Proactis’ bePayd secures new strategic contract win
(PHD ) has signed a contract with Denbighshire County Council (“DCC”) to provide its early payment service, bePayd, into DCC’s supply chain.
bePayd will now enable DCCs suppliers to receive an automated notification of approved invoices with the option of accelerating payment before the pre-agreed contractual terms.
Proactis, which is a business spend management solution provider, informed investors that it will fund the accelerated payment in exchange for a small discount paid by the supplier.
It is anticipated that bePayd will be offered, within the first year, to around 3,000 suppliers that generate over 50,000 invoices per annum with a spend value exceeding £100 million.
Councillor Julian Thompson-Hill, Denbighshire County Council’s Lead Member for Finance, Performance and Strategic Assets, commented that, "The Council recognises the importance of its valuable supply chain, especially in these difficult times. Proactis has recognised the needs of our suppliers and we are keen to be able to offer bePayd to them."
Tim Sykes, CEO at Proactis, commented, "DCC is a long-standing and valued customer of Proactis and we are delighted that it has agreed to offer bePayd to its suppliers.”
He highlighted that bePayd is “a natural extension to the portfolio of Proactis’ existing solutions adopted by DCC and we expect that it can drive liquidity into the supply chain.”
Sykes said Proactis will now focus on working closely with DCC to design and implement bePayd’s roll-out and “look forward to updating the market in line with progress.”
Further positive news for PHD investors to start the 2021 calendar year. Over the past three months PHD stock has increased by over 25% in value with more expected to come as the wider market begins to recognise the significant opportunity for PHD with recent data from Data Bridge Market Research, reporting the global spend analytics market is expected to rise to an estimated value of $5.66bn by 2026.
Reasons to Follow PHD
Proactis creates, sells and maintains software and services, which enables organisations to streamline, control and monitor all indirect expenditure. Its solutions are used in around 1,100 buying organisations globally from the commercial, public and not-for-profit sectors.
Proactis previously adopted a new go-to market strategy for each of its US, France and Germany territories which is designed to replicate that of the UK and Netherlands.
In its FY20 results last month, Proactis noted that it had made ‘substantial headway’ after seeing the first sales of its mid-market single platform solution in Germany and France.
The group cited a ‘record year’ in new business total contract value ("TCV") after securing an aggregate of £14.6m (FY19: £11.3m), a 29% increase secured in ‘virtually all markets.’
Proactis said this demonstrates ‘the effectiveness of its strategy, the resilience of the business model and the ability of its teams to deliver despite a change in working practices.’
In recent weeks, the company announced that it has signed a 3-year contract with an unnamed major German DIY retailer to provide its business spend management solution.
The business spend management provider said the win represents ‘a strategically important milestone’ as the second new German customer to sign up under that new strategy.
Proactis, whose solutions are used in around 1,000 global buying organisations from the commercial, public and not-for-profit sectors, said the solution will be deployed in Germany initially before being rolled out into new territories through Central and Eastern Europe.
On 10 February, Proactis said it had signed a three-year contract with an oil and gas services business in North America which it said represents “a strategically important milestone.”
While the name of the customer and value of the contract remain undisclosed, the business spend management solution provider said the contract win is significant because the client is the first in North America to sign up under the Group's new go-to market strategy. The contract marks entry into a new significant territory, which is a stated objective for Proactis.
Compelling Valuation Metrics
While it remains undetermined of how much today’s contract could generate, consultancy firm, PMH Capital, highlighted to investors that “we would guess a firm like Experbuy might generate £50k-£100k pa for Proactis – dependent on transactional volumes.”
It added, “Plus, multiply this a few 100x, & you end up with a substantial, high margin & very valuable, recurring revenue stream. bePayd has the potential to be enormous, given its 1st mover advantage in providing cash flow benefits to SMEs within this ‘low value’ space.”
Furthermore, research from PMH Capital suggests Proactis is currently trading at a significant discount to its peers on an EV/Sales multiple of 1.6x, against an average of 6.5x for the sector.
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