Small businesses are still dealing with the supply chain and payroll challenges that emerged during the pandemic, creating opportunities for financial services companies to address these persistent pain points.
"We are on an unprecedented macroeconomic journey. There's pandemic, war, inflation, supply chain shortages and more," said Juliana Berger, director of product management at QuickBook Payments. "There really isn't an existing model that can detail how this has gone."
Intuit Quickbooks, which provides accounting software and banking products primarily to small businesses, this week launched Contractor Payments, following another recent update to automated reconciliation, or matching payments to a business' accounting system. The company's deployments come as small businesses show some sign of recovery, despite major headwinds.
"We are embedding finance into the workflow of businesses so they don't have to spent a lot of time on it," said Berger, who joined QuickBooks about six months ago, and has a 13 years career in payments that includes positions at American Express and Meta, where she helped manage many of Facebook's payment products.
At QuickBooks, she's charged with leading automation strategies to reach more than 7 million users of the accounting and payment software, and $1.5 trillion in invoices created in QuickBooks each year.
The company's most recent
To address these concerns, the technology firms that have traditionally provided short-term credit to small business — such as Block, PayPal and Kabbage, and also newer fintechs such as
"You have two out of every five business owners using their personal finance to pay business expenses. This is something that really has to be keeping them up at night," Berger said.
American Express served 550 small businesses in late July, and found these businesses have doubled revenue between July 2021 and July 2022, with an average increase of 87%. But profits decreased 4% during that time as economic challenges have cut into these businesses' ability to grow.
The boost in revenue is a sign that the
The new card is meant to make the advance-payroll offering a more appealing way to fight rising expenses.
"Small-business owners reinvented themselves," said Brett Sussman, vice president and head of sales and marketing for Kabbage, adding that on the positive side of the survey, 80% of small businesses believe they can weather a potential recession.
But it wouldn't be easy. American Express found 37% of small businesses plan to raise prices, 22% aim to negotiate better deals with suppliers and 47% report inflation is impacting labor costs, such as increased salary and benefits costs.
Compensation has become a major front in the battle among payment companies to reach companies of all sizes.
QuickBooks Contractor payments, which charges a monthly fee that starts at $15, allows contractors to complete a W-9 and provide bank deposit details. QuickBooks enables direct deposit, and also completes tax form 1099 automatically, and sends the 1099 form to contractors to report income to the IRS.
Intuit competes with firms such as Tipalti, which offers contractor payments and tax compliance, and
Much of the fintech response to payroll needs of small businesses has focused on flexibility in when workers get paid.
Payment companies will be further challenged to combine services such as payroll, lending and business management services as small businesses pull back on spending.
"Small-business owners in this environment want a range of products to address a rebundling of their back office," Sussman said. "They don't want to have separate discrete items for different functions."
