E-Commerce Retailer Streamlines Supplier Payments to Grow Dramatically While Staying Lean
Touch Of Modern is an eCommerce website that caters to the modern lifestyle. From furniture to fashion, Touch Of Modern is redefining the online shopping experience – every product is curated by in-house design experts and offered at unbeatable prices. Touch Of Modern uses Tipalti to:
- Automatically upload invoices and pay vendors, allowing their suppliers to be paid in a much more timely fashion.
- Schedule payments in advance, greatly improving cash flow.
- Eliminate the need to interact with multiple banking systems and purchase foreign currency, significantly reducing time, effort, and chance of error.
Mistake-Free Lean Operations
Wu recalls what he learned from several other e-commerce businesses about profit vulnerabilities. “One area e-commerce loses money on is on poor AP and AR processes,” remarks Wu. “There’s human error involved in touching your money, and we wanted to make sure there were no humans touching our payments to help minimize errors.”
Those kind of mistakes are painful to resolve since the e-commerce company must go back to the vendor to get refunds for overpayment. They also add cost since bank errors usually also involve investigation and resubmission fees.
Wu adds: “As in our case, when you’re growing very quickly, activities can be very chaotic, and you don’t always have all the controls in place to monitor everything. If you’re entering payments manually, going from $10,000 to $100,000 is only an extra digit. We laugh at the idea of an error like this occurring, but it’s been known to happen.”
Achieving Long Term Scalability
Wu says: “Prior to Tipalti, even at only five payments a day, it was a major time sink. It took half a day, which included entering in the invoice and the vendor payment information, checking and double checking amounts, and setting up wire transfers.”
It was also an interruption in the day. For example, when Wu had to set up a wire transfer, there were times where he didn’t have all the information he needed. That involved emailing or calling the vendor which led to more conversations and more delays.
Wu notes that Tipalti is very unique in its approach to solving the payment management problem. “Other payment management products require some type of escrow account. The problem with retail is that cash is very tight. We can’t have secondary cash sitting in an account that’s just floating. Tipalti was the only system able to pull from a central account to support all the varying payment methods we needed.”
“At the time we implemented Tipalti, we were at about $6 million in sales. Now we’re at almost $100 million in sales, and we’ve never had to add headcount in AP or finance,” remarks Wu. “The long term value Tipalti has brought us, including not having to add staff to manage accounts payable, is immensely valuable, because we’re always focused on growth and scaling our company.”
“With Tipalti we can run our business without the need to staff a dedicated accounts payable department, saving significant time and resources,” continues Wu. “That level of automation has given us increased control and clarity over our payment methods and eliminated the chance for human error.”