The Green Sheet Online Edition

December 23, 2019 • Issue 19:12:02

Past successes, future opportunities - Part 1

At this time of year, people typically assess the year coming to a close and prepare for the new year. Identifying highs, lows and lessons learned, and strategizing to meet new goals are central to the process. This year, members of our Advisory Board provided insights into this process by answering the following:

1. What were the main highlights for you and your company in 2019? What actions led to your positive outcomes? What advice do you have for others who'd like to achieve similar success?
2. What initiatives, if any, didn't go as well as planned? What did you learn? What are you going to do differently next year to increase the likelihood of achieving better results?
3. What were the most significant developments for payments and fintech in 2019? Please elaborate.
4. What will be the most critical issues facing the industry's feet on the street in 2020? What approaches to address them will likely be most successful?

This article contains the first portion of their responses; the remaining answers will be included in our first issue of 2020. Many thanks to the busy industry leaders who share their wisdom herein.

Tom Aronica, Biller Genie

1. We launched Biller Genie a year ago, so 2019 was spent building our core product, and we have a lot to be proud of. With our seamless integrations to QuickBooks Desktop, QuickBooks Online, Xero and AccountingSuite, Biller Genie is the only accounting-software-agnostic electronic invoicing platform that also automates the entire accounts receivable workflow in the industry. We released our brand to the public and drove awareness through various social and paid media channels in addition to adopting a multichannel sales strategy that includes distribution through ISO and agent partners, ISV integrations, and endorsements by major national accounting firms and trade associations.

   However, we're most proud of the recognition we've received from our peers. In 2019, Biller Genie was named to the Money20/20 Start-Up Academy and was a recipient of both ETA Transact's NexTen award and CPA Practice Advisor's Technology Innovation award.

   In addition to implementing foundational marketing and sales initiatives, we've set the stage for more growth in 2020 by building strategic partnerships along with continued development of innovative new features to our platform. As a result, in Q1 of next year, you'll see a radical expansion in the number of integration partners, channel partners and features that Biller Genie has to offer.

   What advice do I have? Focus on providing customer value, not just making or selling products or services. Identify key issues facing your customer -– whether it be an unmet need, a trend that's on the horizon or simply a better way of doing something – and invest energy and effort to build solutions that solve that need. In many ways, it's our job to remove obstacles that get in the way of the customer's success. They aren't looking for products or services. They're looking for solutions to their problems, and sometimes it's problems they don't even know they have. It's our job to find them, and we're limited only by our own creativity.

2. This year, we decided to focus on paid media and advertising to drive awareness of the brand versus more organic efforts such as content marketing and SEO. However, being a new and largely unrecognized brand, we realized that paid media tactics alone weren't enough to get the kind of scale we wanted. By focusing on paid search, social and tech-specific media channels, we didn't benefit from the "amplification effect" of implementing a more holistic marketing approach that includes a mix of tactics that build awareness and position the brand as a leader in the industry.

   In 2020, we'll continue to drive awareness of the Biller Genie brand but will refocus our strategy on supporting our channel partners who wish to add value to their network through the distribution of Biller Genie. We plan to continue to eliminate friction and competition and enable our partners to drive revenue, increase merchant acquisition and reduce merchant churn. We know that word of mouth is the best way to build our reputation, so we will continue to provide best-in-class service to help support our partners in their endeavor to help their clients get paid faster.

3. In 2019, we saw massive consolidation in the payments business with the Fiserv acquisition of First Data, FIS acquisition of Worldpay, and the Global Payments and TSYS merger. This will limit options for traditional payment relationships, and we expect continued rollups of smaller agent and ISO portfolios. This shows that organic growth in the payments-only business has slowed down and the old days of building merchant portfolios by going door to door is not as profitable as it once was. "The big guys" have realized this and shifted their efforts toward growth through acquisition. The payments industry is changing, and to compete, ISOs and merchant level salespeople need to demonstrate real value by delivering products and services that merchants need and are willing to pay a premium for.
4. There has been a fundamental shift in the payments industry towards technology. For payments professionals to stand out, they must adapt and embrace change. Just like Square, software platforms that enhance efficiency and productivity will replace traditional non-integrated payment solutions and force merchant level salespeople to adapt. Those that do not, will not last.

   The global e-invoicing market is valued $4.6 trillion and is expected to grow to over $20 trillion by 2026, a 20 percent CAGR over the same time period. Consider this: 90 percent of businesses in the United States still send invoices and collect payments manually. My bet: this is where we are going to see the biggest growth in 2020.

Justin Milmeister, CPP, Elite Merchant Solutions

1. 2019 was an exciting year for Elite Merchant Solutions. The highlight of the year was expanding our operations internationally to support our company in the United States. The international expansion has taken a lot of work and due diligence to make it a reality. We expect to be fully operational at the end of January 2020. My advice to readers is to never be complacent and always look for opportunities that can help your organization grow. Once you have identified the opportunity, live and breathe it, so it becomes a reality.
2. We have always taken pride in being a boutique payment processing company. We focus on larger merchants, and we service the heck out of them. In 2019, we strayed away from our usual sales hiring practices that previously included small groups, which allowed our sales managers to focus often one on one to get them up to speed on the sales process and hand hold them through their first five deals.

   This past year we had several larger than normal training classes, and this did not yield the results we expected. The lackluster results were clearly a product of not vetting out potential team members properly and not giving the individualized attention needed to succeed in this complex industry. This coming year we will be going back to what has worked for us many years, which is small training groups for newly hired inside sales staff. Doing this will arm our new sales associates with the knowledge and one on one attention needed to thrive in the constantly evolving payment processing industry.

3. I believe the most significant development for fintech in 2019 was the massive M&A activity. These transactions were important because, as with any large acquisition, change brings both good and bad. The leadership of the new massive companies have plans that are sometimes vastly different than that of their predecessors. A perfect example, which I have been hearing over and over, is the way ISOs are being viewed by new leadership. Once upon a time, the ISO was the company's focus; now they are viewed almost like a burden. Resources have been removed or severely limited, leaving the ISO channel on an island, so to speak.
4. Every year, payment processing gets increasingly complex to navigate and understand. Disruptors are constantly entering the highly lucrative payment processing space for their slice of the pie. Merchants are being exposed to a much wider array of products and services than ever before. I am seeing more bundled services and closed end products. Gone are the days where the only thing a sales rep needed to decide was which terminal or gateway would be best for their respective merchant.

   A sales rep's success in our industry today is a combination of having a good network and broad knowledge of the products and services available in the marketplace. My suggestion is to really understand how these products and services may benefit your current and prospective clients. We all know margins in our industry have been a race to the bottom; however, you can still acquire merchants with healthy margins if you provide them a product or service that adds value to their business in some capacity.

Darren Schulman, 6th Avenue Capital

1. As we reflect on 2019, our highlights are the successes of the businesses we were able to support this year. Every time we provide much-needed funding to a small or mid-sized business owner in need of bridge financing or seeking to unlock a near-term opportunity, we're working to help close the estimated $87 billion funding gap that exists between funding sought by U.S. small businesses and capital deployed.

   Our advice to others in the alternative lending space is to understand your merchants. At 6th Avenue Capital, we have a commitment to high-touch service and tailor-made solutions. To that end, we've added capacity to support our clients (and our increased volume) – from additional account executives to new underwriters, we're ensuring every merchant, regardless of size, has access to speak with someone directly.

2. We know we're losing out on potential deals and partners because small businesses either don't understand the product or are scared off by bad actors in the space. We're doubling down on transparency and working on educating clients and partners about the pros and cons of cash advances (and other alternative financing options).

   We believe every small business owner should have the information necessary to inform and empower his or her financial decision-making. That includes understanding when a Merchant Cash Advance makes sense, and when it's not the best option.

3. With all of the tech advances of the past year (and decade), great user experience, technology and speed have become table stakes. This is important because it forces providers to get back to basics. It's not just about having the most user-friendly interface on your mobile app. You need to connect – human-to-human – with business owners to understand their needs.
4. A significant gap remains for underserved small businesses looking for financing. Many are trying to solve this issue, but few have made a significant impact to close the gap. At 6th Avenue Capital, we believe strongly in the power of partnerships to access small businesses that may not be able to unlock traditional financing. We work not only with the business services that support small businesses, but also local community partners that understand the immediate needs of their small business constituents. Given our high-touch servicing, partners like our approach of "handshakes instead of handoffs."

In addition, as our industry continues to evolve, moving from cottage to mainstream, we expect continued focus by legislators and regulators. The best approach to potential regulation is a proactive one. Develop sound practices now.6th Avenue Capital is a member of both ILPA and SBFA, organizations actively working to help create a regulatory environment beneficial to both SMBs and SMB funders.

Patti Murphy is senior editor at the Green Sheet and president of ProScribes Inc. Follow her on Twitter @GS_PayMaven.

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