I run business operations for Plain. We’re building a customer support tool for modern product teams- lightning fast, API-powered, and deeply integrated in the way you work.
One of my responsibilities is to manage day-to-day finances - invoicing customers, paying bills, updating financial models, etc. As someone who loves fintech, it’s the perfect setting to try new tools and learn more about the start-ups in B2B fintech from the perspective of an operator who is working in SaaS.
If you had asked for my opinion of B2B fintech prior to my becoming an operations manager at a start-up, I would have said that the industry had already solved most of the financial needs of start-ups. Today, I believe that couldn’t be farther from the truth.
In particular, there are three critical areas in which B2B fintech needs to evolve - consolidation, globalization, and simplification- to fully serve the needs of start-ups and small businesses.
I’ll dive into each of these with examples from my own experience. First, some context about Plain might be helpful– mostly, to emphasize the amount of complexity we have relative to our stage.
Plain is a seed stage company– we raised $6M at the end of 2022.
We have 12 full-time employees– we’re fully remote and split across Europe and the UK.
We have customers in the U.S., Europe, and the UK.
Our expenses are seemingly simple– on a monthly basis, we pay for software, payroll, a few ad-hoc expenses, and not much else.
Our financial operations are identical to those of most SaaS start-ups of our size– no large capital expenditures (no office space), a small team, consistent monthly expenses. And yet, at the end of each month, I still find myself spending multiple days closing out our monthly finances and preparing for the upcoming month.
Some of this effort is due to our stage as a business, as we continuously iterate on pricing (usage-based vs. seat-based), issue invoices to new customers, etc. But a lot of time is also spent doing basic financial management that feels overly burdensome because of our tooling.
This is where I think fintech can do a lot more to help early-stage companies.
Consolidation: There is a tool for every individual process we have, but not one tool for everything.
Here’s a snapshot of our FinOps tech stack at the moment (which doesn’t even include the API/infrastructure fintechs doing additional work in the background):
Payroll
Payroll software (UK-based)- To issue payroll for full–time employees in the UK.
Global HR software- To facilitate hiring and contracting employees outside the UK without having to establish a local business in multiple jurisdictions.
Primary business bank account- Our payroll software doesn’t actually make the payroll transfer to employees, so the funds are transferred from our bank account.
Customer Payments
Stripe- To invoice customers, track incoming revenue, etc.
Expenses
Expense management software- Where we pay the bulk of our expenses for software, team reimbursements, and increasingly, invoices.
Receipt management software- To manually upload receipts for any expenses that can’t be automatically uploaded to our expense management tool.
Accounting software- For bookkeeping and accountancy.
Business-wide
Primary business bank account
Secondary business bank account (a learning from SVB)
Wise- Used for both international expenses, contractor payments.
Equity management software- To manage and track our cap table with investors.
Excel- Where we do most of our financial analysis (I know there are a lot of tools for this, but Excel meets our needs for now).
We have 10+ different tools to manage our finances alone– each of which requires a monthly subscription. Even worse, when I look at the list above, I can’t really identify a tool that we could eliminate. Each one serves a necessary purpose. Managing so many tools for a seed-stage start-up isn’t only a financial expense, it’s also a time burden and source of inefficiency.
It creates a high bar of knowledge transfer and makes it harder to be transparent with financial management. When I receive questions from our accountants (who do the real heavy lifting), I often find myself checking multiple tools to provide a clear answer so that we can, for example, close our end-of-quarter books, rather than having all information synchronized in one place.
In a previous Signals piece, I wrote about how Wise Platform was signaling an incoming era of fintech bundling. For start-ups, the bundling of financial tools is needed now more than ever. Using one centralized product to manage finances would give us more clarity and time- something most companies would happily pay more money for.
Globalization: Being global adds value for our customers- but adds a lot of complexity to our financial operations.
Our customers are spread across the U.S., Europe, and the UK, so having a global team is a huge benefit for the company. It allows us to sell in multiple geographies, hire the best talent, and build an international brand. As a SaaS tool (rather than a fintech company), we fortunately don’t have to acquire financial licenses to sell our product, which makes it easy to be global from Day 1.
That said, international payroll is more complex of an operation to manage. Global payroll companies (Remote.com, Deel, etc.) are helpful in establishing employment contracts and social benefits in multiple countries so that we don’t have to find lawyers or accountants in each jurisdiction. We also use Wise to manage money transfers outside the UK. These tools are essential, but each adds more overhead and time to manage.
Globalization trends have greatly influenced the start-up landscape - the percentage of remote workers that live in a different country than their country of employment has increased almost 300% since 2020 (Figure 1). According to YC, more than 70% of start-ups offer remote work positions. American investors like A16z, Accel, and Index, are investing in European and UK start-ups more every day. While there are a number of fintechs that are supporting the cross-border movement of money, there is still much more to be done to simplify global payroll.
Source: Lightcast
Simplification: Features are often hidden away, so we don’t end up maximizing the full potential of our tools.
There is already a lot of complexity in finance- we don’t need our tools to make this worse.
If I have to go through multiple clicks or sift through docs to discover a feature, I’ve already written off the product. If I need a customer success representative to give me a demo of the tool, it’s not providing me the immediate value I need. And if I can’t get in touch with a customer support agent when I need one (that’s where Plain can help 😉), I’ve lost a bit of faith in the product. Tools need to be simple, easy to navigate, and optimized for self-service usage.
Conclusion
Financial operations are mission-critical for any business, but young teams like ours rarely prioritize their integration, as it never feels like the most impactful task on the journey to reach scale.
Individually, each fintech tool that we use makes us more efficient for that specific task. However, when you look at the tools in an entire FinOps stack, the challenges that I mention come into play.
To be clear, I recognize that these challenges are far more complex to solve than simply consolidating everything into “one powerhouse tool”. Individually, fintech companies constantly have to battle against various regulations, licensing, tax jurisdictions, closed-off infrastructure, and the list goes on and on.
In addition to these operational challenges, fintechs also have to survive in a competitive market. Fintechs need to validate their product against the needs of a targeted customer group before launching into these segments, let alone before expanding other product offerings. In many cases, it would take more effort for a company that offers expense management to pivot into accounting software than it would to retool its core offering for a larger customer base, for example.
Working for a start-up myself, I understand that asking a Fintech to excel at every product is not the right answer. It’s a problem that needs to be tackled at an industry level, rather than at a company level. Perhaps the right answer is more partnerships between Fintechs building related tools. Or to encourage more consolidation via M&A. How to make fintech services more holistic could be the subject of an entirely different article.
But, there’s more work to be done to continue supporting the needs of small start-ups - more than I might have realized before experiencing the challenges myself.
