Small businesses don’t have the luxury of treating payments, credit, and cash flow as separate problems. A supplier invoice can affect available working capital; a cash crunch can push an owner toward personal credit; and the timing of one payment can influence the ability to cover the next.
The growing convergence of these needs is changing how small businesses manage their finances. Square’s latest expansion of its credit card and bill pay programs is one example, brining payment and cash flow tools together int a single platform.
Square’s refreshed small business credit card also takes a different approach to rewards than many traditional business cards. Rather than emphasizing travel-related perks, the program is aimed at everyday business expenses, including 3% cash back on transactions made through Square’s bill pay platform.
The update also enables businesses to use the card to pay vendors that don’t accept card payments. That brings credit, bill payment, and expense management closer together, reflecting a shift toward tools being built directly into the software businesses already use.
“This is embedded finance in action, adding financial tools that businesses need on a single platform that merchants can use to run their businesses,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research.
The Embedded Expectation
Just as consumers expect payments to be built into the apps and websites they use, small businesses increasingly expect payments to be embedded into the software they rely on. This trend has accelerated with the growth of as Software-as-a-Service (SaaS) platforms, which offer increasingly modular and customizable solutions for small businesses.
These platforms have also evolved to become more vertical-specific, with tools geared to the needs of particular merchant segments. Rather than requiring business owners to stich together separate systems for operations, payments, and financial management, vertical SaaS platforms can bring more of those functions into a single workflow. That can give merchants greater control over their business while reducing some of the administrative work involved in managing them.
Addressing Small Business Needs
Cash flow management is an especially important part of that equation. Macroeconomic challenges in recent years have forced many small businesses to make hard decisions about when and how to pay suppliers. In some markets, the scale of late payments has become significant enough to prompt regulatory action, including in the UK, where efforts to address late B2B payments have gained momentum.
When cash is tight, the consequences can extend beyond delayed supplier payments. Some business owners turn to personal credit cards to cover business expenses, blurring the line between personal and business finances and potentially creating longer-term challenges for both.
These issues underscore the need for more effective small business solutions. Payments products and software platforms can help, but merchants may also need practical guidance on running the financial aspects of their business. Banks, with their existing relationships and financial expertise, are uniquely suited to play a role in providing that support.