Basware, the Finnish e-invoicing and purchase-to-pay technology group, and Demica, the British receivables and supply chain finance business, yesterday unveiled a revenue-sharing partnership that will make supply chain finance available to Basware’s clients. The rumoured deal was confirmed at the Basware Connect event in London’s Docklands.
In an exclusive joint interview, Basware senior vice president of financing services Ad Van Der Poel told SCF Briefing, “Basware clients have invested in AP [accounts payable] automation, they have already invested in making their [incoming] invoices digital.” The new partnership, therefore, “uses that data and the fact that an invoice has been approved to feed into Demica’s capabilities to offer financing based on an approved invoice.”
The deal scales up Basware’s existing financial services offering. For the client it will be “one smooth process”, Van Der Poel said.
Demica CEO Matt Wreford said, “Thinking about the client benefits, the fact that we can do a single integration together takes that effort away from them. For many treasurers, supply chain finance is interesting but never in the top three of things for them to do. This just makes it that much easier and gives their suppliers a much better experience. That’s because of the combination of their data and our tools.” That therefore shifts supply chain finance from being something that a treasurer might do next year to something that they decide to do this year, Wreford said.
Van Der Poel added: “From a customer perspective it feels like one customer experience.”
The technology firm worked hard at understanding what its clients’ needs, and learned that supply chain finance was one of the things they wanted. “But it makes no sense for Basware to do funding or lending. Therefore, Basware started looking at the different players in the market.” Demica was regarded as the only player in the market that had the combination of years of experience but with a recently upgraded technology platform. “Some of the competitors to Demica are seven or eight years old and are already legacy systems,” said Van Der Poel.
“There is a very strong cultural fit [between us],” said Wreford. “The team that Ad [Van Der Poel] has built around him very much speaks our language of combining financing experience with technology. It’s a rare combination. We have it in our business and it was a pleasure to find that he had built that in his, so it was very easy for each of our teams to link up correctly.”
Wreford said that the working arrangement is “a very simple revenue-share”. Legally, Basware clients must become clients of Demica because it is a regulated entity handling billions of euros. “Basware introduces their clients to us, we enable them and then we split the yield between us,” said Wreford. “The more we thought about it, the less it needed a complicated joint venture. It just needed an alignment of interests – which revenue-share gives us.”
Demica’s clients and Basware’s “are very similar”, Wreford said. “We both have large multinational clients and we are talking to the same people in the same businesses – and we understand their needs.”