With B2B FinTech innovation continuing to accelerate, there are troves of accounting platforms from which small businesses can choose when launching operations. While these out-of-the-box solutions can be convenient, with easy-to-use interfaces, the product offering is typically basic and entry-level.
As one of the main functions of an accounting solution is to help a business grow, an SMB will likely eventually find itself too large, and its needs too complex, for an out-of-the-box accounting portal to adequately address.
In a recent conversation with PYMNTS, Passport Software President John Miller described some of the biggest roadblocks that small business owners can face when upgrading to an accounting solution that better suits their needs. Plus, he discusses why inventory management is an increasingly important component of the accounting function as small businesses embrace digitization and modernization.
Customizing The Accounting Migration Journey
High-growth businesses need FinTech solutions that are able to scale along with the business and flex with their evolving requirements. But when it comes to accounting, those needs can be so complex that the process of migrating from an out-of-the-box solution to a more sophisticated tool itself becomes an arduous headache.
“They have a lot more capabilities, but to implement it sell, you either have to do a lot of homework, learn it, figure out how you want to configure it for your business and apply it to your business processes, or you need to get someone to help you who has experience and knowledge of that product,” Miller said of this migration pain point.
Accounting solution providers must find the balance between offering sophisticated features without overwhelming a small business with limited resources and know-how. Indeed, noted Miller, while small business owners may be experts in their own industries, they’re rarely technological gurus – and as a result, they can face many points of friction when implementing new tools.
To ease this challenge, Passport Software turned to pick-and-choose customization with its recently announced PBS Essentials small business accounting solution. The tool enables business owners to pick from several modules for a more personalized and gradual approach to overhauling accounting offerings.
“This allows people to focus on the areas of their business that require more sophistication,” he explained. “It’s possible that QuickBooks may do everything they need for accounts payable or general ledger, but maybe inventory control or point of sale is an area that needs something more sophisticated.”
Considering Inventory Within The Accounting Strategy
As Miller explained, there are two categories of accounting functions: the back office, which includes bank management, accounts payable, accounts receivable and the like, and the front office, which includes point of sale, order management and inventory management.
While inventory management may not immediately be thought of as part of the accounting function, Miller said it has emerged as one of the most popular modules for SMBs adopting the accounting tool.
“Quite honestly, that’s where the money is,” he said. “You don’t necessarily think of inventory as accounting, but when you receive inventory at a cost, it becomes a very important accounting function to track the value of your inventory on hand. It’s very much an integral part of an accounting solution.”
That’s particularly true in an economy in which the cost of certain materials and products can fluctuate significantly, not only impacting the cost of one’s inventory, but also influencing how those products are priced. For businesses with thousands, or even tens of thousands, of products, managing those financials quickly becomes an overwhelming task when the right technologies aren’t in place.
Ushering In A New Generation of Tech
Inventory management is one area of business operations that has benefited from the B2B FinTech innovation boom. Whereas legacy processes required physical cards, paper and other manual processes to track inventory and cost shifts, today’s technology can automate much of that workflow.
With small businesses embracing digitization, many are quickly expanding into a position to be able to embrace the next wave of innovation in the inventory management space as Internet of Things (IoT), location tracking and other technologies step onto the scene.
It’s only one of several areas of running a business that have seen significant evolution over the years. According to Miller, the small business community is quickly changing in an effort to be able to implement those tools, whether they’re related to inventory management, accounts payable or otherwise.
As demand for high-tech, automated solutions grows, so will the requirements among the providers of these technologies to not only develop sophisticated products, but to also present them in ways that are easily ingestible and customizable for the small business owner.
“As younger people move into management roles, they have grown up with technology, so it’s very natural for them to look at automation in lots of areas of the business,” Miller noted. “Part of this is a [generational] transformation. As older folks start to loosen the grip and allow the young folks to take the lead, they benefit from that.”