There are a variety of reasons people establish small businesses. Some of those reasons include entrepreneurial spirit, a desire to work for themselves, a once-in-a-generation idea and a general passion for the commerce.
However, we can confidently state that in the history of any business that was ever founded by any passionate entrepreneur, almost no one has ever gone into business merely because they had a passion for creating invoices and collecting payment.
And yet, no matter what business one is in, they are almost necessarily in the business of accounts payables and accounts receivables, because a business that does not pay its bills or get paid doesn’t stay open for very long.
PayPal knows that among the millions of small business customers they serve, far fewer than 1 percent are sitting up at night overwhelmed by the joyous prospect of invoicing.
But, with the upgrades to the invoicing platform for small businesses that it’s rolling out today, PayPal is hoping to achieve something more important for their SMB customers: a world where invoices are so automated, easily operable and seamlessly integrated into the rest of a business’s accounting practices that owners and accountants don’t sit up at night due to invoice-related dread.
“We have a ton of small businesses that use our invoice product as their primary tool to send invoices and accept payments from their customers. This has been a project in the works for quite a while,” Dan Leberman, PayPal’s General Manager of Small and Medium Sized Businesses for North America, told PYMNTS in an interview in advance of today’s announcement.
“We directly engaged our customers to get feedback about what they liked and wanted to see us double down on and offer more of and also other areas where we wanted to catch-up to make sure that our product was as good as anything out there, and ideally better.”
Those improvements to PayPal’s invoicing product, Leberman explained, essentially break down into six different categories.
“What I tell people is the features and functionality fall into two buckets. The first are true functionality upgrades that changes the way a business can conduct an invoicing exchange with their customers. The other features are more what I would describe as complementary capabilities that make it easier to interact with the invoicing tool and for merchants to interact with their customers,” Leberman explained.
The most significant of the “functionality” upgrades is how PayPal now allows business owners to create and categorize value in an invoice. Now, invoices can reflect the quantity of units sold, time for services and dollar amount.
“Most tools, including ours, previously focused only on a dollar amount,” Leberman explained. “SMBs could create a note to describe what it was. But this new process allows businesses to actually automate that process — here is five units, or 10 hours – so a much more structured way of capturing information. Not only for customers, but also for businesses’ record-keeping when they are trying to track a unit of value over time.”
The other major structural upgrade is how businesses pay, with the new platform taking the all or nothing element out of the payment.
“We are going to enable what we call partial payments,” Leberman explained. “A business can send an invoice to a customer and a customer can pay a part of it at some time, without having to have some special arrangement on the side involving multiple invoices.”
According to Leberman, the second bucket that improves communications has four components. One allows merchants to download and store their invoices as PDFs, which is helpful for companies that service several subsects in their businesses and require separate grouping for invoices. Another allows businesses to easily automate embedded links to the invoice (and payment options) in email and social media postings.
“What we found are new alternative channels for distributing invoices,” Leberman said. “We found that beyond an email, businesses also wanted to be able to send a link so the buyer can see and pay the invoice.”
The system has also been expanded to include the easy entry of invoices that are paid through an alternate method (check or cash) that is not cleared through the digital process.
Finally, the new upgrade will allow small business customers to easily copy other parties on an invoice, which is useful when various parts of an organization need to track the invoicing data, but only one part actually needs to actively interact with it.
“This is more like an FYI,” Leberman explained. “So imagine I am a buyer in a supply chain and I want to copy the invoice to my CFO so they can see the transaction. Well this feature lets it be seen without the copied partner having to take any sort of action on it.”
Leberman noted that what makes this upgrade special is that it was built to be flexible enough to work with PayPal’s rather diverse pool of merchants.
“We serve a wide base of size and vertical, though some pop more than others. A lot of service businesses find this is an easy way to get up and running on sending invoices and accepting payments,” he noted.
“What I was surprised to learn is that a lot of the invoicing products out there don’t make it easy to divide between goods and services – the units vs. the hours. That, we thought, was a really important and simple way to enable merchants to reconcile their own way of thinking about the units of their business with the way they are billing their customers.”
The upgrades rolling out today will start in the U.S., though Leberman noted that they are looking to expand globally in the next few months.
He also noted that this work continues to be a work in progress, as they continue to look for merchant feedback since there is no such thing as a product that is too relevant to its potential users.