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Digital payments trends: Small businesses are getting savvy

Virtual Card Spend
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Originally posted on forbes.com

It doesn’t matter if you run a media agency, a construction company or a law firm, paying the bills and managing the books is an arduous task for any business. Traditional finance and accounting practices have historically caused headaches for everyone involved and even financial repercussions when things go wrong. However, there is an influx of new digital payment solutions designed to help businesses build efficient processes for sending, collecting and managing B2B payments to help their businesses remain competitive.

Being immersed in the world of payments, I’ve had a first-hand look at the shift toward digitizing payments and how small businesses can take advantage of new trends in fintech to transform their operations.

Pain Points In The AR/AP Process

In 2019, paper checks still accounted for 42% of all B2B transactions. But this payment method has a number of challenges, including high processing costs, payment delays, fraud risk and even payment errors. Despite the flaws of relying on paper checks and a manual AP/AR process, many small businesses had been reluctant to seek out alternative payment models.

However, Covid-19 and recent innovations in the payment space have rapidly accelerated the pace of digital transformation, speeding up the widespread adoption of digital technologies by several years. When employees made the shift to a virtual workforce, they needed to quickly transform their payments processes; they couldn’t wait for accounting to cut a paper check anymore. In the wake of the pandemic, 82% of SMBs said that they were changing how they process and receive B2B payments.

Better SMB User Experiences Across The Board

When digital financial solutions and ERP software entered the mainstream over a decade ago, they were designed to meet the needs of enterprise-sized companies. The sheer complexity of managing corporate finances of large organizations would of course drive the market as these companies had the resources to implement, manage and pay for the platform.

However, businesses in the small- and middle-market segment not only lack the means to support the technical implementation and management of these solutions but also don’t have the same needs as large enterprises. Enter: Today’s fintechs.

Established solutions players have struggled to scale down their platforms for smaller segments, and fintechs have jumped on the opportunity to innovate. Today’s idea of “modern experiences” has changed consumer expectations beyond the apps they use in their personal lives, and now people are expecting the same from the tools they use in their work lives.

We see card providers looking to own the end-to-end process of spend and expense management, and fintechs are designing platforms that aren’t predicated on having dedicated team members to configure and customize the software. With features like easy onboarding for the finance staff that needs to do it all, peer-to-peer distribution with just the right amount of approval hierarchy and powerfully simple user experience design that makes engaging with these tools intuitive and accessible, SMBs have their pick of tools to meet their unique financial needs.

AP Digitization Is On The Rise

There’s been an uptick in Accounts Payables solutions designed to solve many of these challenges. Their benefits include streamlined processing, cost savings, improved cash forecasting, faster settlement and improved relationships between customer and supplier.

Many organizations are investing in AP automation technologies to streamline invoice processing as well. New automation technologies are being used to automatically code invoices, recognize data, automate approval workflows and even flag things like duplicate invoices and other anomalies. Since deploying AP automation technology, 58.7% of companies say they’ve seen fewer errors in their invoice processing.

Virtual Cards

Many businesses have also adopted a virtual card model, enabling employees to make purchases and process payments with the use of a unique card number that comes with its own spending limit and promotes stronger security and full transparency. (Full disclosure, my company offers this service, as do others.)

Using virtual cards provides businesses with robust controls and access to real-time data to help track and control their spending. The digital nature of virtual cards empowers businesses to streamline their AP processes and overcome many common payment and expense management challenges.

The Future Of Digital Payment Trends

As the world opens back up, many of the transformations that Covid-19 accelerated are here to stay, and the digital payments industry is still growing.

PwC anticipates a continued shift toward digital payments and a cashless society: Cashless payments are set to increase by more than 80% from 2020 to 2025. It also found that digital wallets were one of the key trends driving the transformation, with the use of digital wallet-based transactions growing by 7% in 2020. Eighty-six percent of financial industry respondents predict that traditional payments providers will collaborate with fintechs and technology providers to innovate and meet consumer and business demand.

Responding To Changing Demand

Today, there’s an ever-greater appetite from innovators and investors to modernize the financial service ecosystem. In 2021, 82% of Americans used some form of digital payment, and these same people are pushing harder than ever in their daily business dealings for their commercial application and service providers to offer similar consumer-like experiences. With many fintechs offering new expense management experiences and bill payment solutions, and neo banks stepping into the commercial sector to serve the needs of small businesses, banks are racing to compete, increasingly focused on innovation efforts to meet the needs of customers.

Small businesses looking to get savvy with their payments and expense processes can evaluate new digital payment solutions by talking to their bank and credit card partners. Between fintechs disrupting the market and banks launching competitive offerings, businesses are going to be spoiled for choice when it comes to adopting digitized payment solutions, ultimately benefiting from better cash flow management and streamlined operations.

Blog

Digital payments trends: Small businesses are getting savvy

Author
No items found.
Virtual Card Spend
No items found.

Originally posted on forbes.com

It doesn’t matter if you run a media agency, a construction company or a law firm, paying the bills and managing the books is an arduous task for any business. Traditional finance and accounting practices have historically caused headaches for everyone involved and even financial repercussions when things go wrong. However, there is an influx of new digital payment solutions designed to help businesses build efficient processes for sending, collecting and managing B2B payments to help their businesses remain competitive.

Being immersed in the world of payments, I’ve had a first-hand look at the shift toward digitizing payments and how small businesses can take advantage of new trends in fintech to transform their operations.

Pain Points In The AR/AP Process

In 2019, paper checks still accounted for 42% of all B2B transactions. But this payment method has a number of challenges, including high processing costs, payment delays, fraud risk and even payment errors. Despite the flaws of relying on paper checks and a manual AP/AR process, many small businesses had been reluctant to seek out alternative payment models.

However, Covid-19 and recent innovations in the payment space have rapidly accelerated the pace of digital transformation, speeding up the widespread adoption of digital technologies by several years. When employees made the shift to a virtual workforce, they needed to quickly transform their payments processes; they couldn’t wait for accounting to cut a paper check anymore. In the wake of the pandemic, 82% of SMBs said that they were changing how they process and receive B2B payments.

Better SMB User Experiences Across The Board

When digital financial solutions and ERP software entered the mainstream over a decade ago, they were designed to meet the needs of enterprise-sized companies. The sheer complexity of managing corporate finances of large organizations would of course drive the market as these companies had the resources to implement, manage and pay for the platform.

However, businesses in the small- and middle-market segment not only lack the means to support the technical implementation and management of these solutions but also don’t have the same needs as large enterprises. Enter: Today’s fintechs.

Established solutions players have struggled to scale down their platforms for smaller segments, and fintechs have jumped on the opportunity to innovate. Today’s idea of “modern experiences” has changed consumer expectations beyond the apps they use in their personal lives, and now people are expecting the same from the tools they use in their work lives.

We see card providers looking to own the end-to-end process of spend and expense management, and fintechs are designing platforms that aren’t predicated on having dedicated team members to configure and customize the software. With features like easy onboarding for the finance staff that needs to do it all, peer-to-peer distribution with just the right amount of approval hierarchy and powerfully simple user experience design that makes engaging with these tools intuitive and accessible, SMBs have their pick of tools to meet their unique financial needs.

AP Digitization Is On The Rise

There’s been an uptick in Accounts Payables solutions designed to solve many of these challenges. Their benefits include streamlined processing, cost savings, improved cash forecasting, faster settlement and improved relationships between customer and supplier.

Many organizations are investing in AP automation technologies to streamline invoice processing as well. New automation technologies are being used to automatically code invoices, recognize data, automate approval workflows and even flag things like duplicate invoices and other anomalies. Since deploying AP automation technology, 58.7% of companies say they’ve seen fewer errors in their invoice processing.

Virtual Cards

Many businesses have also adopted a virtual card model, enabling employees to make purchases and process payments with the use of a unique card number that comes with its own spending limit and promotes stronger security and full transparency. (Full disclosure, my company offers this service, as do others.)

Using virtual cards provides businesses with robust controls and access to real-time data to help track and control their spending. The digital nature of virtual cards empowers businesses to streamline their AP processes and overcome many common payment and expense management challenges.

The Future Of Digital Payment Trends

As the world opens back up, many of the transformations that Covid-19 accelerated are here to stay, and the digital payments industry is still growing.

PwC anticipates a continued shift toward digital payments and a cashless society: Cashless payments are set to increase by more than 80% from 2020 to 2025. It also found that digital wallets were one of the key trends driving the transformation, with the use of digital wallet-based transactions growing by 7% in 2020. Eighty-six percent of financial industry respondents predict that traditional payments providers will collaborate with fintechs and technology providers to innovate and meet consumer and business demand.

Responding To Changing Demand

Today, there’s an ever-greater appetite from innovators and investors to modernize the financial service ecosystem. In 2021, 82% of Americans used some form of digital payment, and these same people are pushing harder than ever in their daily business dealings for their commercial application and service providers to offer similar consumer-like experiences. With many fintechs offering new expense management experiences and bill payment solutions, and neo banks stepping into the commercial sector to serve the needs of small businesses, banks are racing to compete, increasingly focused on innovation efforts to meet the needs of customers.

Small businesses looking to get savvy with their payments and expense processes can evaluate new digital payment solutions by talking to their bank and credit card partners. Between fintechs disrupting the market and banks launching competitive offerings, businesses are going to be spoiled for choice when it comes to adopting digitized payment solutions, ultimately benefiting from better cash flow management and streamlined operations.

Blog

Digital payments trends: Small businesses are getting savvy

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