Case Study: Technology
Merge Accelerates Cash Flows with Ordway
Merge gained better visibility into aging receivables and was able to accelerate cash flow using customized dunning workflows.
The client
Merge is the leading unified API platform for B2B SaaS companies.
More than 20,000 organizations, including frontier LLM providers and Fortune 500 companies, use Merge’s Unified API to add hundreds of cross-category integrations to their products. Merge also offers a suite of integration observability features to help customer-facing teams manage the integrations. And Merge fully maintains the integrations on the customers’ behalf, ensuring they’re performant over time.
The challenge
Merge needed to Automate Billing, Revenue Recognition, and Accounts Receivable
As Merge began to staff up its accounting team, one of the first priorities was to build out the finance tech stack. The company had implemented the Stripe payments gateway to automate customer collections. However, many key finance functions were not automated.
Revenue Recognition Challenges
Revenue recognition was being done “by hand” in a spreadsheet by outside contractors. Spreadsheets are known to be error-prone and are not a scalable approach to reporting important GAAP financials such as top-line revenue. The accounting team needed an automated system that could handle the requirements of ASC 606. Merge also needed a system to handle more complex edge cases of both billing and revenue recognition, such as multi-year contracts with pricing that increases at specific time intervals, and non-standard billing timing arrangements.
Accounts Receivable Challenges
Managing accounts receivable and collections was also challenging. The finance team lacked access to an automated accounts receivable (A/R) aging report, which would have allowed them to view the list of accounts that were current and those that were 30, 60, or 90 days past due. Without visibility into the list of outstanding invoices, it was challenging for finance to manage collections and drive a consistent, predictable cash flow. Dunning communications were limited to a single email reminder for late payments at the 30-day past-due mark.
”“Implementing Ordway had a meaningful impact on our cash flows, decreasing DSOs and improving predictability. It also helped us automate our revenue recognition processes so we could close faster and pass external audits.”
Kathryn ShookHead of Accounting at Merge.dev
The solution
Merge Automated Billing, Revenue Recognition, and Accounts Receivable with Ordway
Selecting a Billing and Revenue SaaS Application
The accounting team at Merge recognized that if finance were to scale to support the company’s rapid growth aspirations, they needed to automate the order-to-revenue process. The team gathered key requirements and evaluated several software applications. Merge wanted a system that would address the company’s immediate challenges with revenue recognition and accounts receivable, while also supporting planned future initiatives, such as usage-based billing, international expansion, and an ERP upgrade.
Merge selected Ordway to support the company’s order-to-cash process, including subscription billing, revenue recognition, and accounts receivable.
Implementation
Integrating Billing with Salesforce CRM
New Customer Acquisition and Renewals
Merge integrated the company’s CRM application, Salesforce.com, with Ordway. As the sales organization marks deals as “closed won” in the CRM, the opportunity records from Salesforce.com are published to Ordway. Detailed information about each opportunity is shared, including the customer name, products, plans, pricing, discounts, contract term, payment schedules, and billing contact(s). Ordway utilizes the data from Salesforce.com to generate the billing schedules, customer invoices, and deferred revenue schedules required for revenue recognition. Renewals are also managed in the CRM and synchronized with Ordway.
AI Chatbot for Sales to Query Billing Records
Communication between sales and finance has improved following the implementation. The Merge RevOps team built an AI chatbot that uses data from Ordway to answer questions about the status of outstanding customer payments. Account executives can ask a Slackbot about the history of payments for their renewal customers to help determine the appropriate billing cadence for customers, which saves time from both a collections perspective and from an engineering and support perspective. Using a chatbot empowers the sales team to gain real-time access to payment information without needing to involve the accounting team.
The results
Automating the Order-to-Cash Process
Accelerated Cash Flows
Implementing Ordway has had a significant impact on Merge’s cash flow. Days Sales Outstanding (DSOs) have steadily decreased since implementation. Merge leverages Ordway’s automated A/R aging reports to understand which accounts are past due. Highly customized dunning messages were implemented to improve collections from overdue accounts. The result is a more consistent, predictable cash flow that enables Merge to run the business more efficiently.
Audited Financial Statements
With Ordway, revenue recognition calculations are automatically performed in the system based on company policies and adherence to ASC 606 principles. The automation has reduced the time required by Merge’s accounting team to close the books each month and produce financial statements for outside investors. Automation of revenue recognition was a key success factor in Merge’s ability to complete its first external audit of the company’s financial statements.
Intelligence for Sales, Development, and Support
Ordway has made access to collections and payments data easy for the Merge team to access in real-time. Other parts of the organization use the data to make more informed decisions about individual accounts. For example, the sales team uses historical DSO data for specific accounts to determine whether to offer a customer a more flexible payment schedule. Customers who pay on time consistently are more likely to be offered more flexible arrangements, such as quarterly or semi-annual payment plans. The engineering and technical support teams also confirm that customers are current on account balances before engaging in custom development work and professional services.
Single Version of the Truth
With Ordway, users can drill down into each specific customer to view the historical records of invoices generated, payments collected, and revenue recognized during various contract terms. Ordway also enables Merge’s finance team to attach files and notes to each account, such as calculations and screenshots, which is especially useful for non-standard contracts that have more customized revenue recognition. All financial details associated with a specific customer are stored in Ordway as the single source of truth.
