Can A Single App Promote Better SMB Cash Flow?

Europe’s revised Payment Services Directive, or PSD2, is among the regulations designed to increase innovation when it comes to digital transactions of all types. According to a new PYMNTS interview with Simon Lyons, chief commercial officer at Slide, such innovation promises to improve cash flow for small and medium-sized businesses (SMBs), helping to solve a common problem that can bring existential risks.

Those businesses, after all, can face what amounts to bullying from the bigger players in the supply chain when it comes to the payment of bills and invoices, Lyons told PYMNTS. “They can be paid late by the big boys,” he said. “Cash flows, that’s what kills small businesses.”

The idea is to offer new technology that aggregates cash flow information in one place — via one app — so that those SMBs have a clear view of their current cash flow, and what’s coming down the pike.

App Store

Indeed, the PYMNTS discussion with Lyons took place as Cashfac PLC, a global provider of back-office operational cash management software, announced the launch of the Slide cash flow app on the Apple App Store. The Slide app currently boasts connectivity with five major financial institutions — Barclays, First Direct, HSBC, Lloyds and Santander. Royal Bank of Scotland is among the banks soon expected to join that group, he said.

This particular launch for the cash flow app comes as more banks open up their data to outside parties to spark more payments innovation under PSD2 and other efforts. Europe’s PSD2, of course, requires all of the region’s banks to provide each other access to transaction data and account information. As Lyons told it, before this innovation push, the data required for clear views and better forecasting of SMB cash flows tended to reside in disparate places instead of under one app umbrella. However, that is changing and will continue to change into the 2020s. “Data can be aggregated, and people can bring them together all in one space,” he said.

Poor cash flow — or a poor view into cash flow — can have multiple impacts on SMBs, none of them good.

In the U.S., for instance, small businesses are growing. A recent report from ScaleFactor found that most companies with fewer than 500 employees are reporting revenue increases, while separate analysis from KeyBank revealed that about half of SMBs are saying they have the finances in place to fuel that growth.

Cash Flow Concerns

Unsurprisingly, there are challenges to expansion, particularly when it comes to hiring, cash flow management and balancing financial management with running the rest of the business. Technology, analysts said, will be essential to addressing these challenges. Indeed, 43 percent of SMBs said cash flow is their most significant business challenge today, the KeyBank research revealed. That’s followed by 24 percent pointing to operating costs and 14 percent citing financial control as their biggest concerns.

“We wanted to bring that enterprise software down to the small business level,” Lyons told PYMNTS.

Artificial intelligence and machine learning are part of the general effort in building better views into cash flow for SMBs, he added. He told about how such technologies, when faced with a flood of tens of thousands, or even hundreds of thousands of invoices, could quickly figure out what invoice went to what business, and when they were supposed to be paid. That knowledge, in turn, can help SMBs figure out what invoices might need to be put off, and make other decisions vital to maintaining robust cash flow.

As for other tools in the works for such cash flow technology and apps, including Slide? A top priority is the ability to make payments directly from the app, and to integrate with the major accounting and bookkeeping software popular with SMBs, Lyons told PYMNTS.

Cash flow is critical in ensuring the stability of a business, and PSD2 and other factors will keep sparking innovations in this area.