Understanding businesses' biggest payment pain points requires a wide line of sight. After all, money exits a company through more than one avenue, whether it be via the accounts payable department or a firm's own employees.
Traditionally, different categories of business spending, including employee expenses, supplier payments, payroll and others, have been tackled separately. But many of these areas of capital outflow suffer the same points of friction, says Nicki Bisgaard, chief executive officer of Norway-based payments technology firm EedenBull.
Further, he told PYMNTS in a recent interview, those challenges don't discriminate between companies large or small.
“If you speak to business owners or C-level executives from small or large businesses, they will all tell you that they are facing the same challenges when it comes to buying and paying,” he said.
Spend Friction, From Employee Spend To AP
Many of those pain points are, by now, well-known in the B2B payments space.
Bisgaard highlighted top hurdles in employee spending, pointing to the “inconvenience” professionals face when employees are forced to use their personal cash and cards to make payments while on the clock, only to wait weeks for reimbursement.
That expense management pain then extends beyond the employee payer, too, he noted, particularly when it comes to workers' maverick spend and managers' inability to ensure purchases are made with verified suppliers for valid, approved purchases.
This particular scenario emphasizes the ripple effect of payments friction: it's not only the employee or accounts payable executive experiencing friction, but also the professionals attempting to manage accounting, reconciliation, cash analysis and cash management strategies for the company as a whole, leading to widespread “administrative burden.”
“Staff spend too much time and effort on managing payments, expense claims, reimbursements, approvals, accounting and internal front- and back-end processing,” he said, adding that a “lack of control” is also a major pain point, with managers often lacking real-time, streamlined visibility into who is spending company money, how and with whom.
Smaller companies in particular struggle with cash flow management when their payments strategies are inefficient and opaque, added Bisgaard, and that extends beyond the private sector into areas like non-government organizations (NGOs) and nonprofits.
The sheer breadth of challenges in business payments means solutions must remain agile and applicable to a variety of use cases. For EedenBull, that means addressing a range of issues, including VAT return automation, cross-border compliance and wielding technology to allow businesses and employees make card payments by sitting in between a B2B transaction of invoice-to-payment — even when suppliers don't accept cards.
“Making sure all spend is paid for by card ensures full control and appropriate basis for analytics,” noted Bisgaard, adding that cards' ability to promote faster payments to vendors without forcing payers to forfeit extended payment terms promotes healthier cash flow.
Where Banks Fit In Problem-Solving
FinTech's attraction to solving B2B payments and corporate spend friction has been instrumental in highlighting and addressing many of these widespread pain points. Their proliferation has also introduced new pressures for traditional banks that have historically been the sole provider of corporate and small business payment solutions.
While competition can breed innovation and progress, Bisgaard emphasized EedenBull's strategy of working in conjunction with, not against, traditional players in an effort to not only “embrace change, but actively drive change.”
“We're not looking to disintermediate the banks,” he said, but rather looking to develop tools those financial institutions can use to better serve their business clients' own payment and expense management needs.
Bank collaboration is at the heart of EedenBull's latest initiative, a collaboration with and investment from Norwegian banking group Eika Group, which will deploy EedenBull's product suite to its member financial institutions' own business customers.
It's an example of how shifting banks' viewpoint of FinTechs from rival to partner can actually help both banks and FinTechs to remain competitive.
For FinTechs like EedenBull, that process involves a “technology agnostic” approach that embraces a range of tools to combat business payments pain points, said Bisgaard. For banks, that means joining with FinTechs to promote agility and innovation in the services and products they provide their own business customers.
“New regulations, new technologies and new players are forever changing the way consumers and businesses thank about payments,” he said. “To the traditional players such as banks, this means that they not only have to ensure that they do what they have always done better than before, but also understand the opportunities and threats they are facing moving forward — and how to leverage the former, and mitigate the latter.”