Imagine a scenario where your clients can pay, get finances, or purchase insurance without having to separately leave your website or application. This is possible with embedded finance, which integrates financial services into non-financial platforms and streamlines the way small-scale and medium-sized enterprises (SMEs) carry out their transactions. Embedding finance makes cash flow more predictable, translating to smoother transactions for SMEs.
SME businesses can now serve financial needs, such as instant payments, buy now, pay later services, and even business loans, without the client having to visit the bank. SMEs can grow even faster while improving customer relationships because they do not have to deal with various regulations that come with traditional financial systems.
Furthermore, according to Bain and Company, the embedded finance market is expected to reach $7 trillion by 2030, implying rapid growth in the space. Many more businesses appear to be integrating to enhance customer accessibility.
Why Embedded Finance is Critical to SMEs
Every business must confront cash flow issues, but in the case of most SMEs, it is arguably the most challenging hurdle. Stagnation in growth can stem from several issues, such as late payments, insufficient finances, and low loan approval. Embedded finance addresses these issues by making financial services accessible at the moment the businesses need them most. Here’s how:
1. Reduced Payment Processes Increases Cash Flow
Cash flow is the lifeblood of any business and effective management of it is critical to running a healthy business. Nothing is more disruptive than delayed payments. Embedded finance enables merchants to initiate payments immediately at the checkout, allowing revenue to flow continuously without interruptions.
For example, online retailers can embed payment processing systems directly in their websites, allowing customers to complete transactions without opening a third-party banking application. The retailer receives payments in a timely manner, and there is no delay. Further, with automated invoicing and instant payouts, embedded finance enables SMEs to operate with significantly less paperwork and enhances overall cash flow management.
2. Easier Access to Business Loans
Obtaining a traditional loan is often slow, cumbersome, and painful. With embedded finance systems, SMEs can apply for funding directly from the platforms they use with minimal paperwork, more flexible approvals, and a quicker response time. This allows SMEs to use their time better and conduct business without financial roadblocks.
For example, a logistics firm that uses GEMx Technologies’ Working Capital Loans embedded financing tool can access SGD 1 million in just a few days instead of waiting for the lengthy bank approval process. Unlike traditional banks, which rely greatly on credit scores, embedded loans focus more on a company’s transaction history, providing a much easier avenue for SMEs to access funds.
3. Building Customer Loyalty with Flexible Payment Options
Payment flexibility translates to increased sales, as customers will be able to make purchases they previously couldn’t afford. With payment methods like Buy Now Pay Later, or post-purchase subscriptions, SMEs have access to more tools to help them convert more sales and ultimately increase their revenue.
For example, furniture retailers can integrate Buy Now Pay Later to allow customers to split their payments into interest-free installments, making expensive purchases more manageable for consumers. Beyond spending prevention, embedded finance also promotes loyalty and brand value by issuing reward-based credits for repeat purchases and long-term business engagement.
4. Achieving an Advantage Over Competitors Advances in Their Specific Fields
SMEs that incorporate financial services into their business set themselves apart from the competition. They increase ease of use, keep customers interested, and make business financial transactions easier, all of which contribute to the expansion of their companies. A freelance marketplace that allows immediate withdrawal of earnings attracts more freelancers who need their money. They can build a stronghold by providing industry-centric solutions that offer tailored services that bigger players may not be able to provide.
Industry-Specific Benefits of Embedded Finance
Different industries can leverage embedded finance in distinct manners. This is how some of the industries are taking advantage of it:
Healthcare and Telemedicine
- Clinic and online health platforms offer embedded payment plans for treatments.
- Patients can access microloans for expensive medical procedures through their healthcare providers.
For example, telemedicine platforms like Doctor Anywhere enables patients to pay through digital wallets or set up installment plans.
Education and E-Learning
- Online course providers enable students to pay tuition in installments.
- Schools integrate financial aid tools for scholarships and education loans.
For example, Coursera provides embedded payments and financial freedom for learners. Embedded finance can also assist vocational training courses by providing financing solutions and making career advancement easier.
Manufacturing & Supply Chain
- To expedite payment procedures, suppliers can employ invoice financing.
- Late payment incidences are reduced as businesses incorporate automated payment solutions.
For example, firms that deploy G-EMx Trade Finance Solutions can obtain funding for bulk purchases and therefore, avoid breaks within the supply chain.
Real Estate & Property Management
- To help tenants pay rent more quickly, property management businesses provide rental payment financing.
- Rent and maintenance fees are collected automatically using automated payment systems.
For instance, Lodgify and other platforms have incorporated payment financial tools into property payment management, making the process simple.
How Can SMEs Start Utilizing Embedded Finance?
The good news is that SMEs do not need to start building their technology from the ground. There are easy ways to merge embedded finance with existing systems. This includes the following:
- Implementation of payment gateways allows for digital payments and BNPL at the point of sale.
- Collaborate with fintechs such as GEMx Technologies to get access to embedded finance opportunities.
- Use APIs to integrate financial services, such as banking, lending, or insurance, into applications or websites.
- Use digital wallets for easier transactions for customers and suppliers like G-EMx e-Wallet solutions.
The Future of Embedded Finance for SMEs
Alongside the rapid shift of business activities into the digital space, financial services will be more integrated within the ubiquitous platforms. Embedded finance will offer SMEs faster transactions, more funding opportunities, and enhanced competitive advantage.
58% of SMEs struggle with financial access, and embedded finance can open new avenues of capital access for them that were previously restricted to bigger corporates. Are you prepared to embed embedded finance into your business? As an SME, payment processing, lending, and other financial aspects should never slow down your willingness to scale. Integrated finance is a solution many SMEs are using, and GEMx Technologies is helping them implement this. Leave your competition behind and discover how GEMx Technologies can integrate finance into your business processes today!
