How payments automation delivers bigger data through smaller FIs, merchants

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For many entrants in the integrated receivables space, payment data is the foundation for nearly every other business process or decision. Increasingly, banks are latching onto data services and making them available to their small and midsize business clients.

Providers operate on the premise that innovating around the efficiency and analytics that are related to payments, and delivering a service through a cloud-based platform, can streamline the essentials of cash-flow management, accounts receivable, accounts payable and payroll.

"Cloud deployments are making technology solutions more accessible to smaller financial institutions," said Erika Baumann, senior wholesale banking analyst for Aite Group. "Solutions deployed in the cloud reduce the cost of implementation, are less taxing on internal resources and allow for more road-map items to be above the line, so to speak."

Because the payments landscape is becoming so complex, it is more difficult for businesses to manage accounts payable and receivable information using spreadsheets, or even with electronic systems that depend on input sources, Baumann added.

"Mid- and small-size businesses need help, and would like to take advantage of tools available from their bank," Baumann said. "So the market opportunity and appetite is there and growing."

Atlanta-based FinSync wants to provide that help, focusing on U.S. payments in its cloud-based financial platform and seeking to get all of the needed cash-flow management and payment data analysis tools consolidated.

"We think about payments as a piece of cash-flow management, a consolidation of where the business is at financially on any given day," said Eddie Davis, vice president of business development for FinSync. "You can think of traditional accounting as giving you the historical picture of the business, but if you are doing accounts receivable and accounts payable in an integrated system, then you have a lot of visibility into future transactions as well."

Seeking to find its niche among competitors such as High Radius, DadeSystems and Billtrust, FinSync wants to distribute its cloud platform to businesses through banks, credit unions, alternative lenders and accountants.

"FinSync was designed to have a pretty large pipeline of banks and credit unions considering it as part of a premium business checking account, to be viewed as another source of revenue," Davis said.

If not for the introduction of integrated receivables platforms, businesses may have no other option than to piece together various software apps or continue to write paper checks and do back-office tasks manually.

"A lot of businesses simply would not do the work (of assessing payment data) if it were not provided," Davis said. "For example, one thing we do well is help awareness of the potential costs of project-based accounting."

A company project calls for many requests for money, unforeseen expenses, and different parties — full-time employees, suppliers and independent contractors — working on it.

"Many business owners are concerned about selling the finished product, but not doing an analysis of actual costs," Davis said. "To do it through Excel would take too long, and you can't tell for sure what you've done overall. With the payment data analysis in ahead of time, and understanding cash flow, these projects become much more understandable."

When partnering with banks, FinSync connects into the bank's Automated Clearing House rails, and the company can also use intermediary banks when obtaining clients through direct channels or marketing departments.

Small business owners have to make an adjustment when working with FinSync, but most see the effects of knowing when payments are coming and going, and how that pattern interacts with all other facets of a business.

"When you first log in, the cash-flow dashboard can either give you a heart attack, or it can make you rest well at night," said Sonia Dumas, chief marketing officer at Curio Haus, a Colorado-based marketing firm that connects financial advisers with clients. "It can push you to say, OK, I have a 45-day window to bring in another client or do something different."

It's a good thing for the business to have that type of "heads up," Dumas said in a FinSync case study. The other options of talking to an accountant or getting financial statements once a month generally don't give you enough time to make decisions, she added.

FinSync started in 2011 and says it has more than 8,000 customers. In that time frame, the company and others like it have worked to make financial management an easier process for small businesses. The timing is right because more banks see the value of providing essential data.

"As transactional margins continue to thin, the potential of charging for advanced and actionable analytics and data is more attractive for banks," Aite's Baumann said. "Businesses are continuing to demand a more streamlined experience, including interacting with their payments data."

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