BILL Holdings Stock

BILL Holdings, Inc. is a leader in financial automation software for small and midsize businesses (SMBs). As a champion of SMBs, the company is automating the future of finance so businesses can thrive.

The company’s network connects millions of members so they can pay or get paid faster. The company’s purpose-built, artificial intelligence (AI)-enabled financial software platform creates seamless connections between its customers, their suppliers, and their clients. Businesses use the company’s platform to generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting systems, foster collaboration, and manage their cash. The company has built sophisticated integrations with popular accounting software solutions, banks, card issuers, and payment processors, enabling its customers to access these mission-critical services quickly and easily. Divvy, a BILL company, provides a solution for businesses to have smart corporate cards, build budgets, manage payments, and eliminate the need for manual expense reports.

Solution

The company’s platform automates the SMB back office and enables businesses using its solutions to pay their suppliers and collect payments from their clients, in effect acting as a system of control for their accounts payable, accounts receivable, and spend and expense management activities. As a result, the company’s platform frees businesses using its solutions from cumbersome legacy financial processes and provides the following key benefits:

Automated and Efficient: The company’s AI-enabled platform helps businesses using its solutions pay their bills efficiently and get paid faster. The company provides tools that streamline the transaction lifecycle by automating data capture and entry, routing bills for approval, and detecting duplicate invoices.

Integrated and Accurate: The company provides an end-to-end platform that connects businesses using its solutions to their suppliers and clients. The company’s platform integrates with accounting software, banks, card issuers, and payment processors, enabling businesses using its solutions to access all of these mission-critical partners easily. Because the company provides a comprehensive view, customers can more easily find inconsistencies and inaccuracies, and fix them quickly.

Digital and Secure: The company enables secure connections and storage of sensitive supplier and client information and documents, such as invoices and contracts, and make them accessible to authorized users on any device, from anywhere.

Visible and Transparent: With its solutions, customers can easily view their transaction workflows, create budgets, and manage spend, enabling them to gain deeper insight into their financial operations, and manage their cash flows.

Purpose-Built for SMBs: The company’s platform provides SMBs with core functionality and value-added services generally reserved for larger companies. Through its cloud-based desktop and mobile applications, SMBs can connect and do business from anywhere, any time. The company’s platform offers a variety of payment solutions which enhances the experience for both buyers and suppliers in a transaction.

Diverse Distribution Channels: The company leverages both direct and indirect channels - accounting firms, financial institution partners, and accounting software integrations - to efficiently go-to-market.

Large and Growing Network: As accounts receivable customers issue invoices, and accounts payable customers pay bills, they connect to their clients and suppliers, driving a powerful network effect. This aids the company’s customer acquisition efforts by increasing the number of businesses connected to its platform, which then become prospects.

Large Data Asset: The company has a large data asset as a result of processing millions of documents and billions of dollars in business payments annually for businesses using its solutions. By leveraging its machine learning capabilities, the company generates insights from this data that drive product innovation.

Proprietary Risk Management Expertise: Leveraging its data, the company’s proprietary risk engine has trained upon millions of business-to-business ACH, check, card, and wire transactions, enabling it to keep businesses using its solutions’ funds secure.

Experienced Management Team and Vibrant Culture: The company’s management team has deep experience with SMBs, software-as-a-service companies, AI, accounting firms, and financial institutions. The company has built a unique culture that resonates with employees, as evidenced by its highly competitive, low attrition rates.

Platform

The company’s purpose-built platform leverages the fact that it can see both sides of a transaction and can easily connect both transaction parties and promote the rapid exchange of information and funds, with strong network effects and greater monetization opportunities as more customers adopt its platform. The company’s platform also expands the ability of businesses using its solutions to budget for, monitor, and approve employee expenses across organizations of all sizes, all in real-time.

Accounts Payable Automation

The company’s accounts payable automation service streamlines the entire payables process, from the receipt of a bill, through the approvals workflow, to the payment and synchronization with the accounting system. Here are some highlights of the company’s service:

Visibility at a Glance – Through its platform, businesses using the company’s solutions gain a comprehensive view of their cash inflows and outflows.

Document Management – BILL automatically assigns a dedicated email address to each customer to provide to its suppliers. Suppliers use that email address to send invoices to the customer’s dedicated BILL inbox. Alternatively, scanned invoices can be uploaded directly through the company’s application. Once uploaded, the company stores the bills securely, linking them to the associated supplier. With a single click, customers can use the company’s search feature to scan documents quickly and resolve open questions. The company’s document management capabilities help businesses using its solutions make payment decisions, answer supplier questions, and provide support to accountants and auditors.

Intelligent Bill Capture – The company has automated the capture of data from bills by leveraging its proprietary AI capabilities. Incoming bills are machine-read, and critical data fields, including due date, amount, and supplier name, are prepopulated. The customer's Accounts Payable staff can review the result and make any adjustments required, and the company’s platform routes the bill internally for approval.

Digital Workflows and Approvals – The company’s platform speeds approval processes through policy-driven workflows. Much of this activity takes place while people are on-the-go: one of the top three uses of the company’s mobile app is bill approvals. The company’s platform proactively suggests payment dates based upon a bill’s due date, helping customers avoid late payment penalty fees. Businesses using the company’s solutions assign each user a role: administrator, payor, approver, clerk, or accountant. Each role has its own entitlements to ensure appropriate checks and balances in the back office.

Collaboration and Engagement – The company’s platform promotes collaboration. The company’s in-app messaging capabilities make communications between businesses using its solutions and their employees, vendors, and clients, easy. For example, BILL allows administrators and payors to remind approvers to act, or delegate payment authority when a key employee is unavailable. The company’s platform creates a clear audit trail that becomes invaluable in the event of an audit, or for tax compliance.

Accounts Receivable Automation

The company’s accounts receivable service automates the entire process, from the creation of an invoice and delivery to the client, to funds collection and synchronization back to the accounting system. Here are some highlights of the company’s service:

Easy Invoicing – Using a simple template, customers can easily create electronic invoices on the company’s platform and insert their own logos to customize them. If required, the company’s platform also enables the printing and mailing of paper invoices. Many accounts receivable customers take advantage of the company’s recurring invoice feature.

Digital Workflows and Visibility – The company’s platform automates and simplifies electronic invoice creation, delivery, and collection of funds. Using its progress bar, customers have complete visibility into the accounts receivable process. When both trading partners are in the network, businesses using its solutions can see when their invoices are delivered, opened, authorized to be paid, and when payment was received. Invoices and supporting documents like contracts are readily accessible and notes can be entered for future reference.

Collaboration and Engagement – To make paying an invoice easy, the company offers a customizable, branded client payment portal. Clients receive a link to an electronic invoice accessible on the Bill.com site. From this portal, the client can make a payment via ACH or credit card within seconds. For reference purposes, the client has ongoing access to bills and associated payments within the portal. Just like the company’s accounts payable service, its in-app collaboration tools make communications between the accounts receivable customer and its clients easy and trackable.

Spend and Expense Management

With Divvy, spending businesses gain robust spend and expense management tools, helping them spend smarter. The company’s spend and expense management product provides businesses full visibility into their spend, by giving businesses the ability to issue any employee their own Divvy card. Every card provides access to charge card lines originated through its card issuing partner banks (Issuing Banks) and is linked to proactive spend controls: managers control their budgets by team through the assignment of individual permissions. Employees can request funds from their phones, and budget owners or admins can approve or deny spend requests on-the-go from a push notification to their phone. Spending businesses can leverage a single, centralized budget or opt for a more sophisticated scenario, where budgets are established by department, team, or project. Rather than building a business budgeting strategy using outdated numbers in a static spreadsheet, the company’s budgeting software syncs automatically with the employee's Mastercard or Visa cards, while also facilitating reimbursements and vendor spend. With Divvy’s intuitive web and mobile applications, budget owners can drill down into spending by department, team, project, or individual. Whether on-the-go or in the office, an SMB can view up-to-date spend against budgets, so they always know where they stand.

The company markets Divvy cards to potential spending businesses and issue business-purpose charge cards through its partnerships with Issuing Banks. When a business applies for a Divvy card, the company utilizes, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a Divvy card pursuant to its credit policies. Once approved for a Divvy card, the spending business is provided a credit limit and can use the Divvy software to request virtual cards or physical cards.

Payment Services

The company’s suite of comprehensive payment services includes:

ACH Payments – The company enables ACH transactions for both disbursements and collections. The company’s network makes it simple to make the switch from paper checks.

Card Payments – Through a third party, the company offers businesses using its accounts receivable solutions the convenience of accepting credit and debit card payments. In addition, the company enables virtual card payments to vendors of businesses using its account payable solutions and who have elected to accept card payments. Virtual cards support faster payments to suppliers, which includes the data needed to easily match incoming payments with open receivables. Through card issuing partners, Divvy provides both physical and virtual Mastercard and Visa cards to companies that enroll in its business spend and expense management program.

Real-Time Payments (RTP) – Through The Clearing House’s RTP network, a real-time payments platform, the company offers an instant transfer service to allow businesses using its solutions to disburse funds rapidly to meet urgent funding needs. The company also facilitates near real-time payments to customers’ debit cards via a service offered with a partner.

Checks – The company issues checks if its customer prefers or is contractually obligated to pay via this method. By design, the company protects its SMB customers against check fraud by never disclosing their bank account details to a supplier and by reviewing every check presented against a check issue file to detect and prevent check fraud.

Cross-Border Payments – The company simplifies cross-border disbursements by facilitating electronic funds transfers around the world with its International Payments service. Payments can be issued in either U.S. or foreign currency, and the company’s platform synchronizes with customers’ accounting software for a consolidated view of domestic and international outflows. The company offers its U.S.-based customers the ability to disburse funds to over 130 countries worldwide.

Pay By Card – The company’s Pay By Card feature allows businesses using its solutions to make payments using a credit or debit card, even if the vendor or contractor does not accept card payments. The company processes the payment with the business' credit or debit card provider, then it pays the vendor or contractor via ACH ePayment or check depending on the business' preference.

Invoice Financing – The company, through a partnership with a third party, enable businesses easier access to cash by allowing them to finance outstanding invoices. For a small origination fee, businesses using its solutions can receive cash immediately instead of waiting for their invoices to be paid.

Value-Added Services

Two-Way Sync with Leading Accounting Systems – The company’s platform automatically synchronizes customers, suppliers, general ledger accounts, and transactions with an SMB’s accounting system to automate reconciliation. The company is integrated with several of the most popular business accounting software applications, including QuickBooks, Oracle NetSuite, Sage Intacct, Xero, and Microsoft Dynamics 365 Business Central. The company’s two-way synchronization capabilities virtually eliminate double data-entry, as its platform and the customer’s accounting software continuously keep each other updated. Customers who use other types of systems use its advanced file import/export capabilities to minimize data entry activities.

Purchase order (PO) Matching – The company syncs POs directly from accounting software systems, including Oracle NetSuite and Sage Intacct, and QuickBooks Desktop into its platform. Users can compare POs and invoices on one screen, then route bills for approval and payment seamlessly in the same workflow. This eliminates the need to switch between systems for two-way matching and reduces the back-and-forth communication between PO creators and accounts payable managers.

Frequent Status Updates – The company provides timely status updates of financial inflows and outflows by providing status updates of all transactions on a regular basis. Through its workflow progress bars on each page, businesses using the company’s solutions can see who has approved an invoice and what approvals remain, the status of each payment, and the date transactions are expected to clear.

Treasury Services – The company’s platform integrates advanced treasury services tools that are normally either not offered to or are costly for SMBs. Examples include:

the positive pay feature the company employs to ensure only authorized payment transactions are processed;

a streamlined void and reissue function when an in-process payment needs to be cancelled; and

the cleared check images the company makes available to enable businesses using its solutions to confirm payment receipt and facilitate research.

Custom User Roles – The company’s platform enables customers to define custom user roles. These roles can be used to expand or limit each user’s access to the platform and core financial operations functions. For example, a customer can temporarily enable its auditors or tax preparers to access the company’s platform using a custom role that allows them to view source documents in support of the services they are providing, but not have access to other confidential documents or information.

Document Discovery – With its advanced document management capabilities, a customer can easily search for an uploaded document and search its data elements, regardless of how old it is, or how long it has been in its system. Businesses using its solutions utilize this feature when deciding whether to pay a given bill or re-issue an invoice, or in determining who authorized a certain payment.

Integrated, Robust Mobile Functionality – The company’s mobile-native apps, available in both iOS and Android, are easy to adopt and use. Through its apps, businesses using the company’s solutions can manage their transaction workflows, send an invoice, make payments on-the-go, and manage spend.

Partner Integrations

Accounting firms use the company’s platform to provide financial automation, bill payment, and client advisory services, or CAS, to their clients. The company’s platform empowers accountants with a purpose-built console to collaborate with their staff and clients across multiple workflows enabling them to be more strategic and serve more clients.

The company provides its financial institution partners a technology platform that enables a white-label integration with their existing business banking services. The company delivers single sign-on, multi-factor authentication, integrated provisioning, and entitlement of new accounts, as well as integration with required compliance systems. Transactions are synchronized automatically between the financial institution’s platform and the company keeping the customer’s view current and consistent.

In addition to its white-labeled solution, the company supports a broad range of partners and customers with its platform application programming interfaces (APIs). These APIs allow the company’s partners to integrate its platform seamlessly into their solutions, create web or mobile apps that integrate with its, or leverage its payments capabilities. Through its APIs, developers can interact with business entities, like suppliers and clients; obtain summary-level reports, such as payables and receivables reports; and interact with accounting details, such as the general ledger codes of the chart of accounts.

Unique Data Asset

BILL's total payment volume and number of documents processed for businesses using the company’s solutions provides it with a unique data asset. This asset has allowed the company to build powerful AI capabilities. The data provides a view into customer transactions and operational status of various payment processes, which enables the company not only to effectively manage risk exposure but also to provide businesses using its solutions with enhanced tools, such as automatically populating drafts of bills, to save time and simplify their operations. The company’s system continues to learn with each payment made and document processed. This virtuous cycle of learning powers a network effect that facilitates customer satisfaction, offers intelligent insights, improves trust and safety, and fuels further growth.

Network

Through its AI-enabled platform, businesses using the company’s solutions can easily connect with existing network members. The benefit of being in the network is simple: customers connect with others to pay and be paid electronically, freeing them from the need to solicit or share bank account and routing numbers with each trading partner individually. The process of adding bank account details to the company’s platform is easy and secure. For example, when a supplier of an accounts payable customer receives an invitation to join its network, the supplier can accept and securely share its bank account details once with BILL. From that point onward, all payments to that supplier will be electronic.

Once in the network, other BILL customers can easily link to that same supplier without the supplier having to repeat this process again. This approach to connecting businesses has allowed the company to build a robust and growing business-to-business payments directory, which includes approximately 5.8 million network members as of June 30, 2023. The company defines network members as its BILL standalone customers plus their suppliers and clients, who have paid or received funds electronically via its platform. These network effects promote greater adoption of the company’s platform, higher levels of engagement, and increased value across its ecosystem.

Payment and Risk Management Services

The company’s payments engine powers its payment services. Through dedicated connections with banks and payment processors, the company issues checks, initiate card-based transactions, originate ACH-based payments, including real-time payments, through its instant transfer feature, and execute wire transfers. The company’s payments engine handles all aspects of payment file transfers, exception file handling, and required payment status reporting. The company has redundancy across its core payment methods such that if there is an outage with one payment processor, it can direct payments to an alternative provider.

Through its risk engine, the company uses both proprietary and third-party tools to assess, detect, and mitigate financial risk associated with the payment volume that it processes. Throughout the transaction lifecycle, the company monitors data and payments to ensure that it is safeguarding its customers, their suppliers and clients, and the company. When a bank account is added to the platform, the company validates that the bank account is held at a U.S.-domiciled financial institution, is associated with the organization adding the account, and is in good standing.

When customers use its services, the company monitors key activities looking for signals that would indicate anomalies that could create risk exposure and need to be investigated. The company’s risk engine analyzes many unique data elements to score transactions. Those that score above the company’s thresholds are routed to trained risk agents for manual review. Agents have the latitude to contact customers to gather further information, or if a financial risk is imminent, to prevent funds from leaving the company’s system until any suspicious activity can be resolved.

Once a payment transaction is processed, the company continues to manage its exposure. The company has extensive contacts in the banking industry, and it utilizes these to reverse payments when possible. If a suspicious or fraudulent payment cannot be reversed, the company follows a rigorous collections process to recover funds.

Security, Privacy, and Data Protection

The company has robust access controls in its production environment with access to data strictly assigned, monitored, and audited. To ensure its controls remain up-to-date, the company undergoes continuous external testing for vulnerabilities within its software architecture. These efforts have enabled the company to certify its platform to SOC1 Type II, SOC2 Type II, and SOC3 standards. The company’s security program is aligned to the NIST-800-53 standards and is regularly audited and assessed by third parties, as well as its partners, including some of the largest banks in the world.

The focus of the company’s program is working to prevent unauthorized access to the data of its customers and network members. To this end, its team of security practitioners work to identify and mitigate risks, implement best practices, and continue to evaluate ways to improve.

These steps include close attention to network security, classifying and inventorying data, limiting and authorizing access controls, and multi-factor authentication for access to systems. The company also employs regular system monitoring, logging, and alerting to retain and analyze the security state of its corporate and production infrastructures.

The company takes steps to help ensure that its security measures are maintained by the third-party suppliers it uses, including conducting annual security reviews and audits.

Sales and Marketing

The company distributes its platform through direct and indirect sales channels, both of which it leverages to reach its target customers in an efficient manner. The company’s direct sales are driven by a self-service process and an inside sales team. The company’s inside sales team augments its direct sales capabilities by targeting potential customers that have engaged with it on their own.

The company also reaches customers indirectly through its partnerships with accounting firms, financial institutions, and accounting software providers. While these partners sometimes require an initial integration investment, a go-to-market flywheel takes effect as its partners accelerate the delivery of its platform across their customer base with minimal incremental investment from it.

The company focuses its marketing efforts on generating leads to develop its sales pipeline, building brand and category awareness, enabling its go-to-market partners, and growing its business from within its existing customers. The company’s sales leads primarily come through word-of-mouth, its accounting firm partners, and website searches. The company generates additional leads through digital marketing campaigns, referrals, in-product customer education, brand advertising, public relations, and social media.

As part of its marketing efforts for its spend and expense management solution, the company offers a card rewards program to drive card adoption, incent card usage, and drive card loyalty with spending businesses. Under the card rewards program, spending businesses can earn rewards based on transaction volume on the cards issued to them and can redeem those rewards mainly for statement credits or cash, travel, and gift cards.

Intellectual Property

As of June 30, 2023, in the U.S., the company had 20 issued patents that expire between 2028 and 2040, and seven pending patent applications, two of which have been allowed as of June 30, 2023, along with five pending international patent applications. These patents and patent applications seek to protect proprietary inventions relevant to the company’s business.

As of June 30, 2023, in the U.S. the company had two trademark registrations covering the Bill.com logo and three trademark registrations for DIVVY or the Divvy logo, along with registrations for Divvy slogans. The company also owns a U.S. trademark registration for the name Invoice2Go and the Invoice2Go logo. The company owns a pending application for BILL.COM plus design in Canada, along with a registration in Canada for the Invoice2Go logo. The company owns one registration in Australia for the Invoice2Go logo, along with additional registrations internationally for the mark INVOICE2GO or the Invoice2Go logo. The company also owns several domain names, including www.bill.com, www.getdivvy.com, and www.invoice2go.com.

Regulatory Environment

Payments and Banking Regulation

In order to conduct the payment services the company offers, it is required to be licensed to offer money transmission services in most U.S. states. The company has procured and maintained money transmitter licenses in 50 U.S. jurisdictions and actively works to comply with new license requirements as they arise. The company is also registered as a Money Services Business with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). These licenses and registrations subject the company, among other things, to anti-money laundering and anti-terrorist financing requirements, the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) sanctions obligations, record-keeping requirements, reporting requirements, bonding requirements, minimum capital requirements, limitations on the investment of customer funds, and regulatory examinations by state and federal regulatory agencies.

The company also holds a Foreign Money Services Business (FMSB) license in Canada that is administered by The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and a Money Services Business License administered by Quebec's Autorite Des Marches Financiers (Financial Markets Authority). Global Affairs Canada and Canada's Department of Public Safety administer Canadian sanctions programs and oversee its compliance with these regulations.

The company is contractually obligated to comply with Federal Deposit Insurance Corporation (FDIC) federal banking regulations, as well as with Visa and MasterCard rules, as a card program manager for the card program management banks (CPMB) for the company’s card product offerings. As a card program manager for the CPMBs, the company has implemented compliance programs designed to ensure the company is in compliance with applicable banking regulations and the Visa and MasterCard network rules. The CPMBs oversee the company’s compliance program and conduct periodic audits to ensure compliance with applicable regulations and rules. The company is also subject to the examination and enforcement authority of the FDIC under the Bank Service Company Act in the company’s capacity as program manager to the CPMBs for the company’s card product offerings.

In addition, the company is subject to FDIC oversight through the provision of FDIC insured business deposit accounts provided by a regulated bank in relation to certain Invoice2Go products.

The company maintains loan brokering and servicing licenses through its subsidiaries in a number of U.S. states and actively work to comply with new license requirements as they arise.

The company’s services utilize ACH transfers and require compliance with National Automated Clearing House Association rules. The company is required to comply with Regulation E, the Electronic Funds Transfer Act, which regulates certain funds transfers.

Anti-money Laundering, Counter-terrorist Financing, and Sanctions.

As a Money Services Business and a licensed money transmitter the company is subject to the U.S. anti-money laundering (AML) laws and regulations, including under the Bank Secrecy Act (BSA) and similar U.S. state laws and regulations. As a Foreign Money Service Business in Canada, the company is subject to various AML laws and regulations in Canada. In addition, the company is required to comply with the U.S. economic and trade sanctions administered by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC), as well as similar requirements in other jurisdictions, including among others, the Canadian Proceeds of Crime and Terrorist Financing Act and the Australian Sanctions Regime.

The company has implemented an AML and sanctions compliance program designed to prevent its platform from being used to facilitate money laundering, terrorist financing, and other financial crimes. The company’s United States (U.S.) compliance program includes the designation of a BSA compliance officer to oversee the program. These programs are also designed to manage terrorist financing risks and to comply with sanctions requirements to prevent the company’s products from being used to facilitate business in certain countries, or with certain persons or entities, including those on designated lists promulgated by OFAC and relevant foreign authorities.

Data Protection and Information Security

The company receives, stores, processes, and uses a wide variety of personal, business and financial information from prospective customers, customers, their vendors, and other users on its platform, as well as personal information about its employees and service providers. The company’s handling of this data is subject to a variety of laws and regulations. In the U.S., the company is subject to privacy and information safeguarding requirements under the Graham Leach Bliley Act and state laws relating to privacy and data security, including the California Consumer Privacy Act and the California Privacy Rights Act. Additionally, the U.S. Federal Trade Commission (FTC) and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. The company is also subject to foreign laws and regulations governing the handling of personal data, including the European Union's General Data Protection Regulation (GDPR), the United Kingdom's GDPR, Australian and Canadian privacy laws, and the privacy laws of other foreign jurisdictions.

Anti-Corruption

The company is subject to the U.S. Foreign Corrupt Practices Act, the U.S. domestic bribery laws, and other anti-corruption laws in the foreign jurisdictions in which the company operates, including among others, Australia's anti-bribery laws, the Canadian Criminal Code, and the Canadian Corruption of Foreign Public Officials Act.

History

The company was founded in 2006. It was incorporated in the state of Delaware in 2006. The company was formerly known as Bill.com Holdings, Inc. and changed its name to BILL Holdings, Inc. in February 2023.