Settle CEO Says GenAI Expedites Cash Flow Management

The way businesses pay vendors, handle invoices and apply for financing is, in many ways, what defines and drives their business strategy.

And the financial operations supporting today’s top business strategies are increasingly getting a shot in the arm from artificial intelligence (AI) solutions that are redefining efficiency, payment speed and vendor settlement for businesses.

“What businesses want is certainty, understanding what the future might look like,” Alek Koenig, CEO and founder of Settle, told PYMNTS for the “AI Effect” series.

“AI does a great job of understanding long strings of text and ingesting a lot of information much quicker than a human. … For us, we deal with a lot of invoices which are full of information and data, which it can understand in the snap of a second,” Koenig explained.

From that understanding of a firm’s money-in and money-out cadence can spring a sustainable approach to cash flow management.

And against a macro backdrop where the operating landscape is constantly shifting and full of challenges and uncertainty, proper cash flow management has become critical to the financial health of businesses.

After all, the best way to ensure proper cash flow management is — and has always been — with clear visibility that can guide decision-making, an area where AI can provide a huge tooling and productivity lift.

Read more: Settle Launches Automatic 3-Way Matching for Purchase Orders

Predictive Forecasting

From supply chain disruptions to unpredictable cash flow patterns, there are many challenges eCommerce businesses face in today’s volatile market. Leveraging AI to analyze historical cash flow patterns can providing online businesses and brands with actionable insights.

By comparing a brand’s performance against aggregated data from various sectors, Koenig explained that Settle helps businesses strategize effectively, offering a semblance of certainty in uncertain times.

“Anything that can help business understand what, say, 13 weeks later, things might look like or what inventory might be available is very helpful from a planning perspective. For businesses that deal with inventory, and specifically procuring inventory, there’s a big time gap from making decisions to turning that into revenue,” he said.

Addressing the critical issue of overdue payments, Koenig outlined how AI solutions facilitate expedited collections and timely bill settlements. “Speed of payment is so key for our brands,” he said, underscoring the direct impact of payment efficiency on inventory management and the overall cash conversion cycle.

“Payments unlock inventory. If you’re not making a payment on time to your vendor, then they might not get that shipment onto the ship to transport it, and then you might have to wait for the next window, effectively. It really impacts your whole cash conversion cycle,” Koenig explained.

Read also: Settle Introduces Purchasing Solution for Founders of eCommerce Businesses

Enhancing Financial Health

Through the use of generative AI and advanced analytics, businesses can equip themselves with the tools to make informed procurement decisions, optimizing their inventory levels and, by extension, their financial health.

“We’re trying to help these brands on understanding that if you procure too much inventory, then not only are you paying for storage of the inventory that you’re not selling, but then your cash is depleted. And if you procure too little inventory, then you have the potential for stockouts and missed revenue. … Helping inventory planning optimizes cash,” Koenig said.

He explains that Settle, which offers financing solutions built atop underwriting models designed by machine learning that take customer data and performance history to maximize lending approvals while minimizing risk.

“When brands can make one-click payments to their vendors, or send it out in one click for approval within their workflow, that creates a better relationship. … Having a good track record of paying vendors on time is important and creates a positive history,” Koenig said.

Looking ahead, the Settle CEO stresses that as AI continues to evolve, its integration into financial services promises to bring about even greater efficiencies and innovations that can better drive certainty through business operations and planning.