Leaders in Payments: Tesorio CEO Carlos Vega on Connected Finance, Panama, and Starting Out in Finance

Carlos Vega, Co-Founder & CEO of Tesorio, joins the Leaders in Payments Podcast to share his remarkable journey from Panama to the U.S. and back, offering a fresh perspective on revolutionizing financial operations. Discover how Tesorio  is transforming the post-sales processes for industries like B2B SaaS, manufacturing, and professional services by enhancing cash flow predictability. With a fully distributed team across the Americas, Tesorio is addressing inefficiencies head-on, replacing outdated methods with innovative solutions. Gain insights into Carlos's vision and how his experiences have shaped Tesorio's mission, including its seamless integration with financial and CRM systems.

The episode takes an intriguing turn as we explore future trends in the payment industry, focusing on the concept of "convergent evolution" in software development. We delve into how increased competition is shifting focus from traditional competitive advantages to data-driven strategies and brand reputation. Carlos sheds light on how reimagining cash flow as a data problem can optimize forecasts through network thinking and data connectivity. Uncover the challenges of extended payment terms in B2B transactions and the potential transformation of accounts receivable and payable for enhanced efficiency.

Listen to the podcast here, or read the transcript below: 

Transcript

Greg: Hello, everyone, and welcome to the Leaders in Payments podcast. I'm your host, Greg Myers, and today's special guest is Carlos Vega, the CEO of Tesorio. So, Carlos, thank you for being here and welcome to the show. Hey, thanks for having me, Greg. Great, so let's go ahead and dive right in. If you don't mind, tell our audience a little bit about yourself, maybe where you grew up, where you went to school, where you currently live, a few things like that.

Carlos: Alright, yeah, so, uh, it's a longer story. I was born in Panama, moved to the States when I was three, grew up in New York. I went to school in Philly, went to Penn for undergrad, a little bit after college, moved back to Panama, met my wife here, then moved back to the States, went to business school at Wharton, and then, uh, started Tesorio. We got into Y Combinator, moved out to California, and now I live in Panama. Again.

Greg: Oh, wow. Third time? Well, let's go ahead and talk about Tesorio. So tell the audience what Tesorio does.

Carlos: Our main point of view is that closed one is just the beginning. And the main thing you want to be able to do is, you know, anything you sell is good for revenue, but revenue is not real until you get paid. And that's when you can start to reinvest in your growth. Right. And so what we're trying to do. Is automate all the financial operations, all that tactical work that after happens after closed one to make sure that you invoice your customer, make sure that the invoice is delivered, make sure you follow up efficiently and all the collaboration across sales CS and finance happens, make sure you receive payment pretty easily and then finally, make sure you're reconciling those payments.

And if you do all of that efficiently in one platform connected to all the right systems, You can start to get a lot more predictability in your cash flow. And the faster you do that, and obviously the faster you can reinvest those dollars in growing your company. We call it: Connected Financial Operations. But basically it's a SaaS platform that enables all of these workflows.

Greg: Okay. Are there certain verticals that you focus on?

Carlos: It's a good question. I think getting paid and cash flow is a pretty, uh, It's a pretty universal horizontal problem. We have had a lot of amazing traction. With companies in the B2B SaaS space and also a lot of companies in physical goods, you know, manufacturing, wholesale distribution, and the last other vertical is professional services, but we're, we're pretty agnostic, but those are the ones where we tend to gravitate to,

Greg: and how big is the company? you can use number of employees or however you want to define that.

Carlos: Yeah, totally. So we're, we're around 50 to 60 employees. It's kind of cool. Actually, uh, we're fully distributed, which I know has come into a lot of debate these days, uh, again. And so we have about half the team, Latin America, half the team in the States. And we stick to the Americas, we're fully distributed remote, but stick to the Americas to maximize team collaboration. And we have, you know, customers in the hundreds, several billions and billions and billions of dollars of transactions going through the platform every single year.

Greg: So two questions about sort of the, the service that you offer: One, if you don't use something like Tesorio, what do you do? What is the main pain point that you're sort of solving for? 

Carlos: It's always a good thing to focus on. Yeah, when we end up running across companies, they tend to be using Excel most of the time. There are other players in similar spaces, but 90 percent of the time companies are: on a Monday, they export from their ERP, all the open invoices that they are owed.

They then go through, work those with Salesforce, their ERP and Outlook Open, copy pasting in, emailing, writing notes. The next day, they export again, all the payments that they received. Do a vlookup, match it in there, remove the invoices that were paid, go through the same process, do that every single day.

Then the next week they come along and they start all over again. Right? Now, imagine instead of that, you know, getting pinged through teams or Slack outlook, you know, all, all the different areas. You had one single inbox to work from, one system that was connected to all your core financial systems. And all of those processes after closed one being fully automated. That's basically the world that we're trying to create and have created for a lot of great customers.

Greg: Okay. And you, the second question that came to mind is you mentioned about being connected to the right systems. What do you mean by that?

Carlos: Yeah, so it's interesting when you think about it. I guess, you know, one point of view that we have is that cash flow is more of a data problem than a finance problem.And if you look at over the last 10 years, the proliferation of Office of the CFO software, there's a lot of core systems that have your financial data. What money is going to come in and out? And with AI over the last year and a half, two years, you're actually able to tap into even more data like emails, you know, slack messages, uh, contract PDFs, all that sort of data houses. What's going to happen with your cache and what has happened in a lot greater detail. And so we plug into some of the obvious systems, right? Like, let's say. On the ERP side, you know, NetSuite, Intact, Workday, QuickBooks Online. On the CRM side, something like Salesforce. On the email side, something like Gmail Outlook, Zora for billing, and multiple other systems.

But the interesting thing we've been doing lately is using what we call primary source data. So can we pull a signed contract from Salesforce, and use AI to understand how the billing schedule is going to be over the next period of time so that you can forecast what your collections are going to be.

Can you use that same AI to generate an invoice and deliver it more efficiently to the customer without the kind of the baton drops that happen between sales and finance, right? Where someone forgot to put in a PO number, they put in the wrong contact information, they swapped the billing and shipping address.

These are things that happen. All of the time and really impact your, your, your timeliness of payment. And those things shouldn't happen these days, right? And so we're plugging into, like, other systems that are not as typical. Combing through emails, bringing in, for example, from the banks, images of checks.

Sometimes not all the banks give you, like, a pre processed lockbox feed. They just give you images, or, you know, there's attachments in emails, or there's something in the body of the email, and things like that. So, you know, we can get more into detail, but those are, those are the types of things we're looking at.

Think of it like tentacles almost going out, capturing all the information it can.

Greg: Yeah, I think the days of thinking about what you do is like just a check coming into the company are kind of long gone, right? It's much more complicated than that, but you're able to simplify it. AI helps with that. So thinking about how you get business and sort of your go to market strategy, do you have a direct sales team?

Do you work through partnership channels? How do you go to market?

Carlos: Yeah, so, uh, the answer is both. So we do have a direct sales team, and then We also work very closely with several PE firms, a couple of the, you know, the, the big four accounting firms, and obviously, you know, Workday, NetSuite, you know, like Workday is actually Workday Ventures is an investor in our company as well. And so we, we've partnered with them and then we've been lucky to have a longstanding partnership with some of the banks as well.

Greg: And what would you say differentiates you from your competitors out there?

Carlos: It's, it's a good question. I think just as a side note, this is just a personal point of view. I think there's, there's something  I've noticed at least since, since the platform shift to AI early last year: There's something I've come to call the convergent evolution of software. And if you're familiar with convergent evolution in, in biology, right? It's this concept of like two species that are completely unrelated anywhere on the ancestral tree developing into almost identical animals, right?

And I think with the increase in velocity for development, the increase in competition coming at you from every angle, I think the times where like the traditional competitive moats of You know, UI, a couple of product features or capabilities, a couple of connectors and things like that. I think those are all dead.

I think the competitive modes going forward are going to be completely different. A lot more data driven, a lot more focused on the objective that you're trying to achieve. And so there's a lot of differentiation there. Um, another thing that's really important is what you're known for. And one of the things that, again, I believe really sets us apart from anyone else is this concept that, look, I said it earlier, that for us, cash flow is more of a data problem, not a finance problem.

But to unpack that, What it means is like, look, you know, uh, this is the irony of cashflow, right? Like, if you're going to pay a bill, you know exactly when you're going to send it. You can choose not to put the check in the mail. You release the payment, even down a payroll, like every single dollar going out the door you control.

So the only thing that's unpredictable is when you're going to get paid, right? The funny part about that is your AR is someone else's AP.  So to someone else, your AR is perfectly predictable, right? And so if you think about it from that perspective, and you start to think about, like, take a little bit more of a network thinking perspective, can you create the incentives, can you create the software that goes into All the right data sources.

For example, what if you have software that can automatically log into Coupa and Ariba at your vendors, right? Get all the information, maybe process all the notifications that you're getting from Coupa and Ariba and the myriad other portals, right? To figure out like, okay, when am I going to get paid? Is my invoice already approved?

When's it expected to be sent? All that sort of stuff. And that all flows naturally into your forecast for when you're going to, uh, what your cash flow is going to look like in the near term. That mindset, uh, I think is a pretty core tenet of what we do. It influences our strategy. And by the way, everything I just said, imagine if, uh, we actually do.

So it's, uh, I feel like that's a core differentiator. Just to summarize, I think the core differentiator is going forward. are being known for what your objective is, having the right business logic and data connectivity. Um, and it's not just data for data's sake. I say data might be the new oil, but petroleum's pretty useless, right?

What is it that you're actually going to do with that data? The objective, the business logic. And then, I know this sounds really basic, but your brand. Like, does it instill trust so that people are willing to give you that data in order for you to do these things?

Greg: It's kind of ironic because I saw today on LinkedIn, someone was saying, why do we still have a 30 day terms for invoices?

And  just as you were talking about that, it's like, that's one of the challenges, even for me as a small business is whenever I work with larger companies, I don't know when I'm going to get paid. And sometimes they tell me it's 60 days or 90 days, and it's 120 days or it's 30 days, but it ends up on day 31, I don't see any money.

And I mean, it's just that whole challenge. I don't know how directly that is related to what. You do other than I know it's a challenge and I don't understand why we even have 30 day terms.

Carlos: Yeah, that's actually directly related to what we do, which is, you know, again, if you had to boil it down to one thing, one of the things we're most known for is drastic reductions in DSO, right?

Your day sales outstanding, which is exactly what you're talking about. How long, how long does it take you to collect a dollar you sold, right? It's a really curious thing, you know, like I think it boils down to working capital, right? Um, so, you know, if you think about the cash conversion cycle, like on the way out, you've got, and I'll just stick to like B2B SaaS, right?

Where you don't have inventory, but you've got the, the DPO, which is, you know, how quickly are you paying the people that owe you money that you owe money to? And then the DSR, right? How quickly are you getting paid? The ideal state is that you collect faster and you pay slower. And that way you don't require more capital or working capital to grow.

That way as, as you grow, basically, like if you think about it, it's the reinvestment cycle, right? Like, so you can invest in growing without requiring dollars to float your business. And that's why you have these net terms, right? You know, if in a perfect world, Let's imagine if you want to go really far out into the future of what might be possible once, you know, you can integrate all these different systems.

You're right, like AR and AP sound pretty antiquated because you have all the invoices, you know, you sold a deal, Salesforce marks a closed one. You create the invoice in your system, in your ERP, your accounting system. You then have to get that over to the customer in order for them to pay you. What's that process like?

Alright, take that electronic invoice in your system,  download it to a PDF, or manually submit it into a portal, and someone on the other side then has to add it to their ERP in their system, right? You know, back when, you know,  people were, were definitely talking a lot more about blockchains, you could almost imagine like, wow, what if there were a shared ledger where everyone just kept, it stayed electronic, there was no email.

Kind of go between and PDFs and all of that, but then if you go back to like the 70s, I mean, that was the dream of EDI, right? And so that didn't work. Why? Because everyone had their own custom EDI instance, just like Pretty recently, everyone wanted to have their own blockchain and everyone wanted to own the blockchain.

So I think there's, you know, the, the hope, you know, and the solve. Yeah, it would be really great if everything just electronically talked to each other. So ERP to ERP, and you could almost just set like, hey, what's your threshold? Like. Look, uh, here's my weighted average cost of capital, and this is how much I'm willing to discount that in order to get paid sooner.

Sorry, pay on top of that in order to get paid sooner. Here's how much I'm willing to discount in order to pay faster, and all that sort of stuff. But  it's just very difficult when you take all those dynamics into play. So that's why I think the net terms exist. You'd have to snap your fingers and magically shift everyone to this way of thinking, which You know, maybe, maybe will happen someday, but I think it'll take some time.

Greg: Well, that's a good segue into the next question. Where do you see, and you can answer this obviously in the context of your business, but where do you see the payments industry headed in the next, say, three to five years?

Carlos: Great question. You know, the way, the way I think about it, so purely payments, we're seeing this right interchange fees are getting compressed.

And so just having a business model purely based on interchange, I think will get more and more challenging. That's like purely on the payment side. I think, you know, some things we're seeing is customers are more and more, they have a global customer base. And so having the flexibility, uh, to be able to collect from or receive payment from any currency, any modality, uh, around the world is critical.

And if you're a business, right, saying, okay, I can use this for only 70 percent of my business, but I need this other platform for the other 30 percent or the other 30 percent that stay manual. because they don't cover X regions that I sell to. Like, those type of things, they're, they're becoming more and more objections that people raise.

And so I think that's going to get fixed, right? I mean, there are a lot of companies trying to fix that, both on the  getting paid and on the paying, on the way out, on AR and AP side. I think we'll see that getting resolved. Um, another thing I do think will emerge is something, you know, I've, I've been referring to as, as, as sensory networks, right?

Like, uh, basically if you have all of these different systems that we were talking about before actually connected, they're gathering a lot of information, almost like notes about how cash is flowing in and out of your business. And if you're gathering that information about how cash is flowing in and out of your business, you can then start to map the randomness or the unpredictability a lot more clearly.

And I'm hopeful that there will be ways to create products that allow these sensory networks between companies to also communicate, right? There's incentives for them to do so. And so therefore, you could start to get to that future we were talking about. Where you can see preferences being set or needs being surfaced and companies can make these decisions purely based on cash flow about when they're going to pay and when they're not going to pay.

So that's a little bit more esoteric. You can dive into that if you would like, but I think the other areas, um, are, are more tangible.

Greg: Yeah, and, and just one question on that. So do you think AI plays a part in that connection? Or do you think it's truly like a, a technology challenge?

Carlos: I think AI 100 percent plays a role in that, in a couple of different ways. When I think about data and what you can do with data, uh, now that AI is around, I think, I think about three different areas, right? The first one is more what you can do with granular data.  So being able to dive into, let's say, I want to figure out when I'm going to get paid, and I have access to the entire payment history over the last two years of this customer, and I have open invoices from them today, I can go through and look at, very easily, with machine learning and AI, all the payment history, come up with a prediction about when this invoice is going to get paid, comparing it also to other similar customers.

The hundreds or thousands of open invoices you have of your company instantly, constantly, right? Like that's very difficult to do manually, but machine learning and AI allow that. So that's, that's the granular data component. The other component is access to new data. I call it primary source data because, you know, it's a.

It's data that hasn't been messed up by human fingerprints, if you will. And so that's, uh, looking at, you know, one example is a contract PDF. Others are like images of checks and like actually looking, and I say contract PDF, yes, humans wrote that, but we find in our customers, 50 to 70 percent of payment delays are actually like fat finger mistakes where someone transcribed something by accident.

But think about the contract, you had teams of lawyers, both sides paying thousands of dollars to their lawyers to make sure, you know, every I was dotted and T was crossed. Right? So what if you could use that information to come up with the invoice automatically without having to rely on a sales rep keying information on the opportunity in Salesforce?

That's just one basic example, but also like going through that to catch other mistakes and areas. And that's the third use of AI I feel is.  Is validation or cleaning of existing data. So what if you could use that contract data to then vet the information that's in your ERP and Salesforce, compare them against each other? and see like, hey, did you catch a mistake before payment gets delayed? So that's on the data side. The other thing, again, also just to go a little bit further into what I actually no longer think is the distant future, I think a really important part of creating those sensory networks is the velocity of integrations.

I don't think we're too far, and today you can do this if you focus on it. I don't think we're too far from the point where you can use Enter an API website, the API docs, and create an integration. If you think about those two things, right? Like being able to use granular data, you know, primary source data, and cleaning up existing data, and then the ability to use AI to connect to almost any data source you want at lightning speed, that's where you're going to start to see these networks emerge. And all of that's possible today. And that's why I don't think it's that distant anymore, uh, to get to that point.

Greg: Yeah, the whole use of AI in payments is a hot topic that I hear about, talk about a lot. And it seems to always come back to like, oh, we use AI in fraud or whatever.

And I know there are so many other use cases and valuable areas within payments when you think of just payments holistically, not credit card payments, but you know, AR, AP, everything. I could sit here and talk about it forever, but I know that the topic is not AI. So, so we'll move on, but I think it's fascinating and I love your kind of view of it.

So I appreciate you sharing that. But let's switch gears a little bit and talk about you. So tell us about your professional background and sort of how you got to your role there at Tesorio and starting the company.

Carlos: I started out of college. I worked for the CFO of GM's pension fund, which at the time was 160 billion fund.

I worked there for almost two years and then actually took a year off to travel around the world. Thanks to his inspiration. Pretty exciting. He gave me really good career advice early on. I was 23 and I said, look, what's this going to look like on my resume? I really want to do it. And he said, Hey, if someone doesn't want to hire you, because when you were 23, you went backpacking around the world, you probably don't want to work for that person anyway.

So that really, as a 23 year old, right, just starting your career, that really, That was great wisdom to get early on, you know, about hey, you're also interviewing who you're going to work for, which is something you didn't think about at that point in your career. And then I came back, I worked in reinsurance and then most of my, I'd say professional growing up was doing M& A at Lazard.

I was based in Panama covering commercially the Caribbean, Central America, execution wise worldwide. That was pretty interesting. While I was there on the side, I had a factoring business. Factoring, you know, that was my first company, and it was called Elemento Factoring. And the idea, it was with a peer from Lizard, and our idea was, hey, look, we're going to, oh, sorry, I kind of, you know, rushed over this, but factoring is when you're financing, you're buying someone's accounts receivable at a discount so that they can get working capital now instead of having to wait to get paid, right?

So that net 30 example you gave earlier. I'm sure you're familiar with it, but just sharing it for your audience. And so our whole idea was like, man, that sounds like payday lending for business. We don't love it. So why don't we go out there and say, look, we'll give you the factoring now, but we'll help you graduate to a bank line of credit.

Here's your cashflow model. Let's get you going. Let's build up your credit score and all of that. And it was really disappointing. People were like, give me the money. I don't care.  And that's why I was like, all right, this is definitely payday lending for business. I don't love it. By the way, factoring plays a really important role, but that was just, and you know, not to knock the industry, super important industry, especially for global trade.

But for me, I was like, you know, it was, you know, I had this mission that I was on. And, uh, and that's where, you know, I went to business school and my goal was to start something that helped people understand their cashflow and could make it more predictable. Um, and that's what got me into starting Tessorio.

Greg: Okay, great. So, what are some things you're passionate about? So maybe one work related passion and one personal passion.

Carlos: Yeah, certainly. At work, I am always intrigued about the importance of communication. It doesn't matter how many times you say something and how many ways you say it, it's never enough.

And you have to keep going and repeating and repeating and repeating because people need to hear things so many different ways and so many different times that you're just kind of never done. And I think that's like one thing I'd heard a lot about and until, until recently I didn't realize like how critical that was.

Outside of work, I love playing tennis, but more material and that I'd say I'm obviously we talked about Panama quite a bit earlier on about how many times I've been in and out of the country, but I really care about looking at the region and Panama in particular. and seeing, back to communication actually, what is the impact of having a lack of a defined country vision?

You know, I think the Dominican Republic is doing it pretty well, but I think the best is, is, is the U. S. I mean, I grew up in the States, you know, was there from 3 to 23, um, so it was pretty formative years, obviously, and then college and, and then grad school. The power of the American dream is something that's, uh, it should not be forgotten, should not be lost, right?

Um, I think that's something that I'm always wowed by and super intrigued by, or in Marvel they call it the, the origin story, right? In all the comic books. The origin story in the U. S. is, is like, look, we had a, we had a revolution, you know, in 1776.  We went and, and, and we fought. we fought what was at the time the biggest empire and we won, right?

Like, and, and that's the origin, right? And then now it's like, wow, like, you know, we fight and we do what we need to do and we will, you know, succeed. Um, and that's something that is very powerful. Versus a lack of that narrative, right? Like, again, like I wasn't born in the States, but I can talk about the founding fathers.

I know, you know, the Paul Revere story. I know the Boston Tea Party, like all these like stories and these narratives are so powerful. And seeing the lack of that in some of the countries in our region is something that I'm constantly thinking about. Well, like, what if, what if those stories could be told?

Right? Like these is such, it's a region with such rich culture, such so many natural resources, such a hardworking, you know, high levels of grit, you know, societies. What if we could capture that energy, right? Like that origin story that. That, that vision for what could be, and that's something, obviously I just rambled way more than you probably expected on that topic, but I'm, I'm very passionate about that and something I spent a lot of time thinking about.

Greg: Okay. No, that's great. Well, if someone comes to you, Carlos, and they're interested in starting a career, maybe they're sort of where you are at 23 and they're asking you for some career advice and that they want to have a, a career maybe in payments or fintech or, you know, something around what you're very, You know, passionate about what kind of advice would you give them to help them be successful in their career?

Carlos: Yeah, I, I'd say I'll tell you the thing that I missed the most. I wanted to start a tech company, but I had never worked in tech.  I understood finance super well, but starting a tech company in FinTech or, you know, office of the CFO payments. It's very different from working at a bank or working in investment banking or working in a finance job.

So my advice would be to find the best company you can get a job at and go work there for the best person you can. Do that for two, three years before starting your company. You're probably gonna meet your co founders there. Or you're going to learn so many things of what to do, what not to do, that that will save you a lot of time.

Greg: Okay, great. Well, Carlos, we've covered a lot of ground about you and the company and the industry as a whole. Is there anything else you'd like to add before we wrap up the show?

All I'll say is that right now is actually a super exciting time to be building a company. I'm jealous of anyone who gets to start from scratch.

The amount of things you can do, the velocity at which you can develop. It's super exciting.  Just go for it. Pretty excited to see what happens over the next couple of years and uh, and continue to be passionate about the space. Awesome.

Well, Carlos, thank you so much for being on the show today. I know your time is very valuable, so I really appreciate you being here.

Carlos: Oh, thank you so much, Greg. And to all you listeners out there, I thank you for your time as well. And until the next story...