charlotte-based AvidXchange is looking to reduce paper for middle-market companies by providing a full suite of accounts payable and payment automation solutions to businesses across the country, a trend that might have been accelerated by measures taken around the COVID-19 pandemic, said CEO Michael Praeger in an interview with Invest:Charlotte.
What service is AvidXchange providing to the market?
AvidXchange automates the accounts payable and payment process for middle-market companies, eliminating the paper invoice and paper check. We are primarily focused on the United States, with a growing presence in Canada.
Imagine the impact in the current transition to a work from home environment when you realize that you don’t have an automated process for your accounts payable and to pay your bills. There are a lot of companies that still have paper checks, with pre-printed check stacks, and you can’t send a person home with a pre-printed corporate check stack.
The current situation has been a catalyst in terms of new customers wanting to adopt our technology and existing customers trying to get everything implemented as fast as they can. Suppliers that have historically been receiving paper checks from their payment network are raising their hands and saying they want electronic payments.
We have five core verticals: real estate, HOA or homeowners’ associations, and financial services, where we have over 2,000 banks that use our services platform to manage their internal accounts payable and pay their own bills. Then it’s construction, which has done really well in recent years, and our newest vertical in healthcare facilities and social services.
How would you describe the evolution of the tech sector in Charlotte as compared to other, better-known tech hubs?
When we founded AvidXchange 20 years ago, there was a small and passionate group of entrepreneurs in Charlotte who really wanted to build a more entrepreneurial ecosystem, particularly around technology, and adapt a lot of the companies that supported the banks. Most of the technology in Charlotte around that time was supporting the banking or the energy sectors. We started growing and gaining traction by staying focused on developing our AP automation solutions, and today we are the largest software company in Charlotte.
In terms of our evolution, our rapid growth began in 2011-2012. There were two catalysts for that. One was that we are a software as a service, cloud-based technology platform. Up until then, companies were really hesitant to adapt cloud-based technology for financial applications. The mindset was to run these services internally, behind a firewall. And then we had the growth of companies like Salesforce and Concur that created momentum and customers started becoming comfortable.
We then added payments to our existing accounts payable solution. We were growing at 15% to 20% annually up until 2012, and since then, we’ve averaged around 40% growth per year. That is a reflection of the growth of Charlotte, but also of the general marketplace adopting our technology.
Are the schools and universities in the region meeting the challenge of training the talent companies like AvidXchange need?
It is really interesting because one of the first things discussed about Charlotte is that all of the other tech centers are really anchored by a university or college research system, and Charlotte does not have that. That is true historically, but one of the things that this COVID-19 dynamic is showing us is that you don’t necessarily need people physically together in a lab or research environment to drive innovation. You have to be in an environment that supports innovation, and I think Charlotte and North Carolina have that. The region does not have that deep research presence in the city itself, but when you look at the whole North Carolina ecosystem, between the research triangle and what UNC Charlotte is doing around analytics and Big Data, positioning itself as an analytics center for the university, there are really good things happening.
How are your services received in the market?
Our main presence in terms of customer concentration is around the major centers of employment in the United States. We have customers in all 50 states and over 6,000 in total nationwide. As I mentioned, this has been our eighth consecutive year of averaging 40% growth, which provides some insight on adoption. It is currently estimated that 60% to 70% of middle-market companies still process paper invoices, so we’re still in the very early days of that adoption curve.
I think the COVID-19 crisis is going to act as a catalyst event where we see companies deciding to automate to avoid future business continuity issues around how they pay bills.
To learn more, visit: https://www.avidxchange.com/opens VIDEO file