Business expense management tools that help companies track and minimize expenditures gained traction during the pandemic.
Companies including TripActions, Teampay, Sievo and Emburse saw exponential growth in their customer base and transaction volume over the past year.
"Adoption of business spend management tools was gaining traction before the pandemic and slowly more businesses will look to take advantage of it," Michael Sindicich, general manager of TripActions Liquid said.
Despite the COVID-19 impact, expense management software companies experienced significant growth. According to WiseGuy research, the global market for business spend management (BSM) software was $7.04 bn in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 10.5% during the forecast period from 2019 to 2024.
TripActions, a travel management company, launched TripActions Liquid, a business travel spend management tool, last February right before travel cratered due to the COVID-19 lockdowns. The company expanded its platform and capabilities in October to provide end-to-end expense management capabilities as work pivoted to home.
The Palo Alto based-company issues physical and virtual cards to businesses, which their employees can use for business spending. This is intended to simplify accounts reconciliation and provide better control to businesses over where their employees can use company funds in real-time, Sindicich said.
TripActions raised a $500 million debt facility from Goldman Sachs, Comerica Bank, and Silicon Valley Bank to provide its customers with a short-term credit line on their TripActions Liquid cards.
"We saw a 55% month-over-month growth in active users and card issuance was up 200% over the last six months," Sindicich said.
Teampay, a New York based-spend management platform, saw its user base increase by nearly 60% over the last 12 months, Teampay CEO Andrew Hoag told Payments Dive.
"We were in an era with the bull market where capital was effectively free," Hoag said. "Last year, with the pandemic and kind of the shift in the economy, the capital was no longer free and I think companies have now woken up to the need to actually control that."
The company is looking to expand its operations in Canada and partner with a major card network to issue its corporate cards in the second quarter of 2021.
Sievo, a procurement analysis and spend management company saw its user base and revenue increase by 30% in 2020, Sievo CEO Sammeli Sammalkorpi said.
"Many of our clients were of course facing huge cost pressures in 2020 and wanted to invest in technologies that help them to kind of drive the cost down," Sammalkorpi said. "A lot of our clients faced cost cuts but one area they did not want to cut is technologies that enable you to drive savings home."
In 2020, Sievo processed nearly $700 billion through its platform compared to $500 billion in 2019. The company has experienced an increase in interest from users across the globe, especially in the U.S.
"In terms of the U.S. market, COVID-19 actually helped us," Sammalkorpi said. "We added Mars, the chocolate company, and many other clients in 2020 in the U.S. market."
Sievo earns 35% of its revenue from the US, 35% from Europe and nearly 30% from Nordic countries. The company is experiencing increasing interest from South America and Asia and plans on entering the market by the end of this year or early next year.
The increased use of business spend management tools are here to stay, said Sara Elinson Principal, a partner at auditing and consulting firm EY who leads the fintech M&A practice for the Americas. "After the pandemic, our general view is that it's going to continue," Elinson said. "It was a necessity, now it's part of the process and part of the flow, how companies are engaging."
Fintechs like Teampay, Sievo and TripActions have been serving the small and midsize business (SMB) market while banks and financial institutions are looking to develop those channels by either partnering with fintechs or creating their own rails.
For instance, Purchase, New York-based Mastercard said that it's partnering with the software company Emburse, to provide bank issuers of its cards the chance to offer their corporate card users a better way to manage employee expense reports. They plan to launch the program with a first customer later this year.
"So far, we've been seeing partnerships with banks white labeling some of these fintech providers, but I think we'll see more and more banks pulling some of that internally, and actually using that as their competitive differentiator with their customers," Elinson said.
