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The MoneyPot Live: The State of Small Business Cash Flow- and How Fintech Can Solve It
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Could a mere shift in how you manage finances redefine the success of your small business? Join us on an insightful journey as Cheryl Chen and I, Ian Horne, explore this possibility with Juliana Berger, the Director of Product Management at Intuit QuickBooks. Live from the energetic Money 2020 USA in Las Vegas, we examine the pressing issue of cash flow challenges that plague small businesses and the innovative solutions being developed in the fintech arena to alleviate these burdens. Juliana shares her wealth of knowledge on how harnessing the power of brands like QuickBooks, Credit Karma, and TurboTax can transform small business financial management from a constant headache into an empowering experience.
Discover how Intuit and QuickBooks are addressing the stress and fear associated with cash flow management by harnessing the power of AI and automation. Through engaging stories and personal anecdotes, including my own ventures into soy candles and football businesses, we illustrate the profound impact of automation on reducing administrative burdens and boosting business efficiency. Listen to discussions about innovative QuickBooks features like automatic reconciliation and cash flow planning that are helping businesses not just survive but thrive by significantly lowering failure rates.
We dive into the realm of big data and AI, exploring how QuickBooks is pushing the boundaries of traditional finance services with solutions like a $50,000 line of credit that requires no additional documentation. Juliana sheds light on how AI is reshaping productivity and competitiveness, serving as a trusted advisor for businesses in this rapidly evolving landscape. As we wrap up, we envision a future where accounting software not only enhances efficiency but seamlessly integrates with everyday business activities, offering unprecedented convenience and personalization. Tune in to uncover how these cutting-edge innovations are setting the stage for the future of small business accounting.
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Welcome to the Money Pot. I'm Ian Horne, european Head of Content at Money 2020. And we're coming in live from Las Vegas. Today it's Money 2020, usa, of course. The Super Bowl of fintech. Is it the Met Gala of fintech? Is it the Catalina wine mixer? I don't know, it's a matter of taste. I guess, guess, um, anyway, we've got a great episode on the way. We're going to talk about the state of small business cash flow and what fintech can do to mitigate one of the longest standing problems in business. But first let me introduce my co-host, heryl chen, the asia head of content for 2020.
Sheryl Chen:Sheryl, hey it is I, it is you. Indeed, it's so nice to be with you in the same room In real life.
Ian Horne:We usually do these online, so it's not quite the same. And usually one of us is doing a really anti-social hour, so it's good that we're both doing it. What is an anti-social hour for us, anyway? Second question, Sheryl have you ever set up a small business or carried out any kind of freelance work that required invoices and so on and did?
Sheryl Chen:you get paid on time. I actually did have a small business, but that is Tell me more, I would tell you more. But it actually contributed to the startup fatality like rate. It didn't make it. It wasn't nice but in terms of invoices. So in my previous role I was at a VC firm. We were working quite a fair bit with freelancers and for the first time I actually had to chase my freelancer to invoice me so that I could get her paid on time. She's like it's okay. It's okay, maybe next month. Next month. I'm like do you want to be paid on time or not?
Juliana Berger:We're going to talk about all of that today. I'm so excited you said that. Thank you.
Ian Horne:Yes, exactly, and that voice you're hearing is Juliana Berger, director of Product Management at Intuit QuickBooks. So of course, that's why I had to ask that question. I've also I've been a freelancer, I've run small businesses and, my God, I sucked at the accounting. So if I'd known you sooner it would have been good. Anyway, juliana, welcome to the Money Pot.
Juliana Berger:Thank you for having me.
Ian Horne:And secondly, I know QuickBooks does not need an introduction really, but can you tell us a bit about it and your role at the company?
Juliana Berger:Absolutely so. Thank you, first of all, so much for having me. I want to hear all about your small businesses and how we can help, so please, later, let's talk about that. As you said, I'm Juliana Berger. I head our payments and invoicing business at QuickBooks and at Intuit and, as you can imagine, this is a massive business right. So I am responsible for managing around $100 billion worth of transaction volume and $2 trillion worth of invoicing volume yearly, and that's across about 5 million businesses that we support worldwide.
Juliana Berger:I've been at Intuit for about two years, but I have almost 20 years of experience in the financial services industry, working for companies like American Express, meta and Citibank, and I got to tell you, ian and Sheryl, I am so excited to share with you today what Intuit can do in this space, because I have never been more passionate and more bullish about being able to impact small businesses and their cashflow like I am today with Intuit, and that is because of two really important things. One is this is a very mission-based company, very customer obsessed, but also this is a brand that has the power of QuickBooks, credit, karma, mailchimp and TurboTax all under one right. So when you combine those brands together, you get groundbreaking innovation that's truly game-changing right. It can really help small businesses be able to drive so much value in their day-to-day and not only survive, as you guys are talking about, but truly thrive yeah, absolutely, and it's all about ecosystems now, isn't it?
Ian Horne:I mean, that's one thing that we we kind of touched upon in the last podcast that we did, but, um, certainly, when you have those kind of brands in one place, I can see the power there. Um, anyway, you remembered your numbers, by the way, which I'm really impressed I so impressed too.
Ian Horne:Everyone who's here live in Vegas with us can see that I have a big laptop in front of me. I wrote down the numbers because I was never going to remember all of them. But we're going to have a bit of a two-part conversation here, juliana. I mean, partly we'll learn about the state of small business finance and how we can make it easier to kind of take the pain out of it, and secondly we'll look at going beyond the pain points, right and and turning it into something. Can we? Can we say it delightful or satisfying? Does that ever happen?
Juliana Berger:in accounting it does.
Ian Horne:Okay, I like your optimism. We're going to run with it.
Juliana Berger:Accounting is fun, guys, payments is fun. You're at Money 2020. Let's go. Yeah, that's true.
Sheryl Chen:I feel like the most. For me, the most delightful thing about accounting is when I don't have to do it. That's right, Well said.
Juliana Berger:We will talk about that too.
Ian Horne:Yeah, I mean, there's some incredible data from your recent study. I mean, what's the name of that study again, so we can all dig it out.
Juliana Berger:The QuickBooks Small Business Insights Report and absolutely, please look into this. This is the best. I mean, as you know, right, such a wealth of information. This gives you such an incredible view into the health of the small business economy and how they're doing so definitely want to talk about that as well.
Ian Horne:No, absolutely. I mean, let's look at it. Oh yeah, Over 85% of US SMBs describe as profitable.
Ian Horne:And yet 48% describe cash flow as a problem. You know it's a problem that's being plugged mostly by things like credit cards and the owner's personal finances. I think that's 45% of people. Isn't that wild? That is absolutely wild. You know, 15% of businesses say they're in survival mode. And yeah, I mean nearly 80% of businesses have used financing in the last 12 months as of June 2024. I told you that that report is really interesting. There's some great stuff. So, yeah, I mean, can you outline the cash flow challenge for small businesses? I mean, is it life or death for many companies?
Juliana Berger:It is life or death. It truly is, and thank you for sharing your small business stories as well, because it showcases that as well. I mean, you probably know this into the data, but almost 50% of small businesses fail in the first five years, right, and that's a wild number. I mean, if you think about that, that trickles down right? The American economy is based on the survival of small businesses, and so, when you think about the impact of cash flow and you think about how businesses have access to cash flow, you're really talking about really testing the ability of small businesses being resilient, right, and the importance of them having access to the right tools and the right data for them to make decisions.
Juliana Berger:And, as you know, in the study that you just quoted, right, so many businesses are suffering from macroeconomic challenges. Right, compounding resilience to rising costs. Right, operational costs. You've got labor challenges. All of this is adding to stress and to fear, right. In fact, 48% of businesses are saying that they're suffering from a rise in operational costs, right, and that is leading to so much of a challenge of them not knowing what the next three months look like. And looking at, you know, day-to-day decisions like do they make payroll or do they actually pay their supplier? Do they pay marketing to grow their company? And this is leading to stress, this is leading to fear that they're not going to make it in the next couple of years or even the next couple of months, and that's where I think our solutions at Intuit and QuickBooks are really well positioned to help businesses in that space.
Sheryl Chen:You know what Like when you were talking about how SMBs are the backbone of the economy, right? That's also the case in Asia, especially in Southeast Asia, I believe the numbers are 70 to 90% of businesses are SMEs, smes as we call them, smes right, we call them SMEs in Europe, but it's SMEs in the US.
Ian Horne:What is SMEs? I'm so curious. Small and medium enterprises.
Sheryl Chen:Yeah, so double-clicking into that. So a couple of data points from your recent survey of small businesses 65% of businesses receive support from a qualified accountant, but 35% don't, and over 40% of SMBs still use pen and paper to record financial transactions, amongst other tools, and 70% are using accounting software or an app, which raises a few questions. So how do you help them to? Number one, get invoices paid quicker, leverage things like B2B for BNPL or assessing better or cheaper credit.
Ian Horne:Yeah, we have a million questions here Should we start with the invoices, because I think that's a massive problem.
Juliana Berger:Yes, let's please do that. So, first of all, everything that we do at Intuit and QuickBooks is around solving for what I just spoke about before, which is the stress and the fear that small businesses face in managing their cashflow right, and what we do, or ultimately what we're trying to do, is we're trying to remove the mystery by helping you manage your finances right, and that comes down to me believing that we're uniquely positioned to do so at Intuit right, and that's because of a combination of three things. The first is our end-to-end automation of our workflows, and I'll talk about that in a second right. The second is you have this incredible power of the brand that I just spoke about at Intuit right, and we're doing all of this cross-organizational platformization and interoperability that brings the power of these brands together, which is awesome, right? And then you've got these really robust data insights. I mean, think about how much data you have in QuickBooks, right, we see every money in and every money out for every small business that uses QuickBooks. And then you've got the power of businesses like that use MailChimp or TurboTax, right. All of that data powered by generative AI. That combination of those three coming together really actually helps businesses see their full financial picture which, as a result, allows them to actually make investments right, make the right decisions and, as with that, actually be able to manage their cashflow better, get more cashflow in their hands that they can reinvest into their business and drive durable growth right.
Juliana Berger:And again, I am so biased in saying that we're well-positioned to do so. But our customers actually agree. In fact, 36% of our customers that we surveyed said that the most important tool that they use to manage their business is their accounting software, but those same customers tell us that they're also suffering from the massive amount of software and applications that they have to manage their business across day to day. I actually spoke to a customer a little while ago. She's amazing. She owns a soy candle company. I know I love her. She's great. If you're looking for candles, please let me know I will send you one.
Sheryl Chen:I had a soy candle hustle.
Juliana Berger:Oh my gosh, I'm sending you a candle. I'm telling you right now I'm sending you a candle. But let me tell you about her. She's awesome. She uses 15 different applications, guys, 15 different applications to manage her business. Think about that, right.
Juliana Berger:Imagine, like just trying to manage your day-to-day life with 15 applications, the amount of stress that that causes. The back end oh my gosh. And she told me she's like I feel like I don't have control because I'm always cross-referencing and cross-checking and the data doesn't integrate well, right. And she's really looking for a solution where she can do so much more of that with one solution. And that's what we can do, right.
Juliana Berger:If you think about the power of QuickBooks and you think about the power of MailChimp and what the workflow automation that exists with those, if you think about the specific differentiating features that we have that we can offer, like automatic reconciliation, which takes the manual guessing out of the process, you power that with our cash flow planner, which allows businesses to see up to 90 days in advance what their cash flow is going to look like, and then marry that with generative AI and the power of insights. These companies, with all of that together, can actually not only again survive but thrive much more than their competitors, and I gave you guys an insight earlier, which is 50% of businesses tend to fail. In the first five years. That number drops to 31% for businesses that use QuickBooks 31% right, and I would love to believe that that is because of some of the value that we're driving with our solutions.
Sheryl Chen:No, I love the example and it hits so close to home because during the pandemic I actually tried, I doubled with doing my own soy candle site hustle. It's insane because you have to do like procuring you have to do, like scent formulating, marketing, everything, especially if you're doing it solo. Like branding, communications, everything went crazy, exactly Like I still have the design sitting in my ipad right now.
Sheryl Chen:it never got off the ground, it's so hard I have I think it's like 20 kg or 20, 50 kg of like soy wax sitting somewhere and that's great.
Ian Horne:It's insane yeah, I think. I think that's easily forgotten about small businesses. Each one is someone's dream.
Sheryl Chen:It's someone's big idea right and my dreams have died yeah, no, don't say that well, there's still.
Ian Horne:There's still kilograms of candles. I don't want to buy Sheryl's candles. Please reach out to us. Um, I'll let you do the pricing on that, but but no same, I'm the same. I ran a football business. I used to run a football league in london, or soccer, you know and I've still got lots of football kit lying around the place I'm never going to use again. But yeah, that was a big idea. But again, with things like that, you just want to get paid, right, it's not going to owe you money. That's one of the big problems. That kind of comes up and you know you talk about using things like MailChimp. But how automated is that process? Because I think the most tiring thing come on, just pay me now.
Juliana Berger:I'm going to tell you right now that automation of processes is such a big problem for the business that we face. In fact, I'm going to give you an astounding number. Are you ready for this? This is one of my favorite statistics. Almost two thirds of the companies that we have surveyed say that, on average, they're spending 14 hours a week on administrative tasks related to collecting payments. When I say that again, 14 hours a week of administrative tasks- that's gross.
Juliana Berger:That's. I mean, think about it. Five day work week right, that's almost three hours a day of you in front of a computer chasing down money Right and it. And then it goes back to like chasing you talked about like chasing down money right and chasing down money Right and it. And then it goes back to like chasing you talked about like chasing down money right and chasing down payments. Access to capital is another major problem for small businesses today, a huge one, right, in fact? Our survey that you mentioned, we actually learned that 58% of small businesses are often paid late 58% and 64% of them actually have today outstanding invoices that are out overdue by more than 60 days. Imagine what that does to a business's ability to thrive and survive.
Juliana Berger:You guys know this right by personal example, Especially like small businesses, exactly right, like they can't, then you're in a zero sum game of do I make payroll or do I pay my supplier?
Ian Horne:Yeah, yeah, I mean you mentioned like getting better access to credit. I mean, how do you help businesses do that? I mean we've seen innovations like you know B2B, you know BNPL and things like that. Or buy now, pay later. Is that the sort of thing you facilitate?
Juliana Berger:We have so much opportunity around the access to capital and credit as well. One of the products that we just launched this year that we're very excited about is actually our QuickBooks line of credit, so this offers businesses up to $50,000 of credit line, and again with no additional documentation needed, right? So you have that access already at your fingertips. And we spoke about the cashflow crunch right and the challenge with late payments and then making the decisions of do I pay my supplier or do I make payroll. You have access to that $50,000 at your fingertips and you can do that to advance suppliers right to buy more soy or some more candle wax to make your candles right, or you can use that to bridge the gap of those unpaid invoices, and you do that, naturally, and what that actually delivers is more money in the hand of businesses that they again can use to fuel their growth.
Sheryl Chen:Actually, you know what that is so interesting? Because 50,000, that's a lot and you're saying that no further documentation is needed. But from your end, how do you manage your risk to us, we see?
Juliana Berger:every dollar in and every dollar out for every business that uses QuickBooks. Right, this is a dream, I mean. I'll tell you honestly, when I worked for Citibank, I used to be like, oh my gosh, we have all the data in the world. This is amazing. We can do so many cool things with this big data. Woo, big B, big D data. Then I went to Meta and I was like, oh my God, forget the banks. Meta and Facebook has all the data in the world. They have all the data about all the users in the whole wide world. Like this is what big data looks like. I'm now convinced that Intuit wins the game when it comes to big data. Right, when you think about the data that we have with QuickBooks and with companies, and you power that with data like TurboTax and others, we can do such a specific and really marketleading risk model analysis because we have that information at our disposal, and so we can offer you products that very few companies can because we have that data.
Ian Horne:Yeah, I think you're leading us on to the next thing here, because obviously we've talked about the pain points, as I said we would. We've kind of covered the. You know, Sheryl and I obviously have stories here to tell and gripes, and I'm sure these are very relatable to people that are listening in. But how do we kind of go beyond that? I feel like fintech generally is at that point of going beyond, beyond the payment, beyond banking and so on. So how does QuickBooks intend to go beyond accounting and offer value for SMBs, value that they'll love, things that are a bit different, things they weren't used to having before?
Juliana Berger:Great question, and I'm going to be honest with you both. I am so bullish on AI, and particularly how much AI can transform the fintech industry. Right, and? And I'll, and I'll give you an example. Not only are am I bullish. This is not because we're a bunch of you know nerds and Silicon Valley building products, right? This is because I actually believe that this can add value to our customers, and they're telling us so, right? So 82% of our small businesses that we surveyed tell us that they're using AI in some way, shape or form for their business. 50% of them have said that their productivity has increased over that period of time, and 72% of them have said that they are looking for AI and AI solutions to help them be competitive in the market, right, and so I think it's really important for us to step forward into that space to be able to be the trusted advisor for those businesses with those solutions.
Juliana Berger:Now I wanna be very clear on something that's important this is not about taking away jobs. This is about empowering jobs. This is about making sure that people have the control needed to be effective in what they do, right, and I'll give you two examples of how we're doing that at Intuit. The first and foremost is around personalized and customized insights. Right? This is about driving awareness and giving you customization so that you can make the right decisions. I'm going to paint a picture of what that looks like. Imagine a world we spoke about before. 54% of businesses are paid late, right? Imagine a world where I can show you all of the overdue invoices that you have and then click of a button I can generate overdue invoice reminders for you. You decide the tone If you want it to be happy, if you want it to be more aggressive, you can tell me what tone.
Juliana Berger:Really you can literally, yeah, exactly, or do you want to add a late fee? Like you, decide the tone. Right that we want these messages to be in, but we'll draft them for you. All you got to do is review, press, send and automatically your chances of getting paid goes up. Right? I'll give you another example. We see how your customers interact with other businesses. So what if we provided you insights about how your customer likes to pay or how they generally pay over all in their ecosystem? Right, we can provide you those insights that can then help you make the right decisions, and we call that personalized, customizable insights. That's area number one that we're investing in with AI.
Juliana Berger:The second area that we're investing in is what we're calling progressive automation, and this is about doing it for you and doing it with you, and removing the tedious tasks of what you do in your day-to-day to empower you to spend your time on what matters most to you.
Juliana Berger:I'm going to paint another picture for you.
Juliana Berger:Imagine what I just told you before about the 14 hours a week that you're spending in front of your computer drafting invoices or trying to get paid.
Juliana Berger:What if you're on the go, you're in the car and you're just dictating into your phone like hey, bill Sherrill, an invoice of X, y, z of what I wanted to pay me for. Or you're at a project and you're taking notes and you just take photos of that, of those notes, automatically, send that to QuickBooks and we're generating that invoice for you. All you have to do is go in, review those invoices and press send and you don't have to actually type them in, right, you're removing the actual work of having to do that. That is so important for our businesses, even more for our mid-market businesses that have very complex AR and AP needs. So that for us is such a huge opportunity area for us and one that we're actually very excited about with our Intuit Enterprise Suite, of offering robust automation in your workflows, offering automated approvals, automated reminders, that you can then be able to get time back hundreds of hours back. If you cut that, you know 14 hours a week and get paid up to four times faster each year.
Ian Horne:Wow, I mean, I love the energy you're bringing to this. By the way, it is actually quite nice to talk about, you know, accounting being covered in such an exciting way, yeah, yeah, I think you're in the right room, I think you are in the right audience to be saying that. But I mean, let's look at AI and big data and what we do with that. Obviously, automation is one side of that, but the other side of it is personalization and giving people specific products that they need In the retail market. We usually look at that in terms of, say, hyper personalization. In SMBs, you're probably looking more like verticals, so could you give us an example of how you better serve a vertical?
Juliana Berger:Great question, and we're seeing such a huge trend in this over the past couple of years, and one that we're actively investing in. So verticalization for us is something about not only outside in, but inside out. Right, we're actually seeing 50% 3X is the chances, right. 50% of the businesses that were using horizontal payment services before are now using payment services offered by verticalized solutions, and the chances of someone who's using a horizontal payment solution, like a Stripe or something else, to move to a verticalized solution is 3x over the next two years, right? So think about that.
Juliana Berger:That is about meeting the customer where they are right and solving for their end-to-end workflow, and how we're thinking about that into it is twofold. One is inside out, so how do we take our capabilities, our APIs, and then embed that upstream, beyond accounting, but to where the business and the decisions are being made, where the customer is meeting their customer? How do we embed our APIs into those front office experiences so that we can be there for our customer at that time of need? It also means outside in. How do we then take the data of those front office solutions and embed them into QuickBooks so that we have all of that data information at your fingertips and you're not like my wonderful soy candle customer who has to deal with 15 different integrations at one time or 15 different apps at one time to manage your business.
Sheryl Chen:I really really love it were 15 different apps at one time to manage her business. I really really love it. And also, I agree, I love the energy. But unfortunately we are running out of time. So one last question. So you've you've painted very, very nice picture right being in a car. Okay, so imagine I am Sheryl, I'm in a self-driving car, I'm telling my phone, Bill Ian Horn he owes me like a shit ton of money. Bill to Ian Horn, Put a late payment notice on that. I can already do it.
Juliana Berger:He always pays late, girl Wow.
Ian Horne:I'm not denying it.
Sheryl Chen:He doesn't do his expenses on time. I've heard complaints, so we can already do it now. But what does accounting software? How will it look like in five years time?
Juliana Berger:That's exactly how I'm telling you right now. I think it's the ability for us to be able to truly drive automation, so that you don't have to come to us, we come to you. In my opinion, the best accounting software, the best software you can build, the best payment experience you can build, is one that is truly seamless, right, and I use Uber as an example of a payments example, right, the reason that that is such a great payments experience is because it is built into your Uber experience and I don't have to do anything for you, right, and so exactly that, if you're just talking into your phone or doing as part of your day-to-day workflow and you don't have to sit in front of a computer for 14 hours to do anything, that's the future.
Ian Horne:Great stuff, juliana. I have taken liberties of our two minute warning. By the way, you won't have seen the person waving frantically through the window at me, but that has happened. So that is all we have time for. But what a great conversation, really, really fun to have you with us, Juliana.
Ian Horne:The SMB market is an interesting space right now. Of course, it's exciting to see how life can be made easier for so many entrepreneurs and innovators so they can get on doing what they do best right. So thank you again, Juliana, and thank you, Sheryl. Always fun recording these with you in person.
Ian Horne:Thank you both Always have a laugh, even if you are making fun of my ability to repay my debts. We'll move on. Anyway, thank you to everyone listening live at the Money Pot here in Vegas and also back home or wherever you are right now. If you've got an inspired idea for an episode, drop us a line. At podcast at money2020.com. Ian Horne and Sheryl Chen signing out.
Sheryl Chen:And keeping our dreams alive.
Sheryl Chen:Yes, I love that.
