B2B Payments

Meeting SMBs Halfway In Their AP Transformations

Whether it's to support a work-from-home environment or to limit physical contact with paper surfaces, migrating accounts payable (AP) operations to the cloud is a must for organizations large and small today.

B2B FinTechs have stepped up in recent weeks to guide small- to medium-sized businesses (SMBs) in their digitization transformations, but the reality is that many SMBs continue to lack the time and resources necessary for an AP overhaul. Paper documents and manual workflows are not entirely inescapable, meaning third-party solution providers must be able to work in harmony with legacy tools.

In a conversation with PYMNTS, Anna Leo, vice president of Medius Ascendo North America, noted that while it is important to encourage businesses away from paper, physical invoices are still flowing throughout trade streams, Excel spreadsheets remain a popular data organization tool, and manual workflows continue to be the norm within many SMBs' back offices.

Meeting SMBs Halfway

For Medius, working with middle market and large enterprises means offering an invoice automation solution that can integrate seamlessly with enterprise resource planning (ERP) systems and other back-office portals for a fully automated, digital workflow.

The firm has recently expanded its MediusGo solution, an AP automation tool designed for SMBs, into the U.S., but as Leo explained, the company cannot necessarily take the same approach to SMBs as it does with large conglomerate.

"Big enterprise companies want to pick up the PO [purchase order] form with ERP, match that with an incoming invoice, and do a three-way match with a good receipt. That's how most big enterprises would want their solution to work," she said. "But if you work with an SMB company, they might not be able to afford a PO system, they might not have an ERP. That's something they do in Excel spreadsheets, which generates paper to place an order."

Offering technologies that can work with what SMBs already have is key. For instance, Leo noted, supporting manual upload of physical POs may mean that the invoice processing workflow is not entirely digital or automated, but it can still support accelerated two- or three-way matching AP teams.

She also pointed to the ability to offer an external box to receive physical invoices, enabling SMBs access to a limited team that can send a digital copy of those documents to AP departments without requiring too many people to physically touch the paper — key for companies looking to limit their exposure for health reasons, and for working-from-home reasons.

Supporting Digitization

The ability to work with non-optimal back-office tools and workflows can mean less friction experience by an AP team as it takes gradual steps to modernize. What's important to note, emphasized Leo, is that no matter how small a business is, many times their need to optimize invoice processing is just as important as a large company.

"With a small company, compared to a big company, you still have the same demands," she said, adding that whether an AP department is processing 10 invoices or 200,000, "they have the same demand, only at a smaller scale."

She added that indeed, it's crucial for SMBs to digitize in the current climate "because otherwise, they won't survive." While FinTech solution providers can accelerate that digitization, they must also be cognizant of the inability for many SMBs to digitize all at once.

What's more, with continued market volatility and an uncertain future for many firms, offering technology that can be flexible enough to meet the changing needs of an end-user is also key. In this regard, Leo noted that the strategy of working with partners to integrate additional functionality like payments is a more agile one, compared to developing a proprietary payment tool in-house.

And just as technology providers have to be able to work around legacy tools in SMBs' back offices, Leo noted they must also find an appropriate price point for smaller firms.

"This is a big cost issue for them," she said. "So, meeting them halfway, both work-wise and money-wise, is important."



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.