The future of business payments and finance for SMBs
9 trends in small business payments and finance
- General ledger software will become smarter
- New technology will continue to streamline payroll processes
- Data protection will become even more paramount
- Inventory management software will become integral
- Crypto taxes will become a common business expense
- Companies will focus more on customer journeys
- BNPL will continue to evolve
- Contactless payments may replace traditional payment methods
- Merchants will offer quicker payment experiences
- Invigorate your cash flow with Melio
With every passing year, business payment technologies become more sophisticated. Industry experts are expecting these developments to drive global changes in the relationship between merchants and customers in the upcoming period.
Some of these technological advancements include increased use of digital wallets, a rise in digital currencies, and innovations regarding buy now, pay later (BNPL).
Every financial professional and business owner must know about these upcoming changes and adapt their finance and accounts payable (AP) protocols accordingly.
This article will describe some predictions of what the future of business payments and finance will look like.
9 trends in small business payments and finance
From developments in AI and new technologies to shifts in consumer behavior, here are the leading trends that will shape the future of payments.
General ledger software will become smarter
A general ledger (GL) is the primary accounting document for any business. It keeps a record of all business transactions. Typically, accountants use the GL to create critical financial reports, such as balance sheets and income statements.
Before the 21st century, GLs were usually completed manually. Now, you can use general ledger software to automate data compilation and keep your financial records accurate.
With the rise of artificial intelligence (AI) and machine learning (ML), GL software is becoming smarter. These technological advancements are opening the door for key decision-makers to browse real-time updates of a company’s financials.
How? New-age GL software can tap into both AI and ML to generate data-driven narratives that provide a clear forecast of your company’s health.
Finally, blockchain technology can improve the security of your ledger system. By leveraging cryptography and decentralization, blockchain technology can help prevent unauthorized users from accessing your financial records.
New technology will continue to streamline payroll processes
Businesses and people have one thing in common. Both require payment for their services, ideally on time. To that end, many businesses are searching for better ways to streamline their payroll processes.
Again, ML and AI will play a huge role in payroll processing. Both innovations can make payroll technology smarter.
For example, your payroll software can use these technologies to:
- Automate difficult payroll calculations, such as bonuses, overtime, and commissions.
- Detect payroll patterns, learn from them, and apply them in future payroll sequences.
- Deploy AI-powered chatbots to assist employees who need help with payroll-related questions.
And that’s not all.
As smartphone usage continues to grow, software providers will give employees access to their payroll information on the go. They’ll even create mobile interfaces to help people browse their pay stubs, tax details, and payment methods, all from their smartphones.
On top of that, some payroll providers may expand their payment methods to include digital wallets and cryptocurrency. In fact, many modern companies are already offering payments in cryptocurrencies in an attempt to lure younger workers.
Data protection will become even more paramount
People are already turning to digital services to manage their finances. In fact, 58% of people say their bank accounts are connected to another digital platform. And this number is only expected to grow.
If, for example, you use Apple Pay instead of a credit card to buy coffee, you’re already a part of this trend.
The problem with increased digitization is the added pressure on companies and financial service providers to keep their customer data secure.
If you’re not vigilant in protecting this sensitive data, you could join millions of businesses that are affected by cyberattacks and data breaches every year. On top of that, you could lose the trust that’s crucial for your business to succeed.
To maximize data security while reducing costs, many companies will turn toward colocation data centers. A colocation data center is a remote storage facility that houses servers and other network infrastructure that are crucial for running a business.
Companies can rent these centers and access the convenient and top-notch data security features that come along with them.
Inventory management software will become integral
Inventory management is the lifeblood of any retailer. Through inventory management, business owners can figure out which equipment and products are draining their profits.
They can also realize the best money-saving techniques for decreasing or increasing order volumes.
To put it simply, a well-managed inventory results in a healthy business.
A key aspect of inventory management is asset tracking. This process basically involves keeping tabs on the number of products you have.
Asset tracking can be extremely tedious and has a high margin of error, meaning you could be wasting thousands of dollars on ordering products you already have.
With intelligent asset tracking software, you can streamline this process and obtain real-time data on your product storage. Access to this information will help you make smarter buying decisions that won’t harm your bottom line.
Crypto taxes will become a common business expense
As more businesses become open to accepting cryptocurrency, they’ll also face the resulting financial repercussions.
In the U.S., cryptocurrency is considered a digital asset. Therefore, it can be taxed just like any other form of currency. If you’re not up-to-speed, now is the time to research crypto taxes before you start accepting virtual currencies.
Companies will focus more on customer journeys
As global recession fears continue to rise, both people and businesses will start keeping a close eye on their wallets.
Because of this, your primary goal should be to keep the customers you already have. Rewards and loyalty programs are tried-and-true methods of keeping long-term customers happy.
However, companies will need to improve every aspect of their customer journey to keep sales coming in through hard times.
If you notice a large increase in abandoned carts, for example, you can try to simplify the checkout process.
BNPL will continue to evolve
Buy now, pay later has always been a popular payment option for consumers. Now, it’s completely streamlined and digitized and is also becoming an attractive financing option for business payments.
Whether buying furniture online or ordering groceries, retailers are providing their customers with the choice to split up their purchases into multiple payments over time. It’s a relatively low-cost financing option that provides customers with a transparent repayment plan suitable for their situation.
If you haven’t already started offering BNPL to your customers, here are some reasons you should consider it:
- It’s a very popular payment method. BNPL usage among American shoppers has increased by 43% within the last year.
- This option is flexible and accessible to a wide range of customers.
- Millennials and Gen Z use BNPL heavily, so, if this is your target market, you need to get on board.
- BNPL encourages buyers to purchase high-ticket items even if they don’t have enough available cash right now.
- It can help your business drive revenue during holiday seasons and sales when you’re advertising higher-value goods.
This option is highly attractive to customers as it helps maximize cash flow in the long term.
Contactless payments may replace traditional payment methods
Will contactless payment options replace traditional credit and debit cards in the future?
It is still unclear whether contactless payment options will replace traditional credit and debit cards in the future. What’s already evident is that contactless payments are gaining popularity among younger shoppers.
The reason is simple. Giving them more convenient options to pay keeps them satisfied and coming back for more.
If you work with consumers, you should open up the possibility of accepting contactless payments ASAP, if you haven’t already done so.
Merchants will offer quicker payment experiences
We’ve already mentioned a few streamlined payment options, such as BNPL and contactless payments. But that’s not all customers expect from merchants.
As the world shifts more towards digital tools, customers begin to expect transactions in real time. When processing a return, for example, they will demand to receive a refund immediately.
Speed matters and your customers don’t want payments to or from their accounts to take more than a few minutes to process. Otherwise, they’d still be writing checks, right?
Ultimately, the quicker you can process payments, the happier your customers will be.
Invigorate your cash flow with Melio
The tides are changing for business payments that are quickly transitioning from traditional payment options like checks, towards advanced digital payment platforms.
Businesses can no longer afford to use outdated methods. So, they’ll turn to online business-to-business (B2B) solutions like Melio.
Melio allows businesses to seamlessly pay each other, offering a choice of payment methods and cash-preserving tools, that fit any workflow.
Sign up for Melio today for free and begin improving your cash flow, reducing costs, and saving time on B2B payments.
Johannes Larsson is the founder and CEO of Financer.com, an SEO geek, and an affiliate marketing expert. In his blog, he shares his expertise in SEO, affiliate marketing, and finance with a wealth of resources for digital entrepreneurs.