How SMB FinTech Elevates (Not Negates) The Need For Humans

Experts may agree that small business owners have more choice than ever before when it comes to adoption of FinTech — thanks in part to a surge in innovation, as well as lowered costs of adoption — but they also warn that just because entrepreneurs can adopt new tools doesn’t necessarily mean they are.

The continued use of paper checks and Excel spreadsheets epitomize this trend: Despite the influx of accounts payable automation tools, new commercial and virtual card offerings, faster ACH options and automated accounting platforms, checks and spreadsheets continue to be favored tools.

Lack of time and money — a small business’s most precious resources — can often be to blame for an SMB’s technological lag. However, according to Dawn Brolin, CPA, CPE and executive vice president of business development and compliance at Out Of The Box Technology, there is another, perhaps more ironic factor behind small businesses’ struggle to embrace innovative tech: a lack of human services and face-to-face interactions.

“Technology is here, and has been for a long time, but it can be good, and can be not-so-good,” she told PYMNTS, adding that strategic advisers must be positioned to guide their SMB clients toward the most appropriate tools available. “That requires face-to-face [interactions] so we can explain why it is important, and why it is an investment in their business, internal controls and protective services.

“Face-to-face interaction is more important now than ever because of the influx of technology,” she added.

It’s an interesting position considering the fears stoked by the acceleration of automated technology development that some experts said threatened the need for humans at all in many areas of the enterprise, including accounting and bookkeeping. However, the number of options available can be overwhelming, as can the process of implementing those products.

If a small business owner lacks the time and resources to become well-versed on the plethora of options out there, their strategic advisers must pick up that slack, Brolin said.

Finding A Strategy

While there may not be a one-size-fits-all solution, especially when it comes to FinTech, Brolin noted that there could be a way to overcome the overwhelming deluge of tools on the market today.

By their very nature, businesses in different industries will need different technologies: a retail company will require a point-of-sale (POS) solution, while a service provider like accountancy firms or IT consulting will need a cloud-based, integrated platform to accept payment. A small business that manages a fleet of drivers will need a mobile-friendly fleet management and payment solution, a tool that would be entirely unnecessary for a single-person enterprise providing web designing services, for instance.

Brolin explained that is, however, a core group of solutions that every small business needs: accounting software that enables a professional to easily access documents and data, a payment-agnostic receipt capture tool, and automated accounts receivable and accounts payables solutions are just some examples that she said from which all SMBs could benefit. From there, business owners can expand into industry-specific solutions to augment what they have.

However, she noted, they must also ensure that those solutions can not only be integrated, but accessed from mobile devices — and that’s often where business owners can trip up when they go-it-alone in their digital transformation journeys.

Fighting Against Fraud

To make small businesses’ technology adoption hurdles even taller, Brolin warned of the growing risk of fraud, a threat for which small businesses must always be watching.

Fraud, said Brolin, is “one of the biggest challenges” for small business advisers today. She pointed to the Report to the Nations report, published annually by the Association of Certified Fraud Examiners, which pointed to occupational fraud as the most significant fraud risk for both SMBs and corporates, while tax fraud similarly ranks high.

However, asset misappropriation is a massive problem for smaller firms, she said, with corruption, billing fraud, check and payment tampering, fraudulent expense reimbursements, payroll fraud, and fraud related to dealing in cash (like cash skimming) massive headaches for small companies that are in the early stages of their digital transformation journeys. Software, she said, can be essential to combat many of these risks, especially when it comes to tax evasion, billing fraud or payment tampering — and the fact that these nefarious activities continue to plague small businesses with such intensity could be a reflection of those businesses’ struggle to embrace technology.

Software is not, of course, a catch-all solution to the risk of fraud. Shifting away from cash and manual expense reports can lower the risk of employees stealing funds. However, payroll redirect fraud, invoice fraud and other risks can still be perpetrated by bad actors from within the organization. Even so, Brolin said that it is paramount that organizations can adopt technologies and platforms that can eliminate much of the fraud risk SMBs face today — and it’s yet another reason Brolin said the human touch is essential to businesses’ digitization and technological adoption efforts.

“As trusted advisers, we are not delivering the message to our clients that technology solutions can reduce or even eliminate these fraud issues for small businesses,” she said.