B2B Payments

Canadian SMBs Improve AR Management Through eInvoicing, Automation

Canadian SMBs Improve AR Through Automation

News came last week that the Canadian FinTech Central 1 had linked its credit union customers to a single digital platform that combines small business online invoicing solutions with its Request Money tool – a move that focuses on streamlining the accounts receivable process.

In terms of mechanics, the platform integrates with the Interac e-Transfer Request Money solution, which the firm said in a press release last week will reduce the fees tied to traditional online payment solutions. By tying directly into SMB accounts, these smaller firms can avoid the cost of card acceptance. Synergy Credit Union was announced as the first to offer the combined service to its small business customers, said the FinTech.

The Larger Trends

In an interview with PYMNTS, Central 1 Senior Product Manager Randy Johal said the movement toward eInvoicing helps solve a pain point in getting SMBs paid. As he noted, as many as two thirds of smaller businesses are very small, and their primary means of collecting funds is through invoicing. The cost of acceptance through the aforementioned online payment methods, with fees attached, can eat into profits, he said, which can have a significant operating impact. Most of these firms are classified as independent workers or home-based businesses, with annual revenues less than $100,000 CAD.

In our research, we noted that some businesses liked the speed of receiving payments electronically, but hated the amount of fees being taken. In some instances, it was as high as 3 percent of the value,” he told PYMNTS. “As one business owner said to me, ‘I issued an invoice through my POS provider for $10,000 and they took almost $300 off and gave me the funds in 48 hours. That was my entire profit margin on the job – wiped out.’”

In the case of solutions that offer eInvoicing and request for payment, Johal said SMBs have a “way to receive funds leveraging a close to real-time payment solution.”

Receiving payment directly into a small business account (which can take place over a matter of minutes), the executive continued, can help companies sidestep a practice wherein they have funded their aged receivables through the use of credit cards to bridge timing gaps between payables and receivables.  

Johal added that “in Canada, Interac e-transfers have been hugely popular with both retail and small businesses as a method to get paid and make payments. We wanted to piggyback off this popularity to reduce their outstanding receivables and leverage a payment solution every Canadian is familiar with.” He said the traditional means of the accounts receivable cycle, rooted in email or paper invoices, can take as many as 10 steps and days or weeks to be completed, where the automated offering takes only three steps.

Johal told PYMNTS this particular rollout also illuminates the fact that credit unions are the financial institutions of choice for smaller firms.

Studies from the Canadian Federation of Independent Business have shown across several years that credit unions are embraced by SMBs, he said, “due to the ability … for credit unions to make decisions at a local level for small businesses, without having to refer decisions back to Toronto for approval. But,” he added, “the credit union member is aging faster than the general population as a whole, and we need breakout solutions to attract the next demographic.”

Embracing AR automation also helps satisfy compliance and regulatory concerns, where companies have had to work with paper bank statements, reconcile invoices and payments, or worry about vulnerabilities of their computer systems (i.e., desktops and laptops can break).

“This is changing with the ability to hold data securely in the cloud,” noted Johal.



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border. Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.