Remember the pandemic-era digital shift in payments that forever changed how businesses connect and transact? Yes. Sort of. Like all epic societal moments, it gets shaped by time into a “can you believe that actually happened” kind of memory.
BAU today is what people were fond of calling “the new normal” back in 2021. Hot solutions from three to five years ago are seen as outdated in the 2025 modernization wave. It’s everywhere, and small and medium-sized businesses (SMBs) are proving to be uniquely flexible, tech-savvy operators.
Banks must meet the expectations of a new kind of SMB.
First on the list is preparing for a new small business persona – we’ll call it “the survivor” – still open and even thriving despite years of unstable social and economic conditions.
In many cases, serving these sharp, battle-hardened SMBs comes down to offering new and better payment options, through PSP partners when necessary. As McKinsey & Co. wrote, “Banks that are leaders in the [SMB] market have tailored their business banking products and services to these smaller clients,” but added that there is “…room to improve and cultivate more fruitful relationships with this subset of clients.”
As one might expect with any survivor, these SMBs are resourceful and adept at evolving with their environment. The technology now available from SMB-focused fintechs (tools for accounting, invoicing, payments, collections, customer management, etc.) has a resilient SMB sector, looking sophisticated to banks.
They have tech acumen long reserved for far larger players. But the metrics are still about better integration into their back-office, better access to data, better payment options, more access to credit, the list goes on. Banks need to understand that successfully serving an SMB today is very different than it was only a handful of years ago.
The Integration Opportunity (Bank to SMB)
One area getting serious attention is integrated payables, which help control cash flow by timing payments to take advantage of any discounts or rebates on offer. It’s also a dramatic improvement in user experience. Busy SMBs truly appreciate process simplicity.
“What you're seeing now with the evolution of AP, for example, is better connectivity and a much more seamless integration between banks and back offices,” said Rodney Nilson, Vice President of Product Management at Bottomline.
This is where bank connectivity into accounting enables automation via APIs to work wonders. Invoice automation and embedded finance are popping up more, for example, as are digital payment options embedded right into invoices, and other click-to-pay options made for business. In many ways, it’s the long-awaited consumerization of B2B payments.
Tearing Up Paper Checks
For SMBs, paper checks are becoming a payment option they simply can’t accept. They still do, of course, but there’s light at the end of that tunnel. Back-office automation takes paper checks out of the equation. Naturally, B2B accounting departments like it.
“It's really just the digital ecosystem that's now available to small businesses, or needs to be,” Nilson said. “Banks have to start thinking about the fact that SMB customers today are expecting things like integrated receivables as a payment option.”
“Banks want to have all businesses move away from writing checks, so providing small business-friendly payable facilities is a win-win for both banks and corporates,” he added. “It gets the business away from a payment mechanism that is fraught with fraud.”
As banks see check use – and check fraud – start dropping, a digital wish is granted.
It seems unfair to compare real-time payments to checks (but we will). With faster payment and instant payment options come improved liquidity management. Period. SMBs no longer need to play the ‘check float’ game to maximize their cash position. Payments can be made on the day they are due without any apprehension about late fees or penalties.
Real-time payment options offer guaranteed same-day delivery allowing businesses to hold onto funds as long as possible and maximize their cash position. Timing B2B payments can be done in various ways today. Variety is largely the point. There’s never been a better time for businesses to pay and get paid. That goes for their bankers, too.
Think Big: Become the Enabling Hub for Your SMBs
Finally, another key element for serving today’s SMBs is having the right partner with the right set of solutions.
With that combination, banks can be central to an SMB’s cash flow management toolset – providing functionality, data, or some combination of both – to enable mission-critical cash flow processes for small and medium-sized businesses.
Whether it's pre-integration or simply the availability of features via API, partnership options with top-tier payment service providers (PSPs) are a strategic necessity. “Banks need to be cognitive of who their partners are, and how their technology partners are helping them enable desirable outcomes,” Nilson said.