SMBs’ Needs Helping Propel M-Commerce Innovation

Among American companies, more than 99 percent of which constitute small or midsize businesses (SMBs) with fewer than 500 employees, according to the US Census Bureau. Though organizations like the Small Business Administration often herald SMBs as laboratories for corporate innovation, smaller companies have not developed a reputation for leading the charge in moving their payment operations online.
In fact, while larger entities are migrating toward electronic payments and digital invoicing en masse, the majority of smaller entities traditionally have remained tied to paper. New research, however, indicates that this is changing.

Indeed, SMBs appear to be charging forward, embracing online banking and paperless invoicing. With this recently charged-up interest SMBs could become a force that pressures the market to develop new and innovative ways to transact business electronically.

Accounts Payable

Accounts payable (AP), and the invoices they produce, is an area where companies of all sizes have historically found themselves drowning in paper. Historically, larger companies have dominated the move away from paper-based AP functions , and the majority already uses invoicing according to PayStream’s 2013 Invoice Automation Workflow (IWA) study. This may not, however, remain the case for much longer. SMBs are closing that gap, pushed by technological advancement, which has made cloud-based and software-as-a-service (SasS) applications inexpensive and relatively easy to implement, even for smaller organizations, according to the report.

Among small business, 35 percent have made significant investments in AP automation, while an additional 23 percent are evaluating its expanded use. Additionally, the biggest gains in AP automation are based in midsize enterprises adopting front-end imagining, which allows paper invoices to be converted into electronic ones by scanning. In 2012, 51 percent of midsize businesses were adopting front-end imagining. But by a year later, the percentage had climbed to 58 percent.

While front-end imagining is making it easier to turn all invoices into e-invoices, 50 percent of the AP workers who participated in the IWA survey would like to see paper-based invoicing disappear entirely. The report also notes that 37 percent claim they have the biggest difficulties with the invoice management process with manual data entry and inefficient processes .

Online Banking Push

More than their invoices, SMB owners also increasingly are becoming interested in seeing their banking handled entirely electronically and. Small-business customers use mobile-banking services frequently, so they are more likely to pay for mobile services. They also have a tendency to change banks purely on the quality of their financial institutions’ mobile offerings, according to the ath Power Mobile Banking Study.

“Mobile represents opportunities and challenges for banks to attract and retain small business clientele,” Frank Aloi, ath Power chief executive, said in a press release . “Banks with mobile offerings tailored specifically for small business will achieve success by delivering differentiated features and functionality not available in standard mobile banking services.”

The ath report also revealed an SMB preference for mobile devices, particularly tablets. Among respondents, 50 percent reported accessing mobile banking through a tablet, while 1 out of 3 noted that banking on a tablet is safer than using a computer or smart phone.

Courting The SMB Client

While SMBs are moving away from paper in favor of billing and banking electronically, products and services that cater specifically to their needs will be increasingly important.

For example, the ath Power survey noted a dip in banker efforts to follow up with potential customers – in 2013, 70 percent of respondents asked for customer names and contact information, down from 78 percent who did in 2012.

“I felt like the banker did not want my business,” said one small-business owner quoted in the study. “He never tried to establish a rapport with me. The fact that he did not ask for my contact information told me he did not care if I came back to this bank or not.”

Respondents also noted a gap between services available through mobile banking and desirable services they would like to see offered. Leading the list of called-for services was an ability to perform a mobile credit check on customers, to calculate and pay local and federal business taxes, and to accept credit cards.