It’s an old cliche that qualifying for a bank loan is an exercise in trying to prove you don’t need the money.
But for SMBs, that’s changing. A combination of technology innovation, platform evolution, and consumer preferences is creating a new opportunity to access financial services embedded in B2B platforms that prioritize a much deeper and more long-term relationship with customers. It’s got some banks a bit nervous, but it’s terrific news for companies who need capital but may not have the collateral assets they would have needed in the past to qualify for a loan.
The fundamental shift here is the value of transaction data. At my company, Inxeption, our platform is a cloud-based industrial or “I-commerce” business service provider. We help our commerce partners create online stores packed with features B2B companies need like purchase-order capability and complex product ordering, flat-rate shipping across all modes, and cart check-out. We even have shipping insurance solutions.
Providing all those services gives us in insight to our customers’ revenues and payment processes and that’s highly relevant to the third critical service we offer: Embedded financing in the form of merchant cash advances, supply chain financing, and our newest service “Ship Now Pay Later,” which helps our customers manage cash flow. That’s been especially vital during recent, challenging transportation market rate volatility.
How can we do this? Remember that banks base their decisions on deep review of financial information and credit bureau reports. We actually know your business. We already know your revenue run rate and the cyclicality of your business, based on the transactions you execute on our platform. That data is critical to giving us confidence to extend to you credit or even a cash advance to be paid back on a schedule linked to your revenue flow. We are your commerce partner and we only succeed if you succeed.
What makes these options “embedded” is that you don’t get referred to a third-party financial services site, you just apply with a few clicks in our app, and our decision comes fast. Instead of losing weeks of sleep wondering if you can find a lender to help you purchase materials or inventory to meet a surge in demand, you can focus on driving new sales and serving existing customers. And you’ll pay much less than using a corporate credit card or other existing options.
At Inxeption, we offer our customers a dashboard that gives them full transparency into every element of their business, from marketing ROI to shipment status and even geographic order tracking. Financial repayment schedules and other financing dashboards are part of this transparency.
Historically, banks have had both the capital and the stomach for understanding and following the regulations required to be a lender. But they haven’t excelled at customer service and they’ve often been inflexible in their underwriting. Today, technology innovations have pushed them to partner with companies like Inxeption to access customers who want a partner, not to run an obstacle course to get a loan. Financial services like those on the Inxeption platform will empower innovation and success for many more SMB companies.
In Part II coming up, I’ll talk about a related new embedded fintech capability: how Inxeption’s commerce partners, such as manufacturers and online B2B sellers, can offer Buy Now Pay Later and other financial services to their customers.