In the build-versus-buy debate, B2B FinTech innovation developed for the financial back office has made “buy” a clear winner among businesses looking to digitize workflows — but this strategy is not without its drawbacks.
With data analytics becoming an increasingly important component of the chief financial officer’s objectives for success, back-office platforms must be able to integrate to support the flow of data between systems. Yet third-party solutions do not necessarily always support that connectivity.
Speaking with PYMNTS for its latest Day in the Life of a Digital-First CFO discussion, Karen Hartje, CFO of buy now, pay later (BNPL) FinTech Sezzle, offered support for the “build” side of the debate, explaining that being part of a company with a digital-first business model has provided the resources necessary to support custom solutions and integrations.
But she had some advice for other CFOs who are also considering a proprietary path to digitization. Achieving success means taking a tactful approach to how a company invests in engineering and developer talent.
Supporting the Business Model
Because Sezzle’s business model was developed on the foundation of electronic payments, it wasn’t much of a stretch for the firm to expand that concept into the back office when it comes to B2B transactions.
“Our process to capture our customer payments and remit payments to our merchants and vendors is already digitized because they were built that way,” Hartje explained, adding that paper invoices are nowhere to be found, and seeing a paper check in accounts receivable (AR) is a rare occurrence. “When we sign up our customers and our merchants, it’s through the digital payment solution. There are no trips to the bank, no delay in funds processing.”
This digital strategy is “integral to our business model,” she said, and one that proved especially valuable during the work-from-home environment at the onset of the pandemic.
It was a Friday the 13th (of March 2020) when Sezzle first began remote working, recalled Hartje, and all employees had to do was gather their laptops from the office and bring them home. An emphasis on digitization from the get-go allowed work to continue flowing without disruption.
“We got together at 8 a.m. ready to go and did not miss a beat,” she said. “It was seamless.”
But digitization alone isn’t enough to ensure business continuity. The platforms and technologies that a company decides to adopt must also be able to integrate with each other to achieve seamlessness — and according to Hartje, Sezzle’s decision to invest in developing proprietary portals and application programming interface (API) integrations has supported the CFO’s broader-level objectives.
Investing in Developers
Support for electronic B2B payments and the ability for Sezzle to easily migrate from a legacy general ledger accounting system to a new one — during a global pandemic — were only possible because the company’s developers had created custom platforms and APIs that connected with other systems in place.
Today, having that data connectivity is key for Hartje, who is focused on extracting value from the troves of digital information flowing throughout the back office.
“I would say where we have a big opportunity is how we organize and use all of that information that has been digitized,” she said. “Within the finance team, that has been one of our biggest challenges.”
However, because of the way Sezzle’s business model is set up, Hartje said she is able to wield its team of data scientists and developers working on the company’s front-facing product to support her relatively easy back-office initiations like writing APIs.
Hartje said she would encourage other CFOs looking to explore in-house platform development and API integrations to invest in this talent. But essential to this strategy is not only finding developers that can code, but also developers that have some expertise into the solutions they’re designing.
The company’s finance team includes a dedicated data scientist, for example, and recruits developers that have a basic understanding of accounting or finance.
“It’s important to bring people onto our team with those technical skills, who can also speak our language,” Hartje said.
In doing so, companies with business models that are also digital-first or developed on electronic payment infrastructures can take advantage of their own talent to optimize the back office and arm their own CFOs with valuable data.
But whether finance leaders choose to build or buy their back-office solutions, Hartje said that all CFOs must take measures to digitize, modernize and optimize.
“It’s not optional anymore,” she said. “It’s the world we live in.”
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