Michael Noble, CEO of Apruve



Business buyers want payment terms from their vendors, and B2B sellers want to offer them. After all, extending a line of credit to a customer can lift sales and promote loyalty. Michael Noble, the founder and CEO of Apruve, says, "We see about 2.2 times more order frequency and about 3.3 times more line items per order for customers that are given a line of credit versus asking them to pay with a credit card." It's no surprise that upwards of 80% of B2B transactions involve customer credit. That said, offering payment terms has a downside, which Apruve seeks to mitigate by offering credit management as a service (CMaaS) to B2B sellers.



Few people go into business in order to underwrite credit, send invoices, manage collections, and spend evenings doing bookkeeping. Furthermore, as companies grow, so does their average accounts receivable balance. While offering payment terms can accelerate growth, it can also exacerbate the need for external financing. Finally, extending credit can be risky. Sometimes, customers can't or won't pay their bills.



What if you were able to get the benefit of offering terms to your B2B customers and sidestep the administrative headaches and working capital financing requirements? That's the value proposition of Apruve and other emerging fintech companies specializing in B2B payments.







Read the Transcript



The following has been edited to make it easier to read.



Dave Bayless: Michael, what does Apruve do and what problem does it solve?



Michael Noble: We manage and finance B2B credit programs. Our customers are manufacturers, distributors, and wholesalers—sometimes retailers, but you have to be doing B2B. For hundreds of years, businesses have done business with other businesses using lines of credit. So a buyer comes into a seller and makes a purchase but they don't pay for it. Instead, they pay in 30 days or 60 days or whatever the term is they have negotiated. This causes a number of headaches and issues for the seller.



From a financial standpoint, this purchase is now recognized as a receivable, so it sits on their balance sheet. It's cash that they don't have but they're promised, and that receivable needs to be managed by a back office team known as an accounts receivable person doing invoicing at the correct time, credit approval of that business to extend them that line of credit, cash application, payment processing, all that stuff. These are pretty human-driven endeavors and pretty burdensome from a financial standpoint.



Apruve wrote software that automates that entire process—from underwriting a buyer with credit approval, to order capture, invoicing, and payment. Then we underwrite the orders that those buyers make through third-party banks, so the seller is actually paid within 24 hours, even though the buyer is getting 30 or 60-day terms.



Dave: Across that range of B2B sellers, is there such thing as a typical seller for Apruve?



Michael: Our customers are across the board. We have Fortune 500 customers like Texas Instruments, and we have small million-dollar or smaller manufacturers or distributors of products.



People view accounts receivable pain differently. Some people are just tired of having a room full of humans doing these processes. Every time a human touches an order, you're—in theory—losing margin on that order. So, automating that process becomes top-of-mind for tech-savvy companies. For other people, they're just tired of being a bank and lending to their customer. It's not what they do, so that is a pain point that brings them to us as well.



Typically, a customer for us is someone who's extending terms to their buyers, currently. They're doing it because it drives sales. But,