Accounting software platforms that power SME financial and business administration offer massive potential for integrating fintech services. The power lies in the many touchpoints that accounting software offers for integrating a broad array of fintech services from various payment services to lending, card issuing, FX, and core banking services. Payouts to suppliers is the most closely adjacent among this broad array of integrable fintech services. We recently analyzed 100+ European accounting platforms to assess the maturity of embedded payouts. We share some of our key observations below.
SME Accounting Platforms, Positioning for Fintech
As we illustrate in figure 1, accounting software is increasingly positioned as business management platforms with a variety of software-enabled business services: financial accounting, payables management, receivables management, purchasing and expense, working capital and treasury management, payroll, and others. The ability to touch so many customer journeys allow these platforms to also embed and monetize an array of financial services: payment acceptance, lending and financing, cards issuing, transaction banking, and payouts (to name a few). Payouts to suppliers (the focus of our analysis) through domestic or x-border payments is the fintech services we consider to be most easily integrated into accounting software.
FIGURE 1: Value Chain of Key Software and Fintech Services Embedded in Accounting Platforms
FIGURE 2: Overview of Accounting Platform Landscape in Europe