Embedded Finance Is Changing the Game for Small Businesses

My cousin runs a landscaping business. It’s mostly just him, with a helper or two at the peak of his season. In order to run his business, he needs to track his daily schedule, record details of each job, invoice his customers, and accept their payments. He also needs to pay himself and the contractors he sometimes employs, make the right payments to tax agencies, and file his taxes both quarterly and annually. Like many small business owners, these tasks are manual and spread across many different tools. 

He operates his business with sticky notes, spreadsheets, and one software solution for invoicing customers. Reconciling how many hours he spent on each job–and therefore how much he should be paid–can take several hours every other week. After he figures out the right amounts, he passes it off to his accountant to help him actually process payroll and file his taxes. Separately, he enters data into his software to generate each customer invoice, then expects a paper check to come in the mail eventually. All of this consumes valuable time that he could otherwise have put towards growing his business.

Small businesses make up 99.9% of American businesses and employ more than 61 million people. Considering the significance of small businesses to the US economy, you might think that we’d have made it easier to actually run one of these businesses. But if you talk to a small business owner like my cousin, they’d likely tell you that it can be quite challenging.

My conversation reminded me of how applicable Check’s vision is to the real world: we can better support small business owners by making it easier to embed financial services into the software they’re already using. A Vertical SaaS platform could change my cousin’s day-to-day life significantly, but he hadn’t even considered the benefits of moving to an all-in-one solution.

By working with a field services or landscaping platform, he could move virtually everything he does for his business to a single app. Instead of writing jobs in his notebook, there are tools that would let him plug in addresses and find the most efficient routes. He could manage invoicing, payments, and payroll. When he brings on help, they could manage their hours and their paystubs in the same platform. And there are a number of platforms that can offer him more efficient, more cost-effective business operations.

My cousin is a hard worker who has spent years growing his business. He also has finite resources and saving a little time or a little money can make a huge difference. A similar story is played out over and over across millions of small businesses in the US, and embedded finance is providing the key to a better solution.

Embedded finance has made it possible for platforms to build these products for their small businesses without becoming experts on the services themselves. Platforms are increasing the breadth of services they offer and all-in-one is becoming the norm. And the opportunity is only growing. The embedded finance market is projected to grow 148% over the next four years. As platforms continue running towards embedding more financial solutions, we can collectively better serve the backbone of the US economy: small businesses.

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Sources

US Small Business Administration Office of Advocacy

Juniper Research