Episode 113 – SMB Cash Management Meets Lending and Payments – Nan Siler, Kabbage
In this Payments on Fire® podcast, we examine the role of a payment service offered through a commerce solution targeted at the small and medium business (SMB) market. To do that, we talk with Nan Siler, Head of Payments Strategy and Operations, at Kabbage.
The small and medium business market is important to both the national and local economies. It’s big. According to the U.S. Small Business Administration, over 40% of GDP is generated by this segment. Over the last decade and more, SMBs have come to face new competition (Amazon and the high concentration of Big Retail) and a less willing lender community of traditional financial institutions. Kabbage has stepped into that environment.
Kabbage has loaned over $9B since its inception to some 220,000 customers and last fall added a new service, Kabbage Payments, to ease payment and invoicing for its SMB customers.
SMBs live and die on cash flow. If a big customer’s payment doesn’t come in on time, the business owner can end up paying her employees but not herself.
Kabbage has built sophisticated onboarding and lending models around the needs and realities small businesses. Cash flow management includes, of course, timely access to money, via lending, to fill funding gaps or help expand the operation.
Nan takes us through how Kabbage’s Payments solution complements Kabbage Funding, its lending operation, and how the two come together to provide better insight on the business’s cash needs. With better insight, the goal is to help the small business borrow less money for shorter periods of time when funding the day-to-day with the expectation that Kabbage can provide larger sums to meet the capital requirements of business expansion.
Many independent software vendors (ISVs) bring payments capabilities to their merchant customers to meet functional expectations as well as enjoy payment related revenues. Indeed, the ISV is now the channel through which many SMBs acquire payments acceptance capabilities. The payment-focused PSP group, and especially the Independent Sales Organization (ISO), no longer control that channel.
Kabbage, while not an ISV, has built its payment service to help merchants get paid faster. Every SMB wants that. So, take a listen to Nan as she discusses both the lending capabilities of her firm and how the new payment service complements that funding function.