How Payhawk is changing the finance industry

On November 23rd 2021, we announced that Payhawk, an international payment and expense management software company, has raised a landmark $112 million in our Series B. Firstly, I wanted to say thank you to our investors on behalf of everyone at Payhawk. It’s a huge milestone for us, and according to pitchbook, it means we’ve just achieved the 8th largest B2B Series B round in Europe. And the second largest in eastern Europe.

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by Hristo Borisov 30 Nov 2021

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Secondly, I wanted to share the results of a recent Q and A I had with the team. We covered questions on what the Series B investment means for Payhawk’s immediate growth. We also discussed how to approach investment rounds and what I’ve learned about software development and product management from keeping score in tennis. In this post, I share some of the best answers and sorry, no tennis this time.

 

What do we want to achieve post-Series B?

 

It’s hard to cover everything in one short answer but in a nutshell, our three priorities are:

 

  1. Become the leading European spend and expense management system and continue on our trajectory to grow the fastest. We’ve already had the quickest round from Series A to Series B of all of our competitors.
  2. Attract the top 1% of the talent on the market to ensure our software, innovation, and creativity is the best in class for our customers.
  3. Expand beyond Europe into the US, Australia, and Canada.

 

 
What did the business learn from Series A that you took into Series B? 

 

The time between Series A and B is all about performance, gathering the data, and setting the company’s trajectory. You need to prove that the relevant channels are profitable, operating efficiently, and showing ROI. Also, that you’ve fine tuned the parts of the business that you still need to scale. Series B is about adding fuel to the fire and keeping the machine going and growing. 

 

What were standout actions that helped us scale so quickly?

 

One of the key things we did was to introduce our 3% cashback offer. It’s a win-win for customers who get to enjoy the product and avoid fees (as the cashback means it pays for

itself.) The offer allowed us to create additional value for businesses and acquire customers more quickly. Obviously, the more customers spend, the more revenue we make, but it’s equal for them too as it creates a brilliant ROI. Finance teams just get an enterprise grade software to manage all company payments free of charge.

 

Also, our flywheel — meaning how much revenue we’re earning from customers over time — is extremely good. It allows us to add more services to businesses once they’re on board, starting with cards. Then geographies, accounts payable, reimbursements to people without company cards, and so on. The flywheel spins faster and faster as we help an increasing number of finance teams get more efficient.  

 

As a challenger brand, Payhawk does things differently from traditional banks, tools, and competitors. How does the Series B support us to disrupt and innovate?

 

Traditionally, a finance team’s tech stack was disconnected and fragmented. Through Payhawk, we’ve connected invoice and expense management, company cards, workflows, payments, expense policy and compliance, and automation, all in one single system. From dropping an unpaid invoice, getting all of the data, running it through the approval flow, and finally paying it out, we’ve created new efficiencies and helped teams achieve a higher standard of work. 

 

Funnily enough, when we meet with new customers, they always say, I don’t know why no one created this before. The reality is, this is what businesses need. 

 

Take our customer ATU, for example. ATU is Germany’s number one chain of auto retail stores and workshops, and it needed to digitally transform the way it paid for and managed external purchases. It used to transport its invoices through Germany with two of its trucks. “When buying parts, our branch managers would historically always reach for cash which would generate a massive amount of paperwork. Our goals are to streamline processes and save on overhead costs, and we’ve identified a new solution with Payhawk,” CFO Sebastian Jarankowski explained. “We’re reducing expenses to zero and creating a highly flexible, secure and transparent working environment. Now we’re able to scale our spend processes among hundreds of branch managers quickly.”

 

How will our customers feel the benefit of the Series B investment?

 

Our customers are going to see a super-fast acceleration of our current roadmap. We already know the additional things they need. And now we’ll have access to a bigger pool of tech talent to bring these two things together. As we’ve done previously, we’re aiming to grow by 8-10 x year over year. We plan to achieve growth horizontally by adding more locations and more international expertise. But we also plan to grow responsibly, which is why we recently started our journey to become B Corp certified. 

 

Our investors mentioned they were amazed by the love we have from the customers. So, it’s going to be the same Payhawk that our customers love, but with new features, more currencies and languages, improved efficiencies, and the best finance automation. We’re going to have a big focus on R & D too, and plan to set up a center full of helpful insights for our customers. 

 

What new problems will we solve?

 

The concept of a single solution that can manage all of a team’s expenses just wasn’t there before, so we’ll keep solving that problem and in better ways than ever. With the Series B investment, we can expand use cases of the product, create features, and develop new capabilities such as per diems and cheaper international transfers in 50+ currencies including USD. All of which give the finance team more control, transparency and time. 

 

There are a few things that we often hear when we first demo our product. “How can all those things go into a single system?” Or, “Can we really start using it straight away?” Finance teams are surprised that the implementation is so easy, as new projects usually take months to integrate. We’ll make sure that this feeling of simplicity stays at the forefront for our customers and find new ways to improve the user experience.

 

As a Payhawk founder, what difference does coming from a software background rather than finance make?

 

Good question. We don’t have the burdens of the finance stack for a start. We have the ignorance of tech people who build software to solve problems. We don’t know about payments in a traditional sense, but when we explore it, we can see it’s broken. 

 

In a lot of financial software, you’ll find that everything is very fragmented. There’s a heap of manual processes, and someone has to match all the details together and reconcile them. What we’re doing should’ve been there since day one. But many of the big banks didn’t have the engineering capacity, culture, or drive to change anything. They were afraid to innovate in case it killed their business.

 

Payments have been around for hundreds of years, but there hasn’t been a lot of innovation since the chequebook. Luckily changes in regulations, and initiatives like Open Banking and PSD2 have helped game-changing companies like us exist. Now, the experience we offer allows finance professionals to adopt more strategies and work more efficiently. 

 

How is the role of CFO changing?

 

People currently won’t accept a process that is heavy on manual paperwork. And why should they? The workplace is brimming with digital natives, and they expect digital solutions to solve their problems. 

 

The way we behave as consumers is slowly translating to the way we do business. We’re all used to doing everything in an app, and we expect services to be digital, easy to use, trackable, and transparent. It should be no different at work, and finance managers and accountants are demanding digital-first solutions. Employees expect the company to help them be as efficient in doing their job as possible; they want to do what they’re hired for, not admin. 

 

We’ve seen COVID-19 accelerate digitalization. Finance teams have had the time and the need to overhaul their systems. We’re seeing the fruits of that now, with companies ready to look for better and more flexible digital tools. 

 

A big thank you again to our investors and the team. With our Series B funding, we’re in a brilliant position to offer more customers the chance to get all-in-one finance software and incredible customer service. You can learn more about taking your business finances digital by reading our ebook: How to build your cashless business

 

An extract of this article first appeared on LinkedIn.

Written by Hristo Borisov

November 30, 2021

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