Simplifying Payments for the Small Business
Article
AUG 6 2024
An all-in-one billing and payments platform could be a game-changer for small businesses
Imagine you are a small business owner. Your customers are your No. 1 priority, but a close second is all the back-office work you have to manage. Your resources are stretched thin, and you wish your trusted community bank or credit union could provide more support, particularly with cashflow and managing incoming and outgoing payments.
Small business payment needs have historically been underserved, and manual and paper-based processes are still commonly used. Existing capabilities are often fragmented, with most small businesses using two to four tools and providers to manage billing and payments – which can be time-consuming, inefficient and error-prone.
To make matters worse, vendors often set their own rules for invoicing and payment acceptance. Small businesses can end up using their financial institution’s online bill pay service, direct billing to one or more credit cards, vendor payment portals, accounting software with payment features, paper and email invoicing, checks and more. Each of these may have its own unique interface, or website, or mobile application. Companies with large finance and accounting teams may be able to manage the potential confusion, but you have to feel for the small business trying to handle it all.
In addition, small business owners need real-time optics into how their business is doing financially. Most small business owners worry about running out of cash and need extra money to reinvest back into the business. Providing small business owners with rich “money in” and “money out” data will improve their financial insight as well as help financial institutions understand and offer them the appropriate lending solutions.
Knotty problem, elegant solution
The time is ripe for a single resource that can organize all of this complexity. It should be an integrated solution managing all invoices and payments – all with at-a-glance simplicity, and in one place. Imagine the relief of a small business owner being able to view, analyze and manage all payments from a single system with one user-friendly interface. There is a demonstrated need for this one-stop solution, as 39% of small business owners use two banks, and 10% use three or more banks to meet their financial needs, according to a 2023 NerdWallet survey. The ideal solution will enable primacy of one financial institution.
And it can’t come soon enough. Customer loyalty among small business banking customers is waning. According to a 2024 study by Datos Insights, no matter who they bank with (big four, super-regional, regional and community), 33% of small businesses at any given moment are actively considering switching financial institutions. In short, many small businesses are dissatisfied and looking for added value in their banking relationships. Providing an integrated payments solution could be the differentiator for community financial institutions.
What would such a platform look like?
The ideal solution will:
- Communicate with every payment system, financial institution, supplier and vendor
- Import and assemble data from all sources and present it in an accessible, useful dashboard
- Enable users to schedule, execute and track payments – across the board – from one convenient place
- Provide timely, accurate reporting, from a clear overview to minute details
All of that may sound ambitious. But it’s also sorely needed.
Where will small businesses find that kind of powerful tool? We expect they’ll first look to the bank or credit union where their business accounts reside. Which means the solution must be as easy for the financial institution to offer, blended seamlessly within its own products and brand, as it is for businesses to use. Such a solution would provide yet another opportunity for financial institutions to demonstrate their continued value and relevance.
At Fiserv, we’re taking the lead in helping financial institutions provide this critical payments capability to the small business community. CashFlow CentralSM from Fiserv will combine easy-to-use accounts payable and receivable workflows with the market-leading biller and merchant network and payment capabilities of Fiserv. The goal is to enable financial institutions to compete in the small business segment and help small businesses operate more efficiently.
Earlier this year, WaFd Bank, a Seattle-based institution with 210 branches in nine western states, selected CashFlow Central to enhance their robust small business banking offerings. “WaFd Bank has a common-sense, disciplined approach that resonates with our small business customers,” said Jill Boyle, Senior Vice President and Head of the Commercial Product & Treasury Solutions Group at WaFd Bank. “Ready access to funds keeps small business opportunities flowing, and integrating CashFlow Central from Fiserv will enable us to help our customers simplify and streamline billing and payment processes so they can save time and maximize their money.”
Benefits for businesses
Institutions like WaFd are discovering that offering a banking-centric payments platform can help small businesses in a number of ways:
- Saving time and resources: A big-picture solution will decrease the time required to track and manage billing and payments, freeing up staff to concentrate on other revenue-producing activities
- More accessible data: Instead of trying to keep track of a mountain of paper invoices, or juggling information from multiple sites and systems, businesses will gain access to organized billing and payment data that’s easier to manage and understand
- Actionable insights: Robust reporting will help managers address issues and make more informed decisions
- Improved customer relationships: Questions and disputes will be resolved more quickly, because billing details and payment status will be easier to discover and analyze
Benefits for financial institutions
Serving the small-business segment more effectively is crucial for community banks and credit unions. Small businesses are an important source of deposits, loans and cards. But without an integrated solution for managing all incoming and outgoing payments and cashflow, businesses rely on multiple service providers and are less likely to concentrate their deposit, card and lending relationships with their primary financial institution.
That’s why many banks and credit unions are actively looking to close this gap and position their institution as the “hub” for all their customers’ payment needs. The goal is to grow deposits; cross-sell cards, loans and merchant services; and generate new non-interest fee income.
An integrated cashflow and payments solution such as CashFlow Central can help financial institutions achieve that vision, and be the nexus point for deepening and expanding relationships with their highly valued small business customers.
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