81. The Secret To Saving Money With AR Automation! (w/ John Perez, CEO of Unified A/R)

Karthik Chidambaram: Today we have a very special guest. We are going to
talk about A/R automation. We have John Perez, the Chief Executive Officer,
CEO of Unified A/R.

John, thank you so much. Thanks for joining the Driven Show. Great to see
you in DC.

John Perez: Yeah, great to see you again. Karthik as well. So yeah, welcome
to DC.

Karthik Chidambaram: Alright. DC and DCKAP?

John Perez: Yeah. DC and DCKAP. Yeah.

Karthik Chidambaram: Alright. So John, I mean before we get started, I just
wanna understand a little bit about A/R automation, let's say, 101.

How do you define A/R automation?

John Perez: So A/R automation basically is a complete 360 view of order to
cash processes, whatever they may be. Our primary markets or wholesaler
distributors and light manufacturers. And look, I spent the first 29 years
of my career in corporate banking. One of the things I learned as soon as
you get into a client's back office is there's a lot of paper.

There's still a lot of paper. So basically we provide a very easy way. I. To
start with for some of that paper to go away, or at least not that be the
primary path for payment execution. We also make getting the payment very
easy. So in a nutshell, once all of that happens through our systems, we can
automatically apply the cash back into our client's back office, into their
ERP.

So we like to say we make getting paid easier, very frictionless, and at
less cost than what people are used to experiencing. The problem with all of
the different payment paths as they exist today is that companies have a
very hard time of understanding where their costs are really coming from. So
on the way in, after we do a demonstration of our systems.

We put our prospects through it, basically an A/R survey, if you will, and
actually show them where the costs are embedded in their environments.

Karthik Chidambaram: So how are you helping distributors get paid faster?
Can you walk me through that process?

John Perez: Sure, absolutely. So if you start with what exists today, it
largely paper like we've talked about, you know, sales and orders can happen
in multiple different ways, at the counter, over the phone, the web, what
have you.

But in a lot of instances. You're relying on the person picking up or take
accepting delivery of the goods to take the paper for that paper to wind up
in their back office so that a paper check or you know, an ACH, we like to
call it grandpa's ACH, just a traditional ACH comes across and eventually
makes its way to the back office of the company that sold the goods in the
first place.

What we do is we overlay a digital dynamic invoice that basically forget
what happens with the paper. They get a digital dynamic copy of the invoice.
If they need to print it out in the back office, that's fine, but there's
also secure payment links embedded in our digital dynamic invoice.

And when we are integrated, not only do they get an invoice. If they want a
complete history of all of their orders through time and everything else,
that's outstanding. The customer of our client has a clear, secure, and
simple path to get to all of those things where they can then make an
execution on a payment immediately, or schedule that payment.

And again, when that happens, we know what, we know what the payment details
are, we automatically apply those funds back into the ERP.

Karthik Chidambaram: I'm just trying to understand here. Let's say as a
distributor, I will already have an accounting system in place. Mm-hmm.
Let's say I'm using Intuit, or maybe for simple terms, I'm using QuickBooks.

QuickBooks does this, right? So I generate an invoice and it lets me pay
online. So how do you compare with that?

John Perez: So, most of our clients have a very good experience with Epicor
and their environment, P21, I would tell you that the situation is radically
different. And that the invoice details, the invoice is probably one of the
more critical aspects of our client's environment.

We spend an inordinate amount of time working with our clients to have the
invoice look exactly like they want, have everything laid out. It is
literally their operating billboard. Not only is it their invoice, but it's
very important to them. So the invoice is very, very specific. It's not
something that you're gonna find off the shelf.

So when you start from that environment and kind of work your way forward
you also have the dynamic where some of our clients are multi-branded.
There's a lot of things that go into that invoice that you're not likely to
find just off of an off the shelf. QuickBooks environment has been our
experience.

On top of that, understanding where the cost really is embedded in those
environments. Once we do a full diagnosis of where those costs are coming
from, not only can we do credit card, debit card eCheck, which runs on the a
CH rails. We also have a state by state execution on surcharge payment
processing, which is very important in the credit card world because
basically if our clients are affording terms to their customers.

The last thing they want to have is 45, 60 days later, somebody shows up and
pays them with a credit card, especially in a card not present environment,
because those costs are sky high. So we have different levers that can be
pulled that reduce those costs the whole way around.

Karthik Chidambaram: So you help monitor the costs.

Monitor the charges, correct. Hey, I'm paying more for this particular
transaction, so how can I do better and how can I save cost?

John Perez: Correct. And what a lot of people don't understand. Is that you
can have the same customer, the same credit card presented in different
manners, either in person or card, not present, and your costs have just
radically changed.

And so a lot of times we're having conversations like that with our
customers, with our prospects to help them understand, here's why your costs
are so different, and here's the costs that you should attack.

Karthik Chidambaram: Since you work on the Prophet 21 space, which we do a
lot of work on as well. You know, a lot of-

John Perez: Yeah, absolutely. Yeah.

Karthik Chidambaram: So one challenge I run into, you know, when we chat
with customers, is payment processing is hard. And it takes a long time to
implement, and all that, right? So why do you see that happening? And do you
guys address that as well?

John Perez: Yeah, so we address it in spades. One of the other things that
we haven't talked about is that we have a team of experts from payments. We
have a team of experts from SaaS, from our technology platform, and then our
back office team basically just becomes an extension of our client's back
office team. So 24/7, if somebody needs something, they know they can pick
up the phone and they can call us and they're speaking with a real person.

How we address it on the front end is we call it concierge level service. We
do that from assessment on the way in cost assessment on the way in ROI once
we've gone live. But as we are going live, we lead our clients step by step.
Through all the processes that are needed, whatever that may be, if that's
communication with their customers, if that's getting all the applications
filled out and completed, we handle all of that.

You know, basically we think it's a dream state, and we have a litany of
clients that will attest to that. That's how we address it. When I joined
the company about a year after we were founded in 2017, I joined in 2018. My
partner Dan Hatcher, and I immediately started talking about, not only does
it have to be ‘ease of use’ it has to be secure. You know, we've gotta have
our hands around the technology and make sure that it's secure.

But we talked about the Amazon-ification of accepting payments, that the
younger generation is used to that one click execution and everything kind
of happens from there. And we took that a step farther, we think once
integrated with all of the historical information behind that relationship
that frankly, in a lot of instances has run for generations.

These are companies that have been dealing with each other for 30, 40 years,
some cases longer. So if we can give them all of the data that they already
have, make it readily available, even the purchasing gets a lot easier for
the customers of our clients.

Karthik Chidambaram: So when I was chatting with Dan, you know, he was
mentioning that it's not just built by technologists, but by distributors.
You get the distributors involved in building the platform.

John Perez: Correct.

Karthik Chidambaram: I'm just curious to know, how do you do that, right? I
mean, do you have customer champions or what is the process in terms of
building the product roadmap?

John Perez: Well, we have the relationship with the NAW, as you well know.
And so when we got started, a great set of direct members of the NAW.
Welcome us in with open arms and they said, if you can solve these problems,
that would be very important for us. And you know, frankly, it took me right
back to my commercial banking days because there was the same problems that
I've been hearing.

And frankly, in 2018, I was a little surprised to see that the paper volumes
were actually the same. So, you know, from that standpoint, it was the same
set of issues. But we started with the feedback from the direct members of
the NAW. And again, the Amazon application of payments and cash application
and everything that they told us, we just kind of went forward.

One of the other things that came out of those conversations was that our
tech stack had to represent the opposite of an IT project. And so our CTO,
Jason Palmer is fantastic. We really kind of put all of the, you know, that
those were the primary ideas for building the tech stack. Our tech stack can
be implemented into our new client's environments in well under an hour with
little lift from our new client side.

So those are things, you know, hopefully are always tenants of everything
that we do on a go forward basis.

Karthik Chidambaram: So if I understand this correctly, what AR automation,
accounts receivable automation, order to cash, you help distributors get
paid faster. But then you have a history of the previous invoices, history
of what happened where pretty much like an Expedia where I have the travel
history.

John Perez: Correct.

Karthik Chidambaram: So this is great. But then let's say a distributor is
not doing all this right? So it's not automated. How do I get paid faster?
You know, I would say of technology. You have any tricks?

John Perez: Well, so the funny thing is, I don't wanna know about tricks,
but I can't tell you every company that we have signed has had a team member
that has said.

Oh no. Our customers are not going to pay us this way. They like their
paper, they like their paper checks. You know, we've heard every excuse that
says, no, I still wanna live back in the 1980s. That's the way we've always
done it. And they're shocked when we go live and we're getting payments, you
know, sometimes like the same hour that they are going live.

You know, this happens to be the day after the championship games for
football. We were getting payments while the games are going on. We get
payments on Thanksgiving, so it is a 24/7 cash receiving desk, if you will.
And again, we're applying those payments automatically. So I think people
are really shocked. At the experience set of how easy our tech stack is
adopted by their customers.

And then one of the other things that we do for everyone as we are going
live is we measure the ROI of every environment that goes live, and our goal
is to have them cash positive. On an ROI basis 45 to 60 days.

Karthik Chidambaram: So even if I have your solution, I would still need a
payments processor.

John Perez: We take care of that.

Karthik Chidambaram: Oh, you take care of that?

John Perez: Yeah, we take care of that. Yes, correct. You can keep your
payment processor, but I most people, when they understand where those costs
are coming from. If they're happy to switch, they're happy to switch
everything. Yeah.

Karthik Chidambaram: Okay. Since you worked for 23 years, and I think you
worked at 23 years, you spent at Fifth Third Bank, spent a career in
payments and banking. I have this question, how do I choose my payment
processor?

Because let's say, I mean, I'll just give you a business example, which
happens. Right now, we are processing with a payment processor. Then I have
somebody from Chase who reach out to us. Hey, I would like to look at your
statements. I think we can do a better job. I'm sure you have heard this
many times.

John Perez: Yeah.

Karthik Chidambaram: So how do I decide which payment processor to choose?

John Perez: It's a great question, and you're right. Everybody wants to look
at your statements. Maybe if they don't wanna look at your statements, that
probably begs a question. And if it's a one price fits all model, that
probably begs another question. Set of questions, you know, we kind of step
back and say, how do you wanna be served and start, if you start from there,
if I have a problem, who am I calling?

Because there are a lot of banks, there are a lot of financial institutions,
there's a lot of just pure payment plays that as soon as you have a problem
they like to tell you, oh no, it's actually your problem. It's not our
problem. We did everything correctly and at Unified A/R we don't care if you
have a problem and you're with us.

We're gonna hop on the phone with you and we're gonna work through it the
whole way through. So a lot of it is, you know, what is the cost? You know,
why am I just finding this out now and who do I talk to in a service issue?
You know, if that's one 800, take a number. You know, I think there's a lot
to be said for direct line service.

Karthik Chidambaram: Yeah. There's a problem and you guys step in and solve
it. Correct. And correct. That depends on which process, which,

John Perez: Yeah. Correct.

Karthik Chidambaram: So the theme of this podcast is driven, how are you
driven, John?

John Perez: So I was taught corporate banking almost in a backwards
solution, or at least it was backwards from when I got into the banking.

If you solve your clients and your prospect's problem, you're likely to have
a client for life. That's how I was taught. Banking Fifth Third took the
next step, which was we don't expect our clients to come see us. We expect
to go see our clients and our prospects at their place of business. That's
where the rubber meets the road.

That's where you find out where the real issues are. And so, you know,
again, as we were starting off and we were sourcing what the real problems
were, we were in people's back offices visiting with them. It's the same
thing. So I'm driven, our team is driven by solving problems for our
customers. And we hear that, you know, when there is an issue, frankly,
people are like, thank you so much. We know that you're on it. Just let us
know when it's fixed and that's, you know, we're telling them when there's a
problem as opposed to their having to inbound every time. So it's really,
it's been refreshing.

Karthik Chidambaram: And what are some things you do outside of work?

John Perez: Some things that I do outside of work.

Yeah. Worry. We constantly worry about our three adult children do a fair
amount of reading when I can. And you know, like you. We do some some white
papers and some other customer facing things in our spare time, as you say.
But yeah, it's you know, when you, when you're part of a small team, as you
well know, there's always something that's, that's going that's going on
around the clock.

And so yeah, we love to travel. I. When my wife and I get the time, so yeah,
it's great.

Karthik Chidambaram: I would like to end with this question. What book are
you reading right now? Or is there anything you're reading and learning
which you would like to share? Audience?

John Perez: Yeah, so I just started when the Clock Stopped, which is a very
interesting book.

It kind of melds media and news. It gets back into financial issues as well.
So for me, it's kind of everything that I'm living, but it really kind of
starts from like the early eighties, mid eighties kind of pull forward. It's
fascinating. I'm just into it. But yeah, if not for that, I'd be headlong
into sports books and books about music.

So at any rate, but that's the latest and greatest.

Karthik Chidambaram: You're from Nash Smoke.

John Perez: Yeah. Yeah, yeah.

Karthik Chidambaram: Alright, John, thank you so much. Thank you for this
conversation. It's great to see you again.

John Perez: Absolutely. Yeah, for sure.