Settle is a cash flow management platform that makes paying vendors anywhere in the world seamless and efficient. Their easy-to-use software provides workflows for on-boarding vendors, aggregate invoices, and tracking and scheduling payments against those invoices over ACH, Wire and Check. They also have built-in integrations with accounting software so that customers can automate reconciling payments to their general ledger.

Settle provides invoice factoring services to payers and vendors. They pay vendors on a customer’s behalf so that the customer can repay within 30 to 120 days to manage cash flow efficiently. Vendors can also sell them outstanding invoices for upfront cash, with Settle managing collections from their customers.

Being able to handle all payments directly in the product is a key component of their business model. Since they focus primarily on e-commerce and Consumer Packaged Goods (CPG) companies that have long lead times between inventory sales and revenue, quick payment settlement is extremely important to their customers.

For accounts payable, Settle handles two payment flows:

1. Debit the customer’s bank account for the amount that needs to be paid.
2. Credit the vendor’s bank account for the same amount.

Their invoice factoring feature needs to handle two payment flows as well:

1. Credit the vendor’s bank account with the payment for the invoice.
2. Debit the customer’s bank account over the repayment period for the factored invoice.

Since Settle takes on transaction risk to provide faster payment settlement, each transaction must be tracked and reconciled accurately and on time. When they receive a repayment for a factored invoice, they also need to apply it to the customer’s loan balance to track their progress on repayment. For a high-growth business like Settle, the complexity of managing payment operations increases with the number of customers and transactions on their platform.

They need to provide both parties complete visibility into payment statuses and, to minimize payment failures and returns, also need to verify the bank account details of both buyers and sellers.

“We also evaluated Stripe and Dwolla, but their cost, longer settlement times, and lack of adequate support for Wires and other payment types meant they weren’t the right fit for our business model.”

Alek Koenig, CEO and co-founder of Settle

Settle knew that they needed to automate money movement even before they wrote the first line of code for the product. Their goal was to provide their target customers with a cash flow management product that had a great UX, a seamless global payments experience, and built-in financing services. Since their product and business model was unproven when they first started, they needed a solution that was easy to integrate and had the flexibility to handle their requirements. It also needed to scale with their volume if the product started getting a lot of traction.

After evaluating all their options, Settle decided to use Modern Treasury because of the ability to integrate directly with their bank for payments and reconciliation and the flexibility of their APIs. “We didn’t consider integrating directly with a bank because just from my experience, they generally don’t have good API docs,” said Alek Koenig, co-founder and CEO. “We also evaluated Stripe and Dwolla, but their cost, longer settlement times, and lack of adequate support for Wires and other payment types meant they weren’t the right fit for our business model.”

Settle used Modern Treasury to build a payments experience that lets their customers use ACH and wire transfers to make payments anywhere in the world. It’s fast to set up and comes with workflows and reporting to manage accounts payable effectively. It also integrates with accounting software to make booking transactions easier. Implementing with Modern Treasury was pretty quick — it took them 4 weeks to complete the bank integration, set up the APIs and make their first payment.

When a customer makes a payment, Settle uses Modern Treasury APIs to debit the customers bank account and credit their vendor. Since all payments go directly through their bank account, they don’t have to hold on to their customers' funds for too long waiting for the transaction to clear. They also provide invoice factoring services for each payment allowing customers to manage cash flow more efficiently. On the accounts receivable side, they offer to buy a customer’s invoice for upfront cash and take over collecting on it.

They’ve seen tremendous growth since they launched two years ago, scaling to more than $100 million in payments processed every month.

Currently, Settle uses Modern Treasury to power accounts payable and invoice factoring payment flows. When asked what’s next for the company, Alek says that his number one priority is managing the company through hypergrowth to ensure they’re able to scale with their customers. As far as payments are concerned, their focus is to build out an accounts receivable product using Modern Treasury next. They’re also going to start using Continuous Accounting to automate booking payments to QuickBooks.

“We don’t work with third party lenders because we’re underwriting in a unique way with unique data. It’s very important for us to be able to control the entire experience,” said Alek. “Modern Treasury gives us a lot of control over payments. It’s been pretty flawless so far.”