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Happy end for SME-tale in sight - if banks do their part..

We often hear the tragic tale about the SME-sector. Nobody is really interested in them and is competing for their business. Not the banks, not insurance companies, not the accounting profession, not telecom and so forth.

The answer is simple - as they are so small they have small volumes = low transaction, financing, insurable and wealth volumes = low income - still high costs. In banking it is not so much the potential individual credit losses (they are small) that scare - more the very high cost of lenghty workouts and the personal tradegies these still too often entail. Happy-go-merry venture capital financed cases are not very frequent.

Now there is a happy end to this tale in sight:

1. banks can (for their part) deliver more value by offering e-invoicing transport, validation and formating as a very cost-efficient service and earn more in extended payments business > compete more for the accounts

2. the accounting profession can based on e-invoicing deliver more value by moving away from manual entering and paper chasing altogether and increasing efforts in analysis and advice and earn more > compete more for the accounts

3. banks and finance companies can lower financing costs by automating invoice financing (also for leasing) and moving deeper into supplier financing and earn more from higher volumes > compete more for the accounts

4. insurance, telecom, utilities, banks, accounting and so forth can lower their invoicing costs by moving to e-invoicing, e-agreements, e-statements etc - better customer profitability > compete more for the accounts

This all naturally needs a new attitude from SMEs:

1. embrace digital - ask for e-invoices and offer e-invoices (charge for paper whenever possible)

2. do not think that time spent on administration is not a cost (more time than ever before should be spent on selling, servicing customers, innovations, improvements etc)

3. do not think that new services should be free - naturally ask around for the best prices - still it usually pays off to concentrate buying

4. ask your banks and other service providers to come up with generic (customer- or supplier-specific solutions are difficult to handle and can tie you up too much) and service based (end of enterprise installed software in sight) solutions - e-invoicing working just like payments

5. realize that offering your customer and supplier e-invoicing, e-orders, e-rfps, e-offers will make you a more important partner as costs go down and intelligence goes up

6. realize that we will not have less reporting in the future - most likely more with sustainability and health in stronger focus - but by going digital next-to-all can be automated

The sooner SMEs really embrace this digitalization ladder - and take the e-invoicing step on it - the sooner we can reach the paradigmatic platform described here in earlier posts. This will truly liberate the SMEs from administration to business - a cause where the EC has already set challenging targets.


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Bo Harald

Bo Harald

Chairman/Founding member, board member

Transmeri, Demos, Real Time Economy Program,MyData

Member since

04 Nov 2008


Helsinki Region

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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