Article

Ledge: Automating Payment Operations to Optimize Finance Teams

by Jonathan Golden, Arjun Jain and Rick YangFeb 16, 2023

NEA invests in Ledge, a payment-focused solution for finance teams

At NEA, we have been long-term believers in backing platforms that leverage software to simplify and democratize access to complex networks and systems— resulting in large cost savings and creating new ecosystems. Over the past couple decades, financial services and processes in particular have been digitized, unbundled and continue to experience massive transformation. Along the way we have been fortunate to partner with several category definers and innovators such as Braintree, Narmi, and Plaid, among others, each solving unique pain points and carving out new territories within the fintech ecosystem. We’re thrilled to add Ledge to this roster, as they pave the way for a new generation of payment-focused solutions for finance teams.

Recently, we’ve been focused on the B2B payments stack; the largest, most complex, and most painful problem in today’s office of the CFO. In the US alone, B2B payment volumes were estimated to reach over $27 Trillion in 2022[1], yet despite the critical role that payments play in the economy, a large portion of the system still functions via outdated methods such as paper invoices, with few comprehensive solutions that span money movement channels and rails. The adoption of digital payments presents challenges for nearly every sector, with businesses facing massive complexities with their current payments setup, leading to costly diversions of R&D efforts. Furthermore, settling a payment is only one part of the transaction lifecycle for finance teams; ensuring past payments reconcile across all systems and stakeholders, and ultimately flow correctly into financial reporting and analysis is equally vital—yet few solutions exist to serve this function.

In the digital payment realm of ACH, card payments and wire transfers, finance teams must constantly contend with reconciling data across multiple sources such as ERP systems, data warehouses and invoices, as well as infrastructure providers such as banks and payment processors. I [Jonathan] saw this problem first-hand leading Product for Payments at Airbnb.

Due to the disparate nature of all of these data streams, smaller teams lacking the engineering resources or coding skill set to build an automated system in-house or the budget to buy an expensive full stack solution are forced to resort to manual reconciliation; a time consuming, painful, and imprecise method of last resort. This results in 40%[2]of finance teams’ time spent processing transactions instead of devoting time to strategic initiatives, with 48%[3]of teams reporting that reconciliation is the largest impediment in closing their books.

The implications of a poor reconciliation workflow go well beyond a painful experience for the finance team. Manual reconciliation can lead to losses, inflated operational costs, friction with customers, incorrect financial reporting and even exposure to audit risk. Conversations conducted with finance employees in industries involving non-trivial money movement such as marketplaces, fintech, subscription services and ad tech have expressed this as their main pain point.

Ledge is addressing this massive problem by solving end-to-end payment ops, leveling the playing field for finance teams by dramatically reducing their workload and increasing their capability set. Ledge’s platform automates the entire payments lifecycle and reconciliation process, creating a single source of truth for finance teams, building APIs to all major banks, payment processors, ERPs and billing solutions. Ledge can provide real-time treasury insights and analytics, allowing teams to make smarter decisions.

Ledge bundles a few key features and capabilities on its platform to make this happen:

  1. Automatic payment reconciliation out of the box, across payment methods and transaction channels throughout their lifecycle

  2. A robust case management system, allowing efficient manual intervention with powerful tools in the event of errors

  3. Payment initiation, allowing for the automated movement of money

  4. Monitoring, including live alerts on ACH returns, chargebacks, other payment failures or late payments, allowing teams to take action

  5. Real time visibility across all bank accounts and payment systems in a single view, aggregating balances across providers

  6. Flexible and customizable ledgers allowing all types of balances to be tracked

Ledge empowers finance teams by allowing them to get up and running on this powerful platform in hours rather than weeks using a no code point-and-click interface to connect their key data channels. This in turn relieves the burden on engineering teams, enabling them to focus on their key mission of contributing to revenue generating products. For developers working on more advanced use cases and complex integrations, Ledge offers a robust architecture.

Ledge is built by finance professionals for finance teams; we believe founders Tal Kirschenbaum, Ariel Weiss, and Asaf Kotzer are poised to confront this challenge, as they have faced the problem themselves. While at Melio, Tal saw how challenging payment ops could be and the potential consequences of a manual process, inspiring him to build a world class product to simplify this historically complex and burdensome process. We are grateful for the opportunity to partner with them and are thrilled to have led Ledge’s $9M seed funding. We look forward to working with the team as they transform the existing model of payment operations and empower the modern finance team.


Citations:

[1] https://www.insiderintelligenc...

[2] https://www.google.com/url?q=h...

[3] https://rc.sageintacct.com/ebo...

About the authors

Jonathan Golden

Jonathan Golden is a Partner at NEA, where he focuses on consumer, marketplaces, fintech, and application-layer software. He leads NEA's investments in Ledge, Ledgy, Metabase, and Patreon. Before joining NEA, Jonathan was Director of Product at Airbnb. Prior to Airbnb, Jonathan worked in product at both Dropbox and HubSpot, and was a venture investor at Greylock Partners. Jonathan holds a bachelor’s degree from the University of Michigan and an MBA from Stanford.
Jonathan Golden is a Partner at NEA, where he focuses on consumer, marketplaces, fintech, and application-layer software. He leads NEA's investments in Ledge, Ledgy, Metabase, and Patreon. Before joining NEA, Jonathan was Director of Product at Airbnb. Prior to Airbnb, Jonathan worked in product at both Dropbox and HubSpot, and was a venture investor at Greylock Partners. Jonathan holds a bachelor’s degree from the University of Michigan and an MBA from Stanford.

Arjun Jain

Arjun joined NEA in 2021 as an investor on the Technology team, where he focuses on consumer and enterprise technology investments. Prior to joining NEA, Arjun was a merchant banker at The Raine Group, in New York, where he worked on M&A transactions and growth equity investments across the technology, media, and entertainment landscapes globally. Prior to Raine, Arjun worked in Sales & Trading at J.P. Morgan. Arjun graduated from Princeton University with a BA in economics.
Arjun joined NEA in 2021 as an investor on the Technology team, where he focuses on consumer and enterprise technology investments. Prior to joining NEA, Arjun was a merchant banker at The Raine Group, in New York, where he worked on M&A transactions and growth equity investments across the technology, media, and entertainment landscapes globally. Prior to Raine, Arjun worked in Sales & Trading at J.P. Morgan. Arjun graduated from Princeton University with a BA in economics.

Rick Yang

Rick joined NEA in 2007 and now heads the firm’s technology investing practice, focusing on fintech and consumer investments. In addition to holding board positions at several NEA portfolio companies, he also serves on the boards of the Stanford Department of Athletics’ investment fund and the Stanford Engineering Venture Fund. He is an All Raise VC Champion and a mentor for BLCK VC. Prior to joining NEA, Rick worked at Credit Suisse. He earned his bachelor’s degree in electrical engineering from Stanford University, where he was also a varsity swimmer.
Rick joined NEA in 2007 and now heads the firm’s technology investing practice, focusing on fintech and consumer investments. In addition to holding board positions at several NEA portfolio companies, he also serves on the boards of the Stanford Department of Athletics’ investment fund and the Stanford Engineering Venture Fund. He is an All Raise VC Champion and a mentor for BLCK VC. Prior to joining NEA, Rick worked at Credit Suisse. He earned his bachelor’s degree in electrical engineering from Stanford University, where he was also a varsity swimmer.