Hi, it’s Jack from CFO Thought Leader, bringing you a Troubleshooter episode where we speak to industry experts and different members of the C-Suite about top of mind subjects in finance. We’re pleased to have caught up with Carey O’Connor Kolaja, CEO of Versapay.
O’Connor Kolaja: Yes, hi Jack.
CFO TL: Carey, thank you for making time for us. From our recent discussions with CFOs, we have increasingly touched on this subject of AI readiness. Of course, what AI readiness means for one organization doesn’t always translate to the next. From your point of view, we’d be interested in knowing what are the questions you believe CFOs need to be asking themselves when it comes to AI readiness? What would you tell us?
O’Connor Kolaja: I may answer this, Jack, a little bit in a surprising way. I actually think CFOs and CEOs, and frankly just the C-suite, needs to be asking their employees, “Are we already there?” I think far too often, when we see the hype curve of trends, and now with AI, and generative AI, there’s a belief of there’s a lot you have to do to adopt it. The reality is, is that we’ve seen AI within the infrastructures of our businesses for years. When we saw ChatGPT launch back, gosh, it was a year ago, I think, this month, back end of last year, there was this hyper adoption of it, and it’s continued.
I do think that there’s a lot of technologies out there. I’ll give you an example. Like Expensify, many people have used it. They can relate to it. They’ve put an AI model underneath it, in order to understand how people are paid, how to absolutely match payments with invoices and receipts. I just use it as an example, because I think the first question is, “Is it being used?” And then, “How is it being used?”Read More
If it is being used, what are the right questions and controls you need to have within your organization to ensure that not only it’s being used the right way, and it’s producing accurate results, but what’s happening to the information and the data that you’re feeding into these AI models? It’s a fascinating journey for me that we learned, there’s a number of people within companies that are already using it, and we’re now exploring, “Well, how do we incorporate it into our product offering, into the efficiencies in our back office, to provide better experiences and solutions for our customers?”
It seems like part of it is really educating the customers, first, did you realize you are already leveraging this type of AI when you do this type of transaction, or you use our software? But going forward, as Versapay looks to really leverage AI more, perhaps, it seems like part of it has to be your role is to educate the finance departments. Am I right about that?
Yeah, education is huge, and it will just continue to be at the forefront as new technologies are adopted. At Versapay, we’ve been actually using AI for 10 years in our cash application, which was a product we acquired about a year ago, and we’ve integrated into our overall product suite and technology stack. With that, we’re able to provide way north of 90% accuracy when we’re looking at digitizing your remittances, and the data, and applying it to an actual payment. We know what that does. It ultimately helps to create efficiencies in the office of the CFO, and more broadly. With AIs, as you and many know, that if you’re leveraging it to get more increasingly accurate, you have to feed it with more information.
Now we can talk about, “Is it anonymous? Is it pseudo anonymous? Is it traceable, all that?” I think that’s a really big education, and a pillar that needs to come with adoption of this new tech. But in doing that, as the more you do it, the more information, the more the model C, the better you become. One is definitely educating our customers where we are, and where we aren’t using it. The second is understanding, from our customers, what are the guardrails or the boundaries that they have within their own organization to adopt external or internal AI, or large language models, to be using. Because if you were to ask the question, Jack, to any C-level executive, “Are you interested in accelerating the jobs that you need to get done for better outcomes?”
In this case, in our world, to unlock working capital, I would guarantee 10 out of 10 people would say yes, and automation and AI allowed you to do that. The education around, internally, as well as externally, to our customers is do you know you’re using it? And if you are, where? Do you have the aspirations to drive automation? Do you want to buy or build? Then how does the information flow throughout your organization? How it’s used, where are the checks and balances? Because it’s not a perfect math yet, and that’s something we have to keep in consideration.
How do you separate, I’d be interested in… When you think of the early adopters of the technology, versus the laggards, what are the characteristics of a laggard? How do we know what group we’re part of? Finance leaders are hoping that they’re really part of the early adopters, or moving in that direction, the world-class users of AI. Is there a distinction you can make for us, if you’re not performing here, perhaps you’re moving into the laggard category?
The attribution is going to be difficult, I think, to make it relevant to your audience, because there’s probably so many permutations of people who listen to your podcast. But I will say, in a lot of the research that we have done, a couple of very interesting statistics. One is 77% of CFOs reported that they need to automate their invoice to cash reconciliation process. In doing so, they know that they can unlock working capital, which effectively could be the difference between a company surviving versus thriving.
In addition to that, in research we’ve just done, and I’ll couch this with, it’s in North America and specifically in the mid-market, which is predominantly who we serve right now, we have learned that 70% of the office of the CFO, when it comes to account reconciliation, has no automation. They’re still using spreadsheets, and they’re still using a lot of manual labor. That, to me, presents a huge opportunity of where we can make a difference for these businesses.
In customers where we’ve been working with them for a number of years, they’re seeing departments that were 60 people go down to six or two. I think that those attributions are probably the right ones. If you’re still working on spreadsheets, and have a large accounts receivable department, you’re probably falling behind. But I don’t think this is a matter of keeping up with the Joneses, as much as it is, “How do you run and manage efficient businesses in a world where the cycles of change, or just continue to be expedited?”
Carey, as someone whose background, perhaps, has afforded you a place to observe how technologies have moved in to industry before, and how exactly that happened internally, and what were the steps business leaders took to really leverage it? I go back to the finance leaders now. Are they having the right questions? Are they asking the right people? Are they engaging with the right people? Sorry, I don’t mean to put you on the spot, but what-
No, Jack, it’s fine. It’s such a fascinating problem, and I’m very comfortable talking about this independent at Versapay. Just my upbringing has been technology. I’ve been in product a good part of my career. I’ve been in financial services for almost three decades. At the end of the day, it’s a piece that I’ve thought a lot about, particularly as we look at, “How do we consumerize business finance?” If you take a look at the patterns of what’s happened in consumer finance disruption, and the technology that effectively has driven disruption, the same thing’s happening in business. So.
To answer your question of how do CFOs, and those in the office of the CEO, know they’re doing right, I think the question becomes is if their business is growing, has the staff that they need, or continue to need, continuing to grow the same rate? Because if it is, you probably haven’t made the right investments. I think there’s also an element of what is manual versus what has become automated? Those are very simple metrics for me, is if I look across the journey of the tasks, and the jobs that need to get done, and my business is growing, am I throwing more people at it, or am I actually able to create operational leverage?
I would say that the people you want sitting at the table, they aren’t necessarily the people you would expect. I absolutely think that the office of the CTO needs to be there. The office of the product officer needs to be there. Companies have chief data scientists now. Your CISO needs to be there, because they have to understand the data flow. It’s not just about protectionistic measures that need to be put in place because feeding these models with so much information, but it’s also about they actually are sitting amongst the disruptors of how this tech is being applied.
I think they can unearth and can reveal a lot of insights into what you need to be considering. But I’ll share one more thing before I pause, which is I was talking to a number of investors in this space over the last couple of years, and I was pushing the envelope with AI. What needs to get done? How do you keep up? Are we using the best and the brightest? And someone said something interesting to me, which was, “The basic problem hasn’t been solved yet.” So before jumping, or taking a leap of faith into the best and the brightest technology, see if you actually have the problem solved, and then you can start applying on technology that will make you better and more efficient.
Well, some great advice on this subject of AI readiness. We’ve been speaking with Carey O’Connor Kolaja, CEO of Versapay. Carey, thanks so much for answering our questions.
Yeah, no, it’s my pleasure. Thanks for having me.