The U.S. economy runs on the success of approximately 30 million small- to medium-sized businesses (SMBs), 20 million of which can be considered B2B businesses, and many are smaller businesses that support each other.
The supporting cast of your favorite local restaurant likely includes countless SMBs, such as the accountants, lawyers, cleaners and kitchen equipment suppliers helping to make your preferred meals a reality.
B2B businesses must often face the added challenge of waiting to get paid, according to Marten Abrahamsen, chief financial officer of Fundbox, an artificial intelligence (AI)-powered financial platform that offers SMBs fast access to business credit. For many of these businesses, free cash for necessary expenses such as payroll and capital investment are often tied up in receivables, inventory, payroll or growth investments.
Fundbox’s core products provide clients with access to extra cash in the form of revolving lines of credit with 12-week or 24-week repayment terms and loans with longer repayment terms. The company’s Insights product also allows customers to predict future cash balances, and a Flex Pay payment solution gives customers more payment options and flexibility.
“Traditional banks are best suited to serve larger, more established businesses because of their cost structure, and other FinTech players are primarily focused on B2C small businesses,” Abrahamsen told PYMNTS in an interview. “Their solutions aren’t designed to meet the needs of B2B businesses, which are uniquely challenging given their invoice payment structure.”
Accelerating Access and Addressing Customer Needs
Nearly 300,000 SMBs have partnered with Fundbox since its founding in 2003, and like any evolving company, Fundbox has faced growing pains. The company formerly used traditional corporate card platforms, and prospective spenders were faced with physically chasing down cardholders, Abrahamsen said.
To streamline internal processes to maintain focus on providing financial tools and resources for its clients, Fundbox began working with spend management firm Airbase.
“We use Airbase to eliminate the traditionally lethargic process of making payments to third parties, accelerating access to the tools and applications our teams need to address customer needs,” said Abrahamsen. “This practice was misaligned with the speed and agility that a growing FinTech company necessitates. Our accounting team also grappled with time-consuming processes like tracking internal approvals and reconciling transactions.”
A Solution for Financial Pain Points
One challenge visible throughout corporate America — and throughout the world, for that matter — is financial efficiency, which has been complicated by the remote working that has become ubiquitous due to the pandemic. A remote workforce can make it more challenging to collaborate with colleagues, control corporate spending, pay vendors and reimburse employees with expense accounts.
“When the world shifted to remote work, Fundbox employees moved to digitize all hard copy documents, leading to a 100% reduction in time spent by accounting in filing records and matching physical receipts to expenses,” Abrahamsen told PYMNTS.
He added that his company was already using Airbase for six months before the pandemic, which all but eliminated any learning curve for employees.
Another pain point in the financial world is automation, Abrahamsen said, specifically a frustrating lack of automation in many typical corporate spend solutions. With 99% of the company’s credit decisions fully automated, he said it was critical to find a solution that allowed his business to reallocate time and personnel resources to other areas.
Virtual credit cards are increasingly being used in the financial efficiency toolbox of many companies to cut down on unauthorized corporate spend by setting administrative spending controls, which can also make accounting quicker and more transparent. Abrahamsen said virtual credit cards could be used to incorporate third-party applications and services more quickly into a firm’s repertoire of internal tools. Reduced time spent on administrative third-party management enables companies to pass those savings on to customers in the form of better pricing and more innovative products.
“We experienced a recent issue with a vendor that agreed to charge a certain amount but instead tried to charge a higher amount to the virtual credit card on file,” Abrahamsen said. “If not for the controls put in place for that specific card, we would have had to spend time attempting to claw back the incorrect charges.”
As businesses continue to work in a remote environment, especially those with international clients in different countries, a need will continue to exist for spend management platforms that can navigate the challenges of remote offices, paperwork digitization and increased platform integrations.