Convenience sometimes comes with a cost. That’s certainly been the case for business payments, and the cost comes in the form of both money and headaches.
No accounts payable or treasury professional wants to manage multiple systems, given the time it takes to switch back and forth and the time and energy it takes to build out not just an ERP to your liking, but also accounts payable and other critical solutions. If a company has made a significant investment in an ERP, it wants to be able to streamline and secure AP processes within that ERP. But regardless of whether you’re a bank or an ERP, you also want to be able to offer your customers finance solutions that provide the same level of streamlining and convenience that consumers have come to expect when they use ecommerce and banking websites.
In a nutshell, that’s the time-and-cost-saving promise of embedded finance, and that’s what finance professionals and banks I speak to are focused on in 2022 and beyond.
Embedded accounts payable and accounts receivable
For those with only a passing familiarity with embedded finance, here’s a very quick summary. In a consumer context, embedded finance comes in the form of services like Klarna, which offers quick financing options on sites like Amazon. If you can’t pass up a new television but you’re also leery of paying for it in one lump sum, there are now options for that.
That’s appealing in a consumer context, but what about a B2B scenario? Embedded technology is nothing new for most businesses—for example, at Bottomline, we embed partners like Plaid and Early Warning Services - into our offerings to offer the highest level of security possible—and finance shouldn’t be an exception. Being able to quickly and easily send invoices through an existing website or portal you use as part of your everyday business relationships is as appealing as it is seamless. Those usages are cropping up in the marketplace everywhere, but the future is especially bright as every business focuses on removing friction from their day-to-day.
While it’s not a customer-facing usage, embedded finance is already a major focal point in the context of your own ERPs and accounting systems, as well. Being able to allow accounts payable and accounts receivable staff to send and process invoices in your existing systems, as well as issue payments and manage critical vendor information, is the sort of time-and-cost saving measure teams in fast-paced environments appreciate. Eliminating the need to log in to multiple portals and remember passwords is, in and of itself, the elimination of a major headache.
Finance is already embedded in the mind of your customers, so it’s time to make it easier for them in their daily lives and embed it into the most commonly used applications. If you aren’t thinking about embedding finance in your solution, it’s time to start. Embedded finance isn’t just the way of the future, but the way a lot of smart businesses are getting ahead in the here and now.
To read more about where treasury is headed, see what my colleague Tracy Kantrowitz has to say about the rise of the connected financial officer.
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