Small Businesses Turn to Payments Tech to Address Persistent Problems

It’s a new year — time to turn over a new leaf as the problems of 2021 fade fully into the background. Wishful thinking, indeed.

As the calendar shifted fully into 2022, many of the challenges and problems bedeviling small- to medium-sized business (SMB) owners are proving to be sticky and stubborn.

Plastiq Chief Financial Officer Amir Jafari told PYMNTS that automation is key to ensuring that SMBs find new ways to innovate and thrive.

In a way, the more things change, the more some things stay the same — at least for SMB owners. Many SMBs may have come into 2022 expecting not to have to grapple with the same concerns that had been top of mind in 2021.

But as Jafari told PYMNTS, “they are really going to need to pick things back up,” particularly when it comes to digitizing back offices and optimizing cash flow management.

That’s especially true when it comes to payments technology, which Jafari said “touches the lifeblood and the lifelines of every single business. No matter how you want to spin it, money matters.”

Indeed, roughly half of SMBs said their companies are just one missed payment away from going under. As noted by PYMNTS, SMBs surveyed in a February study remained in a precarious position, with 80% saying they would need social or financial support to survive another public health lockdown — despite 74% of them saying they were “financially resilient.”

Read more: How FIs Can Tap APIs to Meet SMBs’ Shifting Banking Needs

Moving the Money

There’s nothing riskier than the movement of money. As SMBs continue to seek support from FinTechs, they are also mitigating risk by outsourcing this function from companies that keep them safe, Jafari said.

“You want to build a structure so that it has stability now, and you want to build it so that you have a longer-term trajectory of success,” he added.

The great digital shift may be most readily apparent on the consumer-facing sides of commerce. The shift toward digital payments is less readily apparent in the business-to-business (B2B) side of operations, where transactions between buyers and suppliers are still filled with friction.

FinTechs (Plastiq among them, through its payments platform and other offerings) can help SMBs move beyond the confines of accepting cash or checks — outmoded forms of payment by any standard.

Wearing Too Many Hats

SMBs often don’t have the resources or staff to be on the frontlines of tech innovation, and the entrepreneurs themselves are rather thinly stretched. Many of those companies do not have CFOs, and so it falls to the owners to wear as many hats as possible.

FinTech support can help SMBs mitigate the risks tied to spreading oneself too thin — and help a small firm grow into a midsize one.

A Continuing Conversation

Bringing more automation to critical functions like accounts payable (AP) and accounts receivable (AR) can free teams to address change-the-business challenges. Jafari noted that any conversation between SMBs and payment providers should address the topic.

“It’s not just, ‘Why write checks?’” he said. “There’s also the question about why bother opening an envelope and reading an invoice. Let the machine do that. Let’s automate as much as we can.”

There may be a bit of a hill to climb over the next few years, as many SMBs are still reluctant about upgrading their systems and processes — fearing, in essence, that they’ll just be swapping time-consuming manual processes for time-consuming upgrades.

“The reality is that it’s the software’s job to make [automation] easy to implement and make business owners’ lives as easy as possible,” Jafari contended.

He said a progressive approach is in order. SMBs may start out with payments modernization but will quickly find that automation can touch every aspect of operations management, such as inventory efficiency.

Finance leaders at small companies can tap into platforms such as Plastiq’s to mitigate risk — watching out for money laundering and corruption, or simply ensuring that they get paid when, and how much, a buyer promised.

“It’s important for SMBs to know that there’s technology out there that is tailored for small businesses, that is highly differentiated, with mobile-first capabilities that really enable them to kind of manage their business while they’re on their feet,” Jafari said. “It’s really time for SMBs to be empowered through software.”