B2B Payments

How Pairing Off Helps B2B FinTechs Stay Focused And Meet SMEs’ Demands

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With FinTech innovators finally starting to give B2B solutions the attention they have longed for, there are now troves of platforms companies can access, from expense management to cash flow forecasting to supplier management.

But with businesses struggling to go all-in on technology, a wave of options for dozens of back-end business processes isn’t necessarily going to make a positive splash on how companies run themselves.

The most recent PYMNTS SMB Technology Adoption Index found that most small- and medium-sized companies say they are only “moderate” users of technology. Separate data from Sage found that most SMBs prefer to stick to their traditional tools and processes rather than integrate technology to overhaul some portion of their operations — even if it would mean greater efficiency and more time and money saved.

Part of the problem could be that, with so many targeted FinTech offerings, there are too many solutions SMBs would have to integrate to fully automate a back-end process. The procure-to-pay space is one of these cases: There are multiple FinTech firms that provide eInvoicing or supplier management or B2B eCommerce or supplier payments tools, but rarely is there a single option that offers all of this.

“The customer on-boarding experience has to be extremely pleasant and as frictionless as possible,” said Shaz Khan, co-founder and chief strategy officer at eProcurement platform Vroozi.

Even once technologies like those offered by Vroozi are adopted, though, businesses still have more technologies to integrate to complete the procure-to-pay cycle. For example, Vroozi could connect businesses to suppliers to procure goods but could not facilitate the actual payment of the order.

That’s where a partnership with AvidXchange came in. Like Vroozi, explained Co-Founder and CEO Mike Praeger, AvidXchange only targeted one portion of the procure-to-pay process: the payment. But that meant business customers had limited visibility when making those payments, he said, forcing accounts payables executives to pay an invoice without all of the necessary data to ensure the invoice was accurate and approved.

According to both Khan and Praeger, customers of their companies had been calling for them to fill in those gaps. Earlier this week, AvidXchange and Vroozi announced a partnership that sees their perspective solutions integrated, enabling joint business customers to see the procurement, ordering and supplier management step of Vroozi linked to the invoice payment step of AvidXchange.

Their collaboration represents a rising trend in B2B FinTech of companies specializing in niche portions of back-office functions: eventually pairing up with each other to break down silos.

“It’s taking two technology companies that solve two distinct problems with corporate procurement,” Khan explained of the partnership, “and bringing what are traditionally two siloed business processes in the middle market and connecting them into one complete procure-to-pay operation.”

In recent years, the number of B2B FinTech companies has increased, but even more recently, said Praeger, middle market companies are demanding the more holistic procure-to-pay solutions once reserved for the big guys.

“If you look back maybe five years ago, we saw that middle market companies interested in procurement functionality were maybe 5 percent of our customers,” the AvidXchange executives said. “Procurement was positioned as a big company tool — a big company solution. But in the last five years, that’s gone from 5 percent interested to now approaching probably 30 percent of our customers being interested in advancing their control over the purchasing process, having more tools on the procurement side. It’s a really interesting dynamic.”

AvidXchange and Vroozi are only the latest B2B FinTech companies to collaborate. A recent boom in these firms deploying API technology to enable data sharing has similarly led to a spike in partnerships, enabling critical financial data to flow between platforms and provide a holistic view of financial positions to businesses.

Whether using API technology or not, integration between two B2B FinTech companies is about streamlining services while understanding that one company can’t be best of breed in everything.

“We had lots of customers ask us to put in front-end processes like procurement, but it’s not our core,” Praeger said. Likewise, Khan said Vroozi didn’t want to step into payables either.

Collaborations like these enable companies to continue focusing on their specializations while meeting customer demand. And with so many companies struggling to adopt and integrate new technologies, the fewer platforms they have to take on may be for the better.

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