Discover how integrations can help you deliver the best-in-class functionality your small business customers deserve.
Staying on top of business expenses is crucial to the success of any enterprise, regardless of industry or size. After all, 56% of companies identify expense management as the biggest challenge for their finance departments.
Manual expense management is time-consuming, error-prone, overly complex, and vulnerable to fraud. For instance, over 64% of people describe the expense management process as ‘frustrating’, and 10% of employees admit to exaggerating expense reports, costing businesses up to $52 per report to correct.
The competitive landscape
The B2B payments market is evolving so rapidly that it is now estimated to be worth $10 trillion, of which corporate cards represent a $1 trillion opportunity. It’s therefore no surprise that competition in the industry is heating up, with providers increasingly focused on developing value-added offerings and building advanced software suites around their original products, in order to achieve rapid customer growth and secure a larger share of their wallets. As reported by TechCrunch, “the table stakes are higher than ever in this niche”.
In recent years, we have experienced the rapid emergence and growth of software solutions like Ramp, Brex, Jeeves, and Pleo, as well as the evolution of offerings from incumbents such as AMEX, Capital One, and Barclaycard, all designed to help small businesses establish better expense policies, streamline approvals, and increase visibility.
Problems faced by your small business customers
With a wider selection of providers than ever before, financial integrations are simply a customer expectation. In order to achieve success in this increasingly competitive landscape, expense management providers must utilize financial integrations to address the following small business pain points:
1. Manual reconciliation is time-consuming and error-prone 🕑
SMBs now use a multitude of applications to manage everything from expenses and stock to cash flow forecasting and marketing initiatives. According to Blissfully’s 2020 Annual SaaS Trends report, the average small business now uses 102 different apps.
With so many strains on their time, business owners expect effortless and automated accounting that works from day one. Eliminating manual data entry by automating expense filing into a business’s accounting software directly, can save small businesses from lost receipts and administrative logjams as well as help to prevent costly errors caused by manual data entry.
2. Financial insight is limited for small businesses 👀
The lack of interoperability between systems materially hurts small businesses by limiting their ability to gain a detailed and ongoing understanding of their financial health. Poor expense management limits a finance team’s ability to track spend vs budget, ultimately forcing businesses to absorb unplanned expenditures.
3. Credit limits are overly restrictive and rarely updated ❌
With a limited understanding of a small business’s financial position often based on outdated information from traditional data bureaus, expense management providers are forced to apply sweeping and restrictive rate limits to their entire portfolio of customers.
Why integrations are critical to success
1. Offer automated accounting ✔️
You can better support your customers’ expense management processes by automatically capturing all transactions relating to their expense card accounts directly into their accounting platform of choice. Categorizing this information according to the small business’s own bookkeeping, including recognizing spend against the correct chart of accounts, not only saves the business crucial time, it also improves the accuracy of their bookkeeping and their understanding of their finances. Accounting integrations make it possible for businesses to track expenses against budgets and department spending, providing business owners with an invaluable level of insight.
2. Set better credit limits 🏆
With real-time access to the accounting systems businesses use regularly, you can develop a better understanding of your customers and the risks they represent. This additional level of information can be used to deliver a frictionless onboarding process and set more suitable credit limits for customers that outstrip your competitors while remaining confident that you are not taking on additional risk.
3. Launch new products and functionality 🚀
Accounting integrations can also be used to develop additional revenue streams and improve customer satisfaction. For instance, you can utilize accounting integrations to offer bill pay services that make it easier for your customers to pay outstanding bills using preferred payment methods and view spend analytics across all transactions.
Alternative SMB integrations can be utilized to expand your product suite further. For instance, access to the eCommerce and payment systems small businesses rely on, like PayPal, Shopify, and Stripe, can be used to offer revenue-based and embedded finance products.
But, building and maintaining integrations is hard
Integrations are crucial to addressing the small business pain points outlined above but building them in-house is incredibly costly and distracts your engineers from focusing on your core product offering for a number of reasons:
Choosing the right integrations to build: Adequately understanding the integration market and deciding which applications hold the most valuable data to satisfy your needs requires deep analysis.
The number of integrations required: The accounting and commerce software markets are notably fragmented, meaning the platforms used by small businesses differ significantly depending on size, location, etc. Building a full set of integrations to cater to all existing customers while also accounting for future product and geographical expansion could take years. Read our accounting and commerce market guides to find out more about the complex landscape.
The depth and quality of integrations: Expense management is an incredibly bespoke process as every business recognizes transactions differently. For example, some may consider conferencing to be a sales and marketing expense while others may see this as general spend. There is also often a need to apportion the spend to the relevant department and recognize this against budgets which can be split by office locations. Each accounting platform handles these nuances differently, and there’s a long list of edge cases that need to be considered in order to ensure the serviceability of the integrations you build to avoid errors.
Regional variations: Catering to regional variations, such as a multitude of date formats depending on geography, introduces additional complexity to the process.
Standardization requirements: When integrations are built in-house, this requires a full-time team to map data points against the provider’s API. As each application handles data differently, this is an incredibly convoluted and time-consuming process. Read our data standardization blog to understand why it’s so crucial that this process is carried out correctly.
Ongoing maintenance: Direct integrations require constant maintenance as providers regularly introduce new features. The requirement to remain up to date with any changes made to the integrations distracts significant resources away from your core product offering.
How Codat can solve your integration challenges, quickly
Codat provides business data APIs for SMB lending and embedded accounting automation. We provide two-way connectivity to over 30 different accounting, banking, and commerce systems used by small businesses, including Xero, Plaid, QuickBooks, Stripe, Oracle NetSuite, Shopify and Sage Intacct.
Over 175 clients, including leading expense management providers like Jeeves and Payhawk, are leveraging our API infrastructure to build leading SMB products. Our integrations are standardized to a single data model, allowing clients to build to Codat once rather than having to sink their own engineering resources into building and maintaining each complex integration themselves.
Our integrations are robust and battle-tested, allowing us to cover a wide range of edge cases. This enables you to offer the depth and breadth of coverage your customers need from day one. We also take care of the complexities of authentication, data mapping, configuration, and ongoing maintenance so your engineers are free to focus on your product.
James Yorston, Solutions Lead
Contact [email protected] to learn how Codat can help with your integration strategy or create an account to start building today.