FinTechs Deliver Enterprise-Level AP/AR to SMBs as Economy Softens

Owners of small- to medium-sized businesses (SMBs) have to wear more than one hat — sometimes, it’s three, four or five. And to manage their financial responsibilities while staying abreast of the competition, they’re increasingly looking for enterprise-level capabilities in terms of platforms and payments.

“SMBs want digital organization of the chaos that they have to deal with constantly,” Plastiq Chief Financial Officer (CFO) Amir Jafari told PYMNTS in an interview.

They also want faster access to working capital, better ability to manage their cash cycle and deeper insights into their finances.

“All these things impact cash, which is the livelihood of an SMB,” Jafari said.

Freedom of Choice

SMBs are also looking for greater flexibility about how they pay vendors — and get paid themselves.

“If you think about our day-to-day life, as an example, there isn’t a place that we go to, from a consumer-oriented perspective, where we are not able to use a credit card,” Jafari said. “Yet, in the world of the SMB, that’s actually not the case.”

Credit cards still aren’t common for B2B payments, so when a supplier can enable that payment method, the company can give its customers more options in terms of payment methods and thereby drive more revenue.

In turn, these capabilities help SMBs generate better access to inventory and turn — boosting their top lines as a result.

“The ability to have not just embedded finance but payment automation — a category that’s coming into the SMB space — is really going to help them not only survive but also thrive,” Jafari said.

Enterprise-Grade Tech

Plastiq offers a finance management platform that helps growing businesses access working capital, pay bills and get paid. It focuses on small businesses.

SMBs haven’t had the same instant capital that credit cards and other tools have long offered consumers. But entrepreneurs are increasingly pushing on the boundaries of technology so that they can use credit cards the way they want, access working capital more efficiently and move away from some manual tasks.

“Nobody should be opening an envelope anymore. Nobody should be reading an invoice,” Jafari said. “These things that maybe 10 years ago only big companies got to take advantage of — no, this needs to become a very basic kind of capability that all businesses have access to. You’re seeing that coming.”

That helps SMBs keep up with bigger competition. For example, greater access to capital allows them to put more products on the shelves, which in turn brings more customers into the store and enables the store to better meet customer demands.

“When you start bringing those together, I think you’ll see a rebalancing and you’ll see SMBs able to hopefully make up a little bit of the ground that’s been lost over the years as the enterprises or the bigger companies have been able to create that path forward,” Jafari said.

Smoother Payment Flows

Cash and the ability to manage working capital are required in any type of business because all companies need to drive their services, goods or inventory into a revenue stream.

While the ability to better manage accounts payable (AP) and accounts receivable (AR) payment flows will always benefit SMBs, it’s especially important at the current point in the economic cycle and in this inflationary environment.

“Where we’re likely headed for the next 18 months is going to really put a spotlight on [this ability],” Jafari said.