White Paper Explains Why Cash Flow Management is Critical for SMBs and Lucrative for Banks
PALO ALTO, CALIF. and MINNEAPOLIS, MINN. — Bill.com, the leader in integrated bill payment, invoicing and cash management solutions for businesses, today announced the availability of a whitepaper by financial services research firm Barlow Research Associates, Inc. entitled “Financial Institutions Can Win by Helping Businesses Manage Cash Flow, ” available at www.bill.com/banks. The whitepaper argues that multiple disconnects, including the lack of integration between accounting systems and banks, represent a huge hindrance and massive opportunity for SMBs and banks.
According to the whitepaper, “managing cash flow continues to be a complex and time-consuming task. Whether using paper ledgers or accounting software, checks or online bill payment, the pain of managing cash flow still plagues businesses due to the manual and disjointed nature of the process.”
Although accounting software and Internet tools are both highly used as of today, they are not connected. For example, Internet banking has become an integral part of managing cash by giving businesses real-time access to information on their bank accounts. A 2011 study from Barlow Research indicates that 60% of small businesses ($100K-<$10MM in annual sales) and 83% of middle market companies ($10MM-<$500MM in annual sales) use Internet banking. The top rated feature for online banking users is the ability to monitor account balances and account activity, both critical inputs for managing cash flow. With advancements in technology and the increase in availability of services such as mobile banking, financial institutions are making the task of monitoring accounts more accessible than ever.
When assessing bookkeeping methods, Barlow data suggests that 49% of small businesses and 82% of middle market companies use accounting software to help them balance their books. Despite high adoption of online banking and accounting software, the two tools often operate in isolation, causing dissatisfaction among online banking users. In a 2012 Bill.com survey, 53% of respondents cited “a lack of integration between online banking and accounting software” as the reason for their dissatisfaction with their bank’s online banking offering.
Bill.com delivers a complete web-based financial solution for businesses and accountants that provides the tools, information, and collaboration required to better manage their financial tasks and optimize cash flow. Bill.com's game-changing technology digitizes a historically paper-based and time-consuming process, allowing users to access online bill payments, e-invoicing, document management, and automated workflow through one easy system. In addition to seamlessly integrating with business' existing accounting software programs, Bill.com provides financial leaders with a comprehensive view of their cash forecast - making it the only solution that connects a user's banks, bookkeeping, and business. The Bill.com system is being embraced by the banking industry, bringing banks a first-of-its-kind platform that enables them to offer business customers powerful accounts payable and accounts receivable services, develop additional revenue streams, and increase customer acquisition and retention.
“Now is the time for financial institutions to solidify their position as a central partner to businesses of all sizes,” said John Barlow, President, Barlow Research Associates. “As our report states, the future of Internet banking needs to leverage technology that fully addresses the customers’ pain while delivering financial benefit to the bank. Companies like Bill.com are leading the way in taking a burden away from SMBs while giving banks lucrative new revenue opportunities.”
According to the whitepaper, “with the high level of adoption of accounting software, it is not surprising that 96% of Bill.com customers rate accounting integration with Bill.com as ‘mission critical’ or ‘essential’ to their businesses. Bill.com syncs with five leading small and middle market accounting software packages, including QuickBooks, QuickBooks Online, Sage 50 (formerly Peachtree), Intacct, and NetSuite. The robust integration provided by Bill.com eliminates the manual processes of data entry between systems.” Some additional findings from the whitepaper include:
Financial service delivery is no longer “one size fits all.” As digital touch points expand, the challenge is to simplify usability and consistency not only within the bank, but also between the bank and customer bookkeeping systems. Integration of financial management desktop tools can be a game changer for online banking. In a 2011 Barlow Research survey of online banking users, 45% of small businesses and 39% of middle market customers indicated they would consider changing banks if offered a significantly better business Internet banking system.
Retention of business customers is vital to financial institutions. According to Barlow Research Associates, the average net potential revenue to a financial institution for a small business customer is $5,784 and $140,433 for a middle market customer, based on nine major fee and balance contributors. With 8.4 million small businesses and 85,000 middle market businesses, the value of the market is over $60B in revenue annually. Business customers represent high value to banks, therefore securing the customer relationship can deliver considerable financial value.
Decreasing fee income has become another pressure point for financial institutions. The FDIC Call Reports indicate fee income from institutions with >$50B assets has decreased by more than 20% from a total of $31B in 2009 to $24B in 2011. Integrating Bill.com’s services allows banks to monetize the cash flow management process to the tune of nearly $750K in gross revenue for every 1,000 customers on the system.
“This whitepaper validates what has been our driving force since day one: the manual, disjointed, and inefficient process of managing cash flow today simply does not work,” said Rene Lacerte, founder and CEO of Bill.com. “By offering an automated, integrated, and comprehensive cash flow system online, banks can deliver new value to their clients and add new revenue streams. Being central to their client’s cash flow management process means that banks can capture a broader base of payment volume as alternate business payment methods emerge. We look forward to watching banking evolve as cash flow management becomes more and more important to their business.”
About Bill.com’s Banking Solution The Bill.com cash flow command and control system is the only solution that makes banks the core of their customers’ business. By allowing banks to integrate the Bill.com solution with their own platform, Bill.com empowers banks to own the entire cash flow management process—from payables to receivables to cash flow visualization. Bill.com makes banks the focal point of all their customers’ transactions, letting banks monetize the full cash management process while solving a significant pain point for SMBs by finally automating and connecting all of their financial processes. The award-winning Bill.com platform is being embraced by banks because it creates significant new revenue streams while enhancing customer loyalty and satisfaction. For more information, please visit www.bill.com/for-banks.
About Barlow Research Associates Barlow Research Associates, Inc. (BRAI) was founded in 1980 to provide research and consulting services to the financial services industry in the United States and overseas. BRAI specializes in custom research and strategic consulting, and has developed a widely used proprietary product in the Customer Relationship Audit®, a customer satisfaction research tool designed to provide actionable data at all levels of the bank. As a top research company serving many of the largest banks in the United States, BRAI continuously tracks normative data in their Small Business, Middle Market, and Business Internet Banking programs. BRAI’s experience allows the company to select the methodology that will provide clients with the most useful findings and in-depth analysis.
About Bill.com Bill.com is a cash flow command and control system that manages accounts payable and receivable for businesses of all sizes. Offering online bill pay, custom invoicing services, unlimited document storage, collaboration tools, and mobile access, Bill.com's services easily sync to users' accounting software programs and online bank accounts to better control company financials. Bill.com guards against errors and employs enterprise-class fraud protections that current methods cannot match. More than 100,000 users are now getting paid and paying millions of bills, worth billions of dollars, using Bill.com. Financial institutions can now offer these benefits to their business customers by integrating Bill.com with their banking platform.