The Payments Problem Small Businesses Don’t Know They Have

The circle of trust and the issues around risk management explored in PYMNTS’ recent “What’s Next in Payments” articles are often heavy on future technology. They may bring to mind a consumer logging into a bank app, sending a P2P payment or transacting with a retailer online, where the customer experience demands interaction and risk management across a host of players, including merchants and banks.

But as Mary Kay Bowman, executive vice president, payments and financial services for BILL, told PYMNTS, the circle of trust expands to the business realm and enterprise clients as well.

No matter the type of transaction or the setting, the same five threats can cause grievous and sometimes irreparable harm to the circle of trust. Those threats include credit risk, payments risk, counterparty risk, fraud and security risk and compliance risk. The risks are growing, seemingly exponentially.

“We hear about the advanced technologies and systems that fraudsters are using — and it’s become a technological arms race,” she told PYMNTS.

In the meantime, small business owners are incredibly busy and wear several hats, dealing with everything from inventory to employees. Getting everything right, soup to nuts, Bowman said, is a daily challenge. The plethora of tech solutions that are out there can be daunting, and these business owners simply want a partner to help them address problems and opportunities wherever and whenever they might arise.

Still Using Paper Checks

What keeps Bowman up at night — even while worrying about that quintet of risk factors — is the fact that 75% of firms still rely on paper checks to make payments, despite the technological strides being made.

“We’re still working in a manual world when it comes to some forms of payments,” she said. The reliance on a payment method that has been around for centuries greatly enhances the fraud risk confronting businesses, so much so that check fraud has become a multi-billion-dollar problem.

For firms such as BILL, where platform-based models help client firms automate and streamline back-end processes while ensuring compliance and risk control, “having scale and operational excellence in our solutions that we offer our customers are among the things that balance the fight and the protection against [risk].” In that bid to defend enterprise clients, Bowman said, intelligence systems, powered by artificial intelligence (AI), are collecting data on those firms — on an end-to-end basis — that help track patterns across time to protect payments and the circle of trust.

Covering All the Functions

The platform approach, she added, also helps companies address and keep pace with the ever-changing landscape of regulation (BILL is regulated in all 50 states, Bowman said). “We see this as a key service that we offer to small businesses,” Bowman said. “They can rely on the fact that not only do we know what to do with the technology, but we’re doing it with the right players and we’re covering all functions all the way through the process, including regulations and compliance.”

In terms of the mechanics of the platform, Bowman said, “We look at their entire financial operations from the time that they get a contract to the time they initiate a purchase order — and even though money might not be moving at that time, we’re collecting data to understand context. … And when it comes time to move money, we can complete the transaction, if it’s a ‘good’ transaction, or prevent it if it is truly a ‘bad’ transaction.”

As she told PYMNTS, “Getting this right and getting it right every time is what we focus on, from beginning to end.”