Accounts receivable, the overlooked giant in B2B payments: Why we invested in Tabs
The global accounts receivable automation (A/R) market crossed $3.5B in 2023 and is projected to surpass $6B by 2027. Despite its massive size and complexity, the vast majority of businesses still run A/R manually or on legacy systems.
This stands in stark contrast to accounts payable (A/P), where we’ve seen the rise of modern, tech-driven businesses like Tipalti, BILL (CV portco), AvidXchange, Paystand (CV portco) and others. Given the success of venture backed companies on the “spend” side of B2B payments, you’d imagine there would be an equal number of at-scale players on the “receive” side — but that hasn’t exactly been the case.
The opportunity in A/R automation
Building in A/R requires overcoming two key hurdles
- Contracting, invoicing, and acceptance practices and workflows vary considerably across verticals
- Integration with ERP & CRMs is critical in order to generate & collect invoices
Because of these two roadblocks, most innovation has been bimodal. New entrants have EITHER built for the enterprise (e.g. High Radius) where larger budgets / higher price points allow for vertical customization and deep ERP / CRM integration OR the long-tail of small businesses where simple, non-integrated point solutions (e.g. Invoice2go) are sufficient. This has left the mid-market, where order-to-cash is uniquely critical to business operations and performance, meaningfully underserved.
For mid-market companies, order-to-cash consists of contracting, invoice generation, and pricing to invoicing, payment acceptance, dunning, and payments reconciliation. For most of these businesses today, those processes rely on a patchwork of point solutions and manual labor, leading to inefficiencies and friction that have real financial consequences. In fact, estimates suggest that more than 50% of mid-market A/R invoices are paid late, creating cash flow challenges for businesses across industries.
Why we invested in Tabs
Enter Tabs, a company that is leveraging Generative AI to tackle the “beyond human scale” problem of A/R automation. Tabs can ingest a wide variety of contracts, generate predictive invoices and pricing, leverage conversational AI to handle invoice-related pricing & usage queries with customers, and automate the payment reconciliation and revenue recognition process.
Tabs is enabling a wide range of mid-market businesses — from marketing agencies to venture-backed SaaS companies — to transition away from homemade or repurposed billing platforms (e.g. Chargebee). By doing so, these businesses are reducing labor costs, minimizing errors in their A/R processes, ensuring accurate pricing, and significantly lowering the number of days outstanding or late payments.
The results speak for themselves: Tabs’ customers are seeing impressive returns on investment within weeks of implementing the solution. The company’s traction relative to its stage is remarkable, and we believe it has the potential to fundamentally change profitability for over 200,000 mid-market U.S. businesses.
Looking ahead
As Tabs continues to grow, we see the potential for the company to become the back-office financial and contract system of record for its customers. Beyond A/R automation, Tabs could eventually help businesses with contract structuring, pricing optimization, and other critical back-office functions.
We are excited to support Tabs on this journey and believe that their innovative approach to A/R automation will unlock significant value for mid-market businesses across the country.
