Limited resources. Even more limited time.
Smaller firms look for aid from their own professional services providers — accountants among them — to offer payment methods to their own end users.
But a number of hurdles are involved as those same end clients must grapple with know your customer (KYC) issues as they connect bank accounts to other parties with embracing digital means of conducting payment runs.
To that end, as Tom Beckenham, Comma CEO and founder, told PYMNTS, open banking and the platform model can break down the barriers in helping small to medium-sized businesses (SMBs) help their own customers.
The pain points are acute. In the U.K. alone, Beckenham said, over £1 trillion (nearly $1.4 trillion) per year is transferred manually by small businesses with less than 10 staff.
The typical small business owner, said Beckenham, may have been sent several invoices over the course of the month. Those invoices are scattered all over the firm’s inboxes.
To pay those bills, he said “you need to go into your business bank account and manually enter all of the details — name, account number, sort code, amount, reference — even copy and pasting this from the invoice is a time-consuming process which doesn’t really add value to the business and can often go wrong,” he said. Then those payments must be initiated, one by one.
In terms of mechanics, the SMBs using Comma’s platform — accountants and bookkeepers — can offer bulk payments to clients as they seek to pay staff, suppliers and their own end user customers.
In the announcement tied to the partnership, the firms noted that bulk payments, at least in the U.K., have traditionally been available to larger firms that have corporate banking accounts. Comma enables payment services to these smaller firms.
Beckenham told PYMNTS that bulk payments are important for accounting and payrolls because they allow those smaller firms — with relatively limited resources compared to their larger brethren — to consolidate repetitive tasks such as inputting supplier details and payment amounts to pay multiple bills in a payment run.
The Dishwasher Effect
“If you imagine a kitchen full of dirty dishes, you need to clean them before the next meal. You could wash them up in the sink one by one and tidy up any of the residual mess after. This works, but it’s time consuming and no one really likes doing it,” Beckenham noted. “Eventually a better process was invented — now you can load them in bulk to a dishwasher and clean them all in one go while you go off and do something important,” he continued.
The combination of open banking and bulk payments means that platforms such as Comma’s can upload all these details into the clients’ existing bank accounts and, with the press of a button or a face ID scan, initiate payments to be disseminated in bulk, which lets firms focus on other activities. He said that, typically, smaller companies might spend only a few hours a month making payments, but because the manual processes are so tedious, some of them might push out tackling those tasks.
Under an automated system that streamlines the process with the aid of open banking, logging into the platform means that an SMB user needs only select the bills they want to pay, click pay, and payments are all pushed into the bank account, and with one authentication, everything is sent in bulk to the suppliers.
Bookkeepers and accountants can perform a valuable service in preparing payment runs for clients with bulk payments, he said. They can help determine what a client should and shouldn’t pay to maximize cash flow for them.
“This new service can benefit the client and generate new revenue for the accountant and bookkeeper … Being able to access key data sources and communicate with bank accounts is what makes open banking payments really special,” he said. “Previously, this has never been an option for smaller businesses who do not have corporate banking. Now you can push information such as supplier bank details, payable amounts, account names into any account which has open banking enabled.”
As a result, payments-related tasks might be whittled down to, for example, two minutes rather than two hours.
“Making that money simpler to transfer can put money in people’s pockets faster,” Beckenham told PYMNTS.