FinTech innovation has opened the floodgates for a stream of new platforms and products designed to help small businesses and corporates more efficiently manage money and make payments.
But the pace of change in the payments ecosystem continues to accelerate, leading to new demands among businesses and unfamiliar friction points that emerging FinTech solutions continue to tackle. As innovators drive forward, however, they can sometimes forget who’s really at the user-end of their technologies designed to combat business payments pain: the accountant.
According to Alex Reddish, chief commercial officer at Tribe Payments, that has led to the persistence of friction that has plagued the corporate cash management arena for decades.
“In the current fast-moving climate, accountants have struggled with the manual processes involved with managing their business client’s funds,” he told PYMNTS. “Accountants have not historically been considered when it came to financial management automation, so whether it be tax submission or individual P&L [profit and loss] management, it was the job of the accountant to bridge the gap between the different technologies manually.”
Bridging the Payments Divide
Data integration is an increasingly important part of not only easing businesses’ back-office friction, but targeting the specific challenges that their accountants face, both in-house and outsourced. Additionally, data connectivity can benefit a range of processes, like payroll and cash forecasting.
Payments, and more specifically, initiating a transaction, can be a bit more difficult to accomplish.
“With payments involving a multitude of individual component parts, friction is going to be inevitable,” said Reddish.
That’s because initiating a transaction isn’t just about moving and analyzing data. It requires the technological collaboration of multiple parties, including the sender, receiver, banks and payment rail networks.
The acceleration of payments innovation has also added complexity to the ability of an accounting platform to integrate payments functionality directly. According to Reddish, the drive for real-time processes means a shift away from batch and bulk payments. While technology can address the pain points of fraud and reconciliation to support that shift, for solution providers and their platforms, one of the biggest challenges will continue to be the integration of the growing number of faster payment networks in operation today.
A Game of Scale
Addressing business payments friction means being able to tackle challenges like fraud and reconciliation while also supporting corporates’ need for choice in the payment rails they use to send and receive funds.
According to Reddish, while FinTech can automate the integration of various payment rails, smaller players in the B2B financial services space can struggle to offer all of the touch points end-users need.
“Ultimately, payments is a game of scale, so therefore, a smaller FinTech needs aggregation to integrate successfully,” he said, pointing to Stripe as an example of success in this arena thanks to the company’s ability to provide “a complete payments experience through simple lines of code.”
Increasingly, he said, it’s becoming the FinTech’s job to support connectivity into multiple payment rails from a single portal by collaborating with service providers that can enable those integrations via API.
The accounting platform has emerged as an opportune starting point for this initiative, particularly as more businesses large and small (and their accountants) recognize value in adopting some of the newer rails that facilitate faster payments.
Some recent examples of B2B FinTechs looking to bridge the divide between the accounting platform and payments include QuickBooks, which announced last year that it now supports Next Day ACH within the integrated QuickBooks Payments service.
More recently, Tribe Payments revealed that it has completed its first Bankbox integration service with client Telleroo, a platform designed for accountants to submit payments on behalf of their small business clients for supplier payments and payroll payouts. Tribe Payments now streamlines that payments capability, its press release said earlier this year, with efficiency that would otherwise only be available through direct bank integration into various payment rails.
This efficiency is important, but as Reddish emphasized, it’s not the only requirements of today’s businesses and their accountants.
“Immediacy and cost are of equal importance,” he said. “The provider that gives the FinTech those access points through a single set of APIs is the real value to those businesses.”
As the payments ecosystem continues to evolve in favor of immediacy and efficiency, service providers that are able to work together to support integrated payments capabilities will have an edge on tackling friction not only for businesses, but their accountants who are increasingly at the helm of managing their clients’ transactions. Open banking initiatives are opening the door further for more efficiencies, too, as well as for the easing of a particularly painful point that makes it all the more logical for businesses to work with FinTech platforms to streamline payments rather than go it alone.
“The biggest challenges that businesses face in their payment experience orientate around cost,” said Reddish. “Delivering a ubiquitous payments experience comes with a price tag that most businesses cannot quantify. Subsequently, they are being left in the dark and having to rely on ... incumbents to provide a fractious offering at an expensive price point.”
FinTechs and their own collaborative partners can help ease that challenge, he noted.