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Small businesses need help from banks and credit unions

The services that financial institutions offer can make a big difference in determining if small businesses thrive or struggle.

Apr 1, 2022 / Business Banking
Small Business

More than 30 million small businesses exist in the U.S. today, employing just under half of the entire population, according to the Small Business Administration. These businesses make up the backbone of our economy, yet nearly half of them don’t think their financial institution understands their needs.

Many small-business owners still rely heavily on spreadsheets, which becomes problematic when chasing down customer invoices and payments, and their cash position is often guesswork. As a result, they are going beyond their primary banking relationship to meet their needs – two-thirds already use a fintech platform for financing, accounting or payments.

So, what do small businesses actually want from their financial services providers? Distilled down to three main asks, these are:

  • One easy-to-use place to manage all financial and business operations
  • Accurate, real-time data to help them take action on their business strategy
  • Relevant small business products and services

With these in mind let’s discuss five of the most impactful services financial institutions can provide to their small business customers.

Invoicing and receivables

If a small business doesn’t bank with a large institution, there’s a good chance they’re manually creating invoices and tracking them via Excel. Alternatively, they’re going to non-bank providers for these services. Only a small percentage of banks in the US offer receivables to businesses. Without ways to easily create digital invoices and collect outstanding payments online, many businesses will struggle to maintain healthy cash flow.

Digital account opening

Financial institutions can’t expect businesses to keep opening accounts if the experience takes up to 30 days to complete and requires a visit to a physical branch. While business account opening has unique requirements (like multiple signers, beneficial owner support and document verification), there’s no reason why the business workflow shouldn’t more closely resemble the seamless experiences in consumer banking.

Empowering businesses to open accounts from anywhere, anytime and on any device may not be standard practice yet, but it will be soon.

Cash flow management and forecasting

Cash is king for small businesses, so poorly managed cash flow can create serious problems. On average, small businesses keep a 27-day cash buffer to pay suppliers and employees even when times are tough. The key to maintaining positive cash flow is to get paid by your customers promptly. After sending out an invoice, most small businesses manually track who has paid and who hasn’t. Imagine if they could see all their invoices and their payment status in one place, and be able to send follow ups automatically. Then add a layer of intelligence to help them estimate future cash positions and make strategic business decisions that they’d otherwise be too data-starved to confidently make.


Ensuring that banking data can connect to business accounting data is key to helping businesses identify growth opportunities. Most financial institutions don’t offer accounting capabilities, which creates a need for business owners to leverage third-party relationships to get the job done. This opens a rift in the customer experience and gives third-party accounting providers a way into the banking world. While banks and credit unions generally have trust and convenience on their side because of existing relationships, those advantages will erode if they don’t keep up with the rest of the market.

Proactive engagement

The decline in branch usage in recent years has created opportunities for financial institutions to redefine their customers’ experiences. In a world with fewer in-person interactions, it becomes increasingly important for relationship managers to engage digitally. Banking CRM systems can help business banking teams develop a deeper understanding of every customer. Many modern platforms can also help analyze data with artificial intelligence and machine learning models to identify growth opportunities, usage trends and next-best-action recommendations. Finding differentiation through product channels and customer engagement is a sure-fire recipe for long-term relationship growth and customer acquisition.


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The sooner banks and credit unions can support small businesses digitally and recognize their different needs, the less power non-bank providers will have and the stickier each relationship will become. Those that can deliver easy digital account opening combined with integrated and relevant back-office capabilities to their small businesses will win the battle for primary ownership of the customer relationship when it matters most.

Learn how your financial institution can win relationship primacy by offering services to match SMBs’ newly upgraded digital capabilities in the BAI Executive Report, “Big stakes in small-business banking.”

Norm DeLuca is managing director, banking group, at Bottomline Technologies.