How are small businesses using integrated finance?


As a small business, finding the right financial support can be difficult and time-consuming. From applying for a loan to finding the right kind of credit, navigating the financial landscape can be both difficult and confusing for many entrepreneurs. Fortunately, integrated financing makes it easier than ever for small businesses to get the support they need.

In recent years, we have seen a significant increase in banking-as-a-service (BaaS) offerings that enable fintechs to make financial services more accessible to their end users. BaaS platforms operate like API-first wholesale banks. They offer a wide range of financial services, like cash management, debit cards, and lines of credit that can be integrated with SaaS products. This enables software platforms to deliver new and innovative integrated financial services experiences.

By partnering with technology providers that offer integrated financial services, small businesses can improve critical financial metrics, access debt more easily, and streamline key financial operations such as payroll and vendor payments.

Here are four ways SMEs are using embedded financing to help them grow:

Integrated loan

Innovative technology providers use their customers’ sales data to assess their ability to repay a loan. This data is a better predictor of solvency than traditional measures. It’s also at your fingertips, allowing in-app lenders to bypass traditional, time-consuming data collection processes. The platforms pre-qualify borrowers, offer efficient loans when they are most needed and finance in real time. This helps make financing more accessible to entrepreneurs, giving them the capital they need to meet payrolls, replace equipment or launch a pop-up shop.

Let’s say you own a restaurant and need to invest in new kitchen equipment or replace something that broke during last night’s service. Rather than waiting weeks or months for the bank to process a loan, you can use the integrated lending services offered by your existing technology providers and get the funds you need right away.

Integrated payroll

Another great use case is integrated payroll. Payroll can be a major burden for SMBs, with complex tax regulations and compliance requirements making it difficult to process payroll on time.

By using platforms with integrated payroll, business owners can stop worrying about their bank’s weekly or monthly payroll deadline. Platform-driven events such as clock ins and outs and metadata such as time of day, day of week, and location can automatically create a payroll file that can be reviewed, approved and processed on time.

Recurring payroll data, like sales data, can also be used to give employees early access to salaries.

Integrated Accounts Payable

One of the biggest challenges for SMEs is managing cash flow, especially when businesses operate on low margins. The built-in access point automatically increases purchase orders when inventory is low and automatically schedules supplier payments when orders are received.

Business owners can skip the whole 3-way matching process because they can delegate payment authority to the recipient and put the order form and payment button in their hands (with limits and workflow). climbing, of course).

This not only saves business owners time, but also helps improve supplier relationships. When suppliers are paid on time and in full, they are more likely to offer discounts or extended terms in the future.

Integrated insurance

Small businesses also use integrated finance by offering insurance products to their customers. It can be a great way to diversify your product offerings, generate new revenue streams, and reduce risk.

For example, let’s say you run a small e-commerce business. You can find tech platforms that have pre-negotiated insurance plans for the types of products you sell and offer those plans at checkout. If a customer’s order is lost or damaged in transit, they can file a claim and be reimbursed for the cost of the order.

Not only is the purchase of insurance a source of revenue, but the dispute resolution process is outsourced when the insured event occurs.

Final Thoughts

Integrated financing is quickly becoming an essential tool for small businesses, giving them access to faster, more timely and tailored financial products. These platforms bridge the resource gap between SMEs and enterprises, helping entrepreneurs weather tough times with more confidence and invest in growth more opportunistically.

While the successes of integrated finance are paving the way, four key trends are likely to shape the future of banking for SMEs:

  1. Enterprise management platforms such as point of sale, accounting and CRM will partner with BaaS to launch faster, more diverse and more scalable financial services.
  • Neo-banks will acquire and build their own business management tools to make their Digital Business Banking offers more attractive.
  • Traditional banks will begin to take on a wholesaler role, increase their R&D budgets, and develop APIs and SDKs to better compete with Banking-as-a-Service disruptors.
  • Blockchain-based decentralized financial services (DeFi) offerings will emerge and will be targeted at B2B use cases.

The good news for small businesses is that all of these trends should result in more diverse, seamlessly integrated, faster and cheaper financial services.


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