A client’s marketing department recently asked me about the difference between the terms “procure-to-pay” and “source-to-pay”.  The obvious difference, from a supply chain perspective, is that “source-to-pay” includes the sourcing process (which I like to define as the steps that lead to a negotiated contract).   “Procure-to-pay” presumably starts with a contract in place off which purchase orders are raised.  (Don’t get me confused with your spot buys or spot sourcing.)

But from a marketing perspective, these nuances are unimportant.  (Only nerds make the distinctions I just did.) From a marketing perspective, the real question is “What term are potential customers interested in?”  And for that, there is Google Trends.

Evolving Procurement Terminology

The Google Trends chart below shows that the term Spend Management was really popular in the early 2000s.  My recollection, perhaps faulty, is that Michael Schmitt, CMO of Ariba was responsible for coining, or at least popularizing that phrase. It was darn good marketing.

As you can also see, “procure-to-pay”  was popular before “source-to-pay” caught up.  This sequencing makes sense, as the leading sourcing vendors of the time were not procure-to-pay vendors and vice versa.  (It was not, for instance, until mid-2004 that Ariba acquired FreeMarkets.)  Finally, “source to settle”  which I liked (and so did American Express at one point) never caught on.

Order-to-Cash

But it turns out, all of these procurement terms pale in comparison to the popularity of the term “order-to-cash”, which is, of course, the mirror image of “procure-to-pay” for the supplier. (H/T Peter Lugli.)

And it’s not even close anymore.  This seems surprising to me, but perhaps it is because of my procurement bias.  But as a small business myself, it makes a ton of sense.  I have no procurement issues, but I certainly pay attention to my cash flow and my collections!  There is no small business or large one, that does not have issues with the order-to-cash process!

Integrated Receivables

The growing interest in the order-to-cash process could explain the attention the “invoice-to-cash”, or accounts receivable process is getting from smart people and investors.  This sector is still trying to figure out how to describe itself exactly, but that hasn’t stopped it from growing fast and raising a lot of cash.

• Billtrust, the leader in the segment, uses the cool term “Payment Cycle Management”.  According to Crunchbase, Billtrust has raised over $100 million from Bain Capital Ventures, Goldman Sachs, Riverwood Capital and Edison Ventures.  No dummies here!
• High Radius, uses the term “Integrated Receivables”, which is a little more payments and remittance oriented to describe their business.  Not to be outdone, High Radius raised $50 million this past Fall from Susquehanna Growth Equity.
• VersaPay, a small, public company in Canada (CVE:VPY) uses the terms “accounts receivable management” and “invoice-to-cash”.  The company’s revenue run rate is less than $4 million per year, but it sports a market cap of $88 million.
• Another public player in the space, Deluxe Treasury Management Solutions, uses the term receivables management and has been on an acquisition streak.  (Deluxe TMS is more oriented to selling to and through banks given its Deluxe check printing heritage).  The company discloses that this segment provided about $110 million in revenue in 2017 and is growing 18-19% annually.

Right now, only the generic term, “receivables management” shows up in Google Trends, but I suspect this market will evolve as the procurement space did over the last 15 years.