Keeping Profitability At The Forefront Of SMB Digitization

There are dozens of FinTech platforms on the market today targeting small- to medium-sized businesses (SMBs), and the list of solutions designed to help entrepreneurs manage money continues to grow longer.

For many SMBs, the pandemic was a wakeup call as to the importance of digitization — not only to continue reaching customers while storefronts were shuttered, but also to optimize back-office workflows and obtain a clearer picture of financial health.

FinTech solutions stand as an important component of that effort, but Aryes CEO Edward Bullard warned that embracing digital accounting, accounts receivable (AR), accounts payable (AP) or other financial systems won’t necessarily empower a business to avoid financial trouble in the case of another disruptive event like the pandemic.

“There is no real way to track your profitability, to know whether or not you can withstand a time like COVID, or have ways to track your sales,” he told PYMNTS in an interview.

With so many business owners launching operations out of a passion for the work — and not necessarily out of a passion for financial management — making use of the data within these various FinTech solutions can jump-start these firms on the path to profitability and financial security. Bullard explained why businesses struggle to achieve that goal even with digitization efforts, and why the text message can play an essential role in keeping businesses in the black.

Unlocking Deeper Insights

Much has been said about the challenge that businesses large and small face to integrate the growing volume of platforms and systems taking root in the back office. But even enabling these solutions to connect and share data will not necessarily provide SMBs with the kind of business intelligence they need to assess what it will take to become profitable.

Plus, warned Bullard, many business owners can be misguided or misunderstand what profitability even means.

“We all assume that sales equals success, and that’s not always the case,” he said. “As long as you’re able to pay your bills and keep your staff paid, you think you’re doing well. But in reality, something like COVID or something else hits, and you might not be able to get yourself out of a hole, and [then you] cause yourself to go out of business.”

Speaking with entrepreneurs, he discovered that many SMBs tend to shift much of the financial management workflow off to the accountant. While those professionals should play an important role in helping to close the books, file taxes and understand cash positions, there is not always an opportunity for business owners to use the technologies and expertise they must obtain clear-cut guidance on how to grow the company.

Aryes, which announced its official launch earlier this week, is stepping in to fill that gap. By obtaining permissioned access to businesses’ existing systems and accounts, the FinTech can provide key metrics, including sales, top-selling items, projections and new customers. More importantly, the solution can also identify tangible goals a business must achieve to secure profitability.

“It’s in layman’s terms for the small business owner to say, ‘I need to hit this, I need to spend this much less than I spent last year, and I’ll be profitable in X amount of days,’” explained Bullard.

The Integrity Of The Text Message

Easing SMB owners’ concerns about data sharing can be a challenge, Bullard acknowledged. Assuring users that the data they agree to share into the Aryes system will never actually be seen by another human is key to adoption, but Bullard pointed to another technology as vital to preserving the security and integrity of SMBs’ financial data and the insights that Aryes provides: the text message.

“Text message is the most secure app on your phone, believe it or not,” he said. “No one has ever hacked a text message threat before. It just hasn’t happened.”

Of course, there is no infrastructure that is 100 percent resistant to security threats, the text message included. Yet by delivering metrics and insights via text message, SMB owners can have some level of confidence that financial analysis is only being viewed by them, rather than running the risk of having that information left open on a desktop, for instance.

Regardless of how the message is delivered, SMB owners need to not only understand their current financial positions, but need clear, actionable guidance on the goals they must achieve and the steps they must take to become profitable. Unlocking the data from existing platforms as more SMBs digitize is the first step to keeping more doors open and operations running.

“I see more and more small businesses are going out of business,” Bullard said. “I see many doors closing. I believe that, if caught in time, Aryes will be able to help keep those doors open.”