The rapid adoption of digital payments has become a major challenge for finance teams. According to a reportteams spend as much as 40% of their time processing transactions. Disparate, unstructured data is to blame, they say. In a separate questionnaire48% of teams see fragmented data as the biggest barrier to closing their books.
Tal Kirschenbaum is well acquainted with the battle. He worked at Melio, a business-to-business (B2B) payment platform for small businesses, where he saw finance teams become victims of their own success.
“Some companies have payment expertise and are able to invest R&D resources in building great in-house solutions to address the problem, but that is not a viable option for most companies,” Kirschenbaum told australiabusinessblog.com in an email interview. “Financial teams are forced to work like ‘human glue’ to hold together a complex payments stack of payment processors, banks, enterprise resource management platforms, databases and more.”
That prompted Kirschenbaum to co-found the fintech startup Ledge with Asaf Kotzer and Ariel Weiss in 2022. Through Ledge, he hoped to empower finance professionals to better manage day-to-day tasks such as monitoring and alerting, while also giving them strategic insights to improve their bottom line.
Ledge automates reconciliation in multiple ways, matching a company’s internal records of payments due and payable with the transactions that appear on bank statements. It too enables real-time ledgers, updating the record of all a company’s financial statements by connecting to existing ones data, payment and banking infrastructures.
“Ledge’s big data pipeline collects and normalizes data from multiple sources,” added Kirschenbaum. “The platform’s AI supports predictive rules and smart matching, as well as insights and forecasting. And it offers out-of-the-box integrations plus a drag-and-drop interface that finance teams can set up in hours.”
From Ledge’s dashboard, businesses can view aggregated balances across accounts and financial services providers. They also get AI-powered recommendations for optimizing payments and spending.
“Ledge learns how finance teams work to automate their operations and extract insights from their payments activities. This kind of learning is often about identifying patterns or anomalies (for example, a failed payment),’ explains Kirschenbaum. “In addition, Ledge’s access to datasets of both inbound and outbound transactions across business models and industries enables cash flow forecasting and day-to-day treasury management optimization.”
It’s early days for Ledge, which Kirschenbaum says currently only has a handful of customers. But he sees the company as standing alone in the thoroughness of its offerings.
“Finance teams dealing with a high volume of digital payments and complex payment stacks have been really underserved by the market so far, so our main competition tends to be the status quo – namely finance teams that have to manually compile massive amounts of data from multiple sources in a spreadsheet,” Kirschenbaum said. they rely on R&D teams to implement and maintain.They also tend to target fintech companies that are naturally more savvy about payments than most other companies and are primarily focused on cash flow automation.”
Investors apparently agree. Ledge this week closed a $9 million seed round led by NEA with participation from Vertex Ventures, FJ Labs and Picus Capital. With the infusion of new money, Kirschenbaum says Ledge will introduce more treasury management capabilities, improve the platform’s algorithms, bolster customer acquisition and grow the company’s workforce.
Ledge has undoubtedly benefited from increased cross-industry interest in financial automation technologies. According to a recent Gartner questionnaire a third of CFOs said they will prioritize investments in back-office automation technologies in the coming year.
Investors are betting that the economic scare will prompt companies to redouble their efforts to control spending, driving demand for automation tools. According to pitch book (quoted by The Wall Street Journal), startups making AI-powered accounting software raised $233.3 million in venture funding between January 2022 and the end of March 2022, surpassing $210.2 million in funding for all of 2021.
New Enterprise Associates partner Jonathan Golden said in an emailed statement: “As an increasing percentage of B2B payment volume flows to digital channels and the number of companies with complex money movements increases, tooling to reduce the workload for the finance team is becoming more and more important. becoming a necessity… Ledge was built by finance professionals for finance teams, we believe the founders are ready to take on this challenge as they tackled the problem themselves.