B2B Payments

How Bookkeeping Capitalizes On Young, Digital-First SMBs

An entrepreneur who opens a coffee shop or launches a FinTech startup isn't in business to crunch numbers and file taxes. Yet, the burden of financial management, from tedious data entry to compliance challenges, is a nonnegotiable part of starting a small business (SMB).

Waseem Daher, CEO of Pilot.com, recently told PYMNTS that this burden was felt acutely within two previous businesses he had founded, leading to a wake-up call.

"In our very first company, we were totally bootstrapped — and because of that, we had to be very frugal, so we did our own bookkeeping," he said. "In retrospect, it was a big mistake. It's not a high-level use of any founder's time, but it opened our eyes to the problem."

That problem, he explained, was twofold.

First, the burden of small business bookkeeping is dependent on data. When small business owners take on the books themselves, the process requires significant manual data entry and number-crunching. It's an area to which software automation can bring significant efficiencies — thanks to bookkeeping's rules-based, data-driven nature.

This leads to the second challenge: "No business owner has ever said, 'I can't wait to buy more accounting software,'" said Daher. "The business owner says, 'I just want someone to take care of it for me so I can get back to running my business.'"

Mixing Humans With Data

With more bookkeeping software solutions available on the market, B2B FinTech firms have come to tackle this point of friction for small business owners. However, small business demands continue to evolve, with Daher pointing to entrepreneurs' need for value-added services on top of the basic bookkeeping tools.

That's what led Pilot.com to recently launch three new services, integrated into its bookkeeping platform: R&D Tax Credit, enabling small businesses to capture research and development (R&D) tax credits; CFO Services, an outsourced service connecting SMBs to financial experts; and Extended Services, providing what the company describes as "bookkeeping-adjacent activities," like accounts payable and accounts receivable processes.

The strategy of integrating value-added services on top of a bookkeeping platform is increasingly common in the B2B financial services arena, as providers look to break down silos and prevent the friction that comes with toggling between dozens of different, individual platforms.

The outsourced CFO Services is an example of how FinTech firms can combine the power of data automation with human expertise to augment the financial services experience. As Daher explained, the product connects small business owners to services like budgeting and forecasting, financial metrics and analytics, and producing a pitch deck for an investor meeting. This strategy means more efficient ways of connecting small businesses to financial expertise that is traditionally reserved for large enterprises.

"By giving the average company the capability that a giant Fortune 500 company would have at their disposal, [that] means giving the customer the same power for cash flow forecasting, budgeting," he said. "It's not that this is less critical to a small business than to a larger business. It's just that, historically, those capabilities, personnel and tools have not been available to the average business."

A New Generation Of SMB

While human expertise can connect small businesses to valuable resources that were once only available to the largest companies, data is undoubtedly a critical component of tackling friction, and automating financial management processes. With data integrations more commonplace than ever before, Daher said that service providers like Pilot.com are empowered to provide the kind of value-added, end-to-end financial services that small businesses demand.

"Increasingly, other providers in this stack have APIs and the ability to electronically access data," he said. "We can electronically get bank statements, credit card data, expense report data, payroll data, etc. — and that enables us to work our magic. If this data was siloed away, or if you had to get data via a letter mailed to your business address, that wouldn't be possible."

One of the biggest barriers to accessing that data is businesses' continued reliance on paper, from physical invoices to checks. Yet, increasingly, the businesses demanding value-added services from their bookkeeping platforms — like Pilot.com — are the companies born in the digital age.

"Our customer base is very big into this digitization trend," said Daher. "Almost everything they do is electronic. Many customers don't have checks, and I don't necessarily think they would even know how to get checks."

For the small businesses still reliant on paper, he expressed confidence that, within only a year or two, they will make progress in their own digitization journeys. That's particularly true as more Software-as-a-Service companies emerge within particular verticals, like platforms designed for yoga studios or law firms.

These digital-first small businesses are built with the expectation for data integration and automation. As those businesses become a greater share of the overall small business population, opportunities for companies like Pilot.com to take advantage of their clients' digital data will continue to grow.



New forms of alternative credit and point-of-sale (POS) lending options like ‘buy now, pay later’ (BNPL) leverage the growing influence of payments choice on customer loyalty. Nearly 60 percent of consumers say such digital options now influence where and how they shop—especially touchless payments and robust, well-crafted ecommerce checkouts—so, merchants have a clear mandate: understand what has changed and adjust accordingly. Join PYMNTS CEO Karen Webster together with PayPal’s Greg Lisiewski, BigCommerce’s Mark Rosales, and Adore Me’s Camille Kress as they spotlight key findings from the new PYMNTS-PayPal study, “How We Shop” and map out faster, better pathways to a stronger recovery.