B2B cost management is a whitespace for FinTech players

The FinTech industry has witnessed tremendous growth in India over the past decade, more so after internet services took off in the country. According to the Ministry of Commerce, India’s FinTech adoption is 80% against the global average of 64%, making India one of the fastest growing FinTech markets in the world. The industry estimates India’s total market opportunity to be $1.3 trillion by 2025.

While B2C FinTech players have dominated the first wave, B2B innovation is gathering steam with more and more players catching investors’ attention. From online payments and lending, B2B FinTech players are venturing further into areas related to spend management – ​​digitization of business spend, supply chain finance, equity finance, treasury management to name a few.

FinTech companies serve customers and businesses through a myriad of technical solutions. They provide intuitive software interfaces, positive and superior user experience and access to real-time data that enable them to offer personalized business solutions while ensuring cost and operational efficiency.

Some ways FinTechs are driving change across businesses include:

Cost management automation – a gap

For a long time, managing corporate spend has been challenging as it involves collaboration and streamlining of multiple stakeholders (employees, suppliers, channel marketers and customers). Be it every day or periodic employee expenses, high-budget supplier payments or corporate finance, accounts and HR teams spend a lot of time processing these expenses and supplier payments. In an increasingly digitized business environment, such manual processing can have a significant impact on agility and operational efficiency.

Historically, payments have been a separate and disjointed process from the cost management value chain. Companies have typically relied on corporate and personal cards as tools for employee spending, and very often these purchase flows remain decoupled from SaaS for spend management.

Thus, a blank space remains to be addressed and there are a few FinTech players who have come up with a range of targeted spend management solutions to help businesses improve business efficiency and drive growth. By fully automating workflows and processes, these FinTech players enable companies to leverage new ways to improve agility, create more transparent processes, make better financial decisions and optimize cash flow management.
Improved credit and cash flow management for businesses
Traditionally, corporate credit card penetration in India has been low. Through an integrated offering in the form of business credit cards and partnerships with banks, SaaS FinTech companies enable businesses to make payments without immediately having to take a hit on cash flow. On the other hand, suppliers can get visibility into their payment status and also faster payments, thus leading to improved trust-based relationships.

FinTechs integrate finance, HR and procurement, sales and marketing departments

Through its innovative products, FinTechs cater to the comprehensive payments and financial needs of small, medium and large businesses. There are a growing number of players in the B2B space bringing together SaaS and fintech ecosystems to deliver spend and expense management products, manage rewards and incentives for employees and channel partners, and offer superior customer engagement.

Driving corporate agility and profitability: An unexplored frontier
Around 90% of SMEs continue to use manual or semi-automated processes, so modernizing and automating critical business operations is essential to provide a strong growth stimulus in a fast-paced, connected digital economy. A typical company has departments that work in silos and have processes with little or no interconnection and communication. For example, the finance teams use ERP systems while the HR teams work with HRMS systems. While both of these departments work to manage and grow critical business assets, there is an obvious gap between the two, leading to operational challenges, a lack of visibility into major spend, and a suboptimal employee experience.

Reporting and analyses
Information or correspondence carried out in a fragmented or disorganized manner such as excel sheets or e-mails leads to a lack of transparency, without the possibility of analysis and insight. Financial technology companies offer platforms that ensure that all data is consistent and can be leveraged for detailed analysis. This can ultimately help finance teams gain a comprehensive view of business spend, analyze spend, track inefficiencies or loopholes faster, and optimize business spend.

With the B2B FinTech industry witnessing strong growth, it would be beneficial for even the smallest businesses to implement digitized workflow strategies and thereby eliminate mundane tasks that consume valuable time and resources. This will actually free up staff to be more strategic and fulfill responsibilities and increase their productivity.

FinTechs offer spend management, payments and expense management in a single solution and offer a unified platform that allows companies to manage employee spend policies, create automated approval workflows, define and create spend control rules for employee and department spends. They also provide the payment form factors for employees to use through physical/virtual cards, provide real-time visibility over employee expenses and simplify/automate the expense management process for employees. B2B FinTechs unify and correct multiple spend management pain points while offering value additions such as consolidation and reimbursement of expenses, invoice management and budgeting.

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