Comment by chris-orgmenta | Hacker News Reader

Comment by chris-orgmenta | Hacker News Reader

Hi Megha,

I manage Accounts Payable for clients.

>1. How? Credit Card, Debit Card, Cash or Check.

EFT/Direct Debit > CC/DC manual/ACH/Wire Transfer > Check (US only)/Paypal/other expensive payment platforms.

2. Where? Biller Website, Through your Bank Account or others?

Automatic payments > Manual batches through accounting package > Manual payment via phone/biller portal

3. What are your current pain points, and what improvements would you like to see?

- Current clients: Biggest pain point is actually financial onboarding suppliers, e.g. verifying bank details / setting up direct debit etc.

- Current clients: Credit requests / getting suppliers to make changes to their invoices can be laborious.

- New Clients: Distributors such as Ingram Micro will place companies on stop credit as soon as one bill is overdue - Which seems to catch a lot of orgs off guard if they don't have a stable AP process in place.

- New Clients: Three way match is rarely done.

- New Clients: Often miss on-billing supplier costs. E.g. purchasing M365 licenses, provisioning them, paying them through AP, then forgetting to add them to a client agreement for invoicing.

4. Auto payments. Yay or Nay?

Absolutely Yay, but they should still undergo a three (actually five) way match, and be 'approved' by the decision maker before being debited.

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I reviewed https://www.neonforlife.com/ & https://medium.com/neonfinancial/neon-whats-all-the-fuss-abo... and I'm wondering:

- You are pivoting from b2c to both b2c & b2b? Seems sensible, I can't imagine b2c being very lucrative.

- For B2B, is it your 0% credit line that makes it worth using your dashboard instead of Xero/QBO/etc.? Or are there other benefits?

- How are you monetising this? You are shouldering such massive risk here, surely you will get masses of late payments & defaults ...

I really like that your B2C offering can prevent 'charging poor people for being poor'. Good on you

Hi Chris!

Thanks for your detailed feedback. You have a ton of great insights on bills that businesses pay. To answer your questions -

We started out, we intended to cover user's essential household bills only (rent, and utilities). But we had some early adopters add their business bills as well, and we decided we weren't going to turn them away. So as far as the bills fall in these categories - Rent, Electricity, Internet, Telecom, Water, Gas, Parking or HOA - we cover them both for businesses and consumers. We do not cover the type of B2B bills that businesses need an accounting software for. So we think, we can co-exist with the likes of QBO/Xero.

We don't think that the B2C side is not lucrative enough, given in the absence of fair lending products users resort to Payday or other high cost loans. In numbers, Payday Lending is a $90B industry and 70% of those funds are used to cover a recurring household bill such as rent or utilities. That being said, our current users are definitely not the ones who are desperate for cash or just bad with finances (people often think that we’d be competing with the likes of early-pay or cash advance apps). That’s not true. Our users are actually fairly responsible and tech savvy. They might or might not have been affected by the pandemic, and are actually using credit line at 0% APR to spread out their bill payments but also, benefit from bill consolidation and automatic payments. Solopreneurs, small business owners, white-collar workers are the ones who are using us currently.

How are you monetising this? You are shouldering such massive risk here, surely you will get masses of late payments & defaults ... We plan to monetize from businesses. Mostly through partnerships or transaction fees on payments processed through our platform. The intent is to look for value add services for our users, for ex: some users want to know how their bill amounts compare to others in the same area/demographics and get better deals. By showing relevant deals and helping businesses gain customers, we can earn revenue. However, these are just some preliminary ideas, we’re exploring.

As for the risk, we’re thinking about it differently. Rather than profiling users as risky or not, we evaluate risk for transactions or payment types. Surely, essential bills are always top of mind for individuals, and likelihood on screwing those up is the least, even if you compare people across credit scores. That doesn’t mean that people will not default - there will be circumstances where people may not be able to pay even most essential ones, however, we are hoping that (most) people can recover from those circumstances. Our philosophy of avoiding interests and fees will keep overall debt levels lower, and hence, reduce time in which they can recover.

We really appreciate your kind words. And yes, we’re not out there to exploit people. We believe people are more good than evil, and wealth is not the best way to judge a person’s willingness or ability to pay back. We just want to build the right products and incentives to help them be more responsible.

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