The Need for FaaS In The Post-Pandemic Marketplace eCommerce Industry

The Need For FaaS In The Post-Pandemic Marketplace eCommerce Industry

Before COVID-19, online shopping was growing by about 4.5% a year. The retail landscape has changed this year due to increased movement restriction measures and consumer preference for eCommerce. Those businesses that have successfully adapted to digital platforms thrived while traditional retailers with weak online strategies dwindled.

The growth of eCommerce has also contributed to an increase in financial services provided by non-financial companies. These are often called embedded finance services and can include digital payments, credit, and insurance at the point of sale. The growing trend of embedding finance within businesses can create a more robust and cost-efficient digital economy.

In recent years, platforms such as Alibaba, MercadoLibre, Jumia, and Amazon have expanded their financial services by allowing payment processing. The industry is increasingly becoming service-oriented, as non-financial companies provide credit and insurance to merchants and consumers at the point of sale.

More recently, published reports show that the trend of embedding finance in eCommerce is expanding beyond just online stores. Firms in the agricultural sector, ride-hailing companies, and online logistics are starting to follow a similar development path. They have either started offering financial products or have expressed interest in doing so.

Finance as a Service (FaaS) has been around for some time now, but it is only recently that the COVID-19 pandemic has caused it to become more important than ever. The marketplace eCommerce sector is seeing an increased need for financial services at the point of sale due to the increase in digitalization and remote work, including many non-financial companies offering these services. Finance as a Service provides customers with access to credit, insurance, and digital payments from one platform on any device while also giving businesses access to real-time data analytics.

How The COVID-19 Pandemic Shaped Today’s eCommerce Sector?

The COVID-19 pandemic caused a significant amount of economic damage in the eCommerce sector. The main reason for this is that it was difficult for consumers to spend money while they were sick and unable to work due to illness, which reduced productivity and profits—in addition, having fewer people at work meant fewer people to buy goods and services.

On the other hand, eCommerce businesses have also seen an increase in digitalization and the proliferation of remote work. Due to this, services such as digital payments, credit, and insurance are increasingly being offered at the point of sale by non-financial companies. This is a new development in eCommerce, which was unheard of before COVID-19 due to security concerns about online purchases with people who were not physically present and the increased risk of fraud.

However, this new development is great news for eCommerce businesses because it means they can offer more services to their customers while also increasing sales and revenue numbers. With eCommerce expanding rapidly, it will be essential to keep track of the changes in these selling practices and monitor any digital economy division that may result from them. The growing trend of eCommerce platforms gaining more customers in response to the COVID-19 pandemic suggests that companies within the sector are expanding their customer base by offering digital payment, credit, and insurance for point of sale transactions.

Finance as a Service will become increasingly important in the eCommerce sector due to COVID-19 and post-pandemic globalization.

What Is FaaS?

Finance as a Service (FaaS) is an apt example of the new finance sector, which has seen its value increase exponentially in recent years. Due to the COVID-19 pandemic and increasing digitalization across all industries, finance on demand will continue to be highly sought after. FaaS allows non-financial companies to become more financially involved with their customers without directly providing financial services. Finance as a Service is popular in the marketplace eCommerce sector, which has seen an increase in demand for remote work.

Outsourcing financial and accounting services let businesses focus more on core aspects of their business. Outsourcing the financial responsibilities of your eCommerce business can also help lower overhead costs, freeing up resources that may be dedicated to irrelevant processes such as hiring and training an accountant.

Third-party companies will take over all of the time-consuming financial activities for less than a team within the company can do it. Outsourced finance services are what businesses need to stay competitive without breaking the bank. Because of the vital need for these services, nonfinancial companies now offer them at points of sale with just a fraction of a price as an in-house finance department would cost.

Unlike traditional accounting outsourcing, FaaS goes a step beyond. FaaS is a business model that combines codified standard operating procedures, advanced cloud computing, and digital workflows to enhance agility in meeting partner needs. It also creates easy-to-read financial dashboards together with custom reporting capabilities for regulatory concerns.

How Can Finance as a Service Help the Marketplace eCommerce Sector?

In the post-pandemic marketplace eCommerce sector, Finance as a Service can help in various ways. The first way is by providing financial services to customers who could not physically be at the point of sale due to COVID-19 complications. This would have helped combat issues with customer engagement and increase sales revenue for businesses in the eCommerce marketplace.

The COVID-19 pandemic has created a need for technology to assist businesses with their financial management. Working with a professional finance team instead of internally relieves the organization from disadvantages and still benefits them. But what exactly does Finance as a Service have to offer to those in the eCommerce sector?

  • Finance Professionals – Businesses that use FaaS have a professional team of finance providers they can call on at any time to resolve issues with bookkeeping or financial planning. The FaaS model allows businesses to access the expertise and experience of an entire team without having to rely solely on in-house individuals. It also allows companies to customize the services they need.
  • State-of-the-Art Technology – An outsourced accounting services provider will typically provide modern software solutions like cloud computing, AI, and advanced analytics. Marketplace eCommerce businesses can use these types of accounting software to reduce work done in spreadsheets and replace it with digital tools that generate easy-to-understand business intelligence.
  • Real-Time Reporting Capabilities – In today’s marketplace eCommerce sectors, in addition to a dedicated team handling financial reporting, organizations are also implementing combined systems that track metrics and key performance indicators. This allows them to have immediate insight into financial information from anywhere.
  • Access to Professional Finance Services – For many businesses, the use of state-of-the-art digital technology is increasing, and there is a greater need to reduce operational costs. Outsourcing finance services can provide the much-needed flexibility that benefits both business owners and employees. A professional financial services company will use appropriate digital resources to automate tasks, which will help employees focus on core business decisions.

The Benefits of FaaS for eCommerce Organizations

The benefits of Finance as a Service for eCommerce organizations are numerous. There are many reasons it is beneficial to outsource with finance as a service, including the following:

Scalability Finance

Finance as a Service can provide scalable solutions for businesses of all sizes. This ensures that the solution can grow with your company and reduce costs associated with hiring additional employees or outsourcing work. FaaS providers are structured so that they adjust the allocated resources to every task, ensuring they always have the right amount. With companies building the right systems and streamlining their internal controls and processes, FaaS accounting providers can quickly and effectively jump in to help with any accounting activities after being contacted by organizations.

Cost Savings

Finance as a Service will help you save money by providing high-quality, cost-effective services through technology solutions offered through cloud computing software and advanced analytics. By allowing Finance as a Service to help you automate and streamline your financial operations, it will free up time for management teams so they can focus on other areas of the business that need attention.

Accessibility

Finance as a Service allows organizations to access experienced finance professionals at any time and from anywhere in the world with just an internet connection and a phone. Finance as a Service providers have the technology, knowledge, experience, and expertise to provide high-quality professional finance services without any geographical limitations.

CFO Support

FaaS providers, such as Consero, can offer CFO support for businesses without a dedicated finance chief. As the company’s financial leadership devotes itself to analysis, FaaS takes care of repetitive tasks. With this model helping thrive in a digitalized eCommerce world and proliferation of remote work, the CFO focuses on forward-thinking growth by steering attention towards future goals and providing a more strategic planning trajectory.

Increased Financial Visibility

As the business grows, leadership needs a bird’s-eye view of the organization. Finance as a service platform provides them with financial reporting, which presents current opportunities and challenges. With better visibility into their economic status, companies can make more informed decisions and monitor cash flow, understand their profitability in the market, track how effectively they’ve acquired new customers, and check account balances.

In addition, businesses can leverage FaaS to grow their business. This enhanced reporting system provides more data that can be used to make better decisions towards eliminating inefficiencies and identifying new opportunities that may arise from this digitalization.

What Can Marketplace eCommerce Expect from Finance as a Service?

Without up-to-date systems, inefficient processes, and the wrong team, it can be difficult for any company to achieve success. In particular, for new or small businesses, their finance departments often lack accurate data, and digitalization has made remote work increasingly common. eCommerce organizations will benefit from FaaS in the foreseeable future because it will help them improve their processes and reach new levels of success.

Strategic finance is crucial for eCommerce businesses looking to remain competitive. The trick to staying relevant during such unpredictable times lies in responsiveness and the effect of business decisions over time. It’s because of these business-impacting factors that companies need to look ahead rather than dwelling on the past, and you can do so by using finance as a service.

This is why Finance as a Service solutions can prove to be an efficient solution for companies that need significant financial system overhauls. Consero offers services that help you manage your marketplace eCommerce finance.

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How Consero helped BigCommerce grow from start-up to one of the year’s hottest IPOs

For the past nine years, BigCommerce relied on Consero’s Finance as a Service [FaaS] model and found that the tech-enabled service provider scaled up well with the company’s massive growth, allowing its CFO to focus on the strategic initiatives that took the enterprise from an early­ stage start-up to a massive public offering.

A Page From The CFO Playbook

Back in 2011, BigCommerce was very much a start-up, still running on its series A funding and essentially relying on QuickBooks to manage its finances. That year, they tapped Robert Alvarez as CFO, and he knew they needed to take a hard look at the systems, processes and people in the finance function in order to drive efficiencies and scale up the operations of the business.

Alvarez had worked with Consero on multiple occasions before and knew their Finance as a Service solution could streamline processes, automate back-office transactions and essentially upgrade the finance function in a turn-key fashion.

“By the time I joined BigCommerce, Consero was already part of my playbook, and I knew I needed them here, so I could focus on strategic priorities and the growth drivers of the business,” says Alvarez.

For the new CFO, Consero offered a managed solution with the right mix of digital systems, well­mapped processes and skilled finance & accounting talent. Within two weeks, the tech-enabled service provider had implemented and transferred the GL to Sage lntacct. Additionally, Consero was already working to streamline and automate as much as of the processes as possible. “We get a lot of leverage around the automated workflows and we’ve been paperless from the beginning, which streamlined many processes over the life of this partnership.”

Skilled Finance Talent & PreIntegrated Software Stack with Digital Processes and Workflows

But Consero’s contribution went beyond upgrading their technology and processing the back-office finance & accounting transactions. “We were able to take a huge part of the human capital burden off his desk,” says Chris Hartenstein, Managing Director with Consero. Alvarez didn’t have to fret about the recruiting, hiring and managing of the finance function, which only became more as the company grew over the next eight years. “My team didn’t need to worry as much about training anyone and getting them up to speed,” says Alvarez. “We just let Consero know what we needed and Consero stepped in to deliver it, which saved us plenty of time and recruiting cycles.”

With Consero managing the back-office and business continuity risks, Alvarez didn’t have to be concerned with losing key team members. “In smaller middle market companies, the loss of any member of the team means so much institutional knowledge walks out the door with them,” says Hartenstein. “But at Consero, we have any number of people to step in should someone leave. This ensures their business continuity is maintained.”

And even now, as BigCommerce operates as a public company, Consero is still an important piece of the company’s finance function. “There aren’t too many service providers that stayed with us from the time I started, and that speaks to the quality and reliability of Consero’s technology, systems and people,” says Alvarez.

In fact, the Consero team worked so closely with BigCommerce, that the company leveraged their expertise to help prep them for their IPO. Over the eight years, Consero’s worked so closely with Robert’s team, it was obvious they should leverage their skills for the IPO prep. “They had so much tribal knowledge, and such a grasp of all the previous transactions and systems,” says Alvarez .“So, the IPO readiness plan had several components prepared by them.” This was only possible by collaborating on a consistent and intimate basis.

There aren,t too many service providers that stayed with us from the time I started, and that speaks to the quality and reliability of Consero,s technology, systems and people. – Robert Alvarez (CFO – BigCommerce)

Company Culture That Fits

“When I suggest Consero to someone, I stress that they need to treat them as part of their in-house team, and not merely an outsourced provider.” Alvarez prides himself on watching Consero team members that serviced his account, mature and advance into leadership roles at Consero. But such a long-term engagement requires that Consero staff truly fit the culture over at Big Commerce.

Consero was in alignment with BigCommerce’s two bucket approach to hiring:

Bucket One: verifying a candidate had the given skill set, experience and competencies

Bucket Two: seeing they have the intangibles, the values and characteristics that would allow them to fit well with the culture and grow with the existing team

“Without fail, when we needed more support, Consero always finds the right solution for us,” says Alvarez.

Clean Data and Due Diligence Ready

With Consero tackling the finance function with the right people and technology in the early days, Alvarez was able to devote his time to the higher-level strategic initiatives at his company. “As a Saas business, we’re very metrics and data-driven, so while Consero helped with a lot of the day-to-day accounting, we were able to focus on building up our data warehouse, metrics reporting, and operational best practices across the company,” says Alvarez.

“At BigCommerce, we take real time to map out strategic goals and initiatives, and the reality is that many of the initiatives are owned by other functional areas, but we get pulled in early to play a part in virtually all of them,” says Alvarez. “By outsourcing pieces of the finance function to Consero early on, we were able to be that partner where every functional area can lean on my team for what they need.”

And over the past nine years, Big Commerce has raised growth equity from tier 1 investors like General Catalyst, Revolution, Softbank, GGV Capital and Goldman Sachs, all prior to its successful IPO and subsequent follow-on offering. The IPO was clearly a major initiative that required additional resources and rigor, yet Consero gave Alvarez a solid head start. “If we didn’t have accurate reporting, we would not be compliant or diligence ready in our private financing rounds or our IPO and secondary offering. We’ve been able to meet all of the diligence requests because of the transparency and accuracy in our finance function,” Alvarez noted.

Consero’s CEO, Scott Tynes explains: “So many of the controls we put in place as part of our onboarding are exactly the type of processes that private companies need to establish before going public, and so, BigCommerce had a great foundation to build upon in order to get public company ready.”

“So many of the controls we put in place as part of our onboarding are exactly the type of processes that private companies need to establish before going public, and so, BigCommerce had a great foundation to build upon in order to get public company ready.” – Scott Tynes (CEO-Consero)

This was already evident to Alvarez in the case of audits. “E& Y has been our auditor since I began, and they appreciated the controls, automation and transparency of the systems Consero helped put in place, which allows them to work faster as well,” says Alvarez.

Going Public

BigCommerce decided in June 2019 that they wanted to go public, eyeing an April 2020 date, but the uncertainty brought on by COVID-19 pushed the offering to August. Even with the delay, its IPO stands as one of the most successful of the year, quadrupling in value by its second day of trading, and maintaining a large share of that leap to this day.

After the IPO, Consero is still servicing BigCommerce, without missing a beat. The only difference being the company expanded their inhouse team to address public company requirements in areas such as compliance, external reporting, investor relations and governance. But Consero still provides the same underlying software and accounting support to the company as they always have. That is why Hartenstein stresses that clients don’t outgrow Consero, as BigCommerce leveraged them when they had revenue of $10 million and now, when they’re bringing in well over ten times that.

One of the mixed blessings of that kind of performance is that it accelerated the company’s deadline to become SOX compliant. “That’s one of my team’s next big projects, with the idea that we’d be ready by Q3 of 2021, so we’ll only need to test it in Q4, with time to spare before our deadline of December 31st,” says Alvarez. Of course, Consero will be aiding in this initiative as well.

Given the trajectory of BigCommerce, Alvarez remains convinced of the value Consero brings. “My advice is to anyone considering hiring them, is first, this is not about outsourcing,” says Alvarez. “It’s about finding a Finance as a Service partner that can bring technology, process automation and a back-end workflow that’s been proven for years. Why build everything from scratch when there’s someone with a checklist, and the experience to build something that can grow with you? That’s why Consero has been part of my playbook and why I’m so proud of everyone on the Consero team who has leaned in so much to help get us to this point.”

 

 

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Creating Value Out of the Finance & Accounting Function: 5 Common Mistakes PE-Backed Companies Make…And How to Fix Them

Private Equity firms need the Finance & Accounting team to deliver clear insights quickly. But too often, they are re-creating the wheel—implementing software, hiring professionals and building reports. Time is wasted and opportunities are missed.

To be successful, the finance & accounting function of Private Equity portfolio companies should create value. A strategic CFO should provide the “Voice of Finance” that permeates throughout the business. Key functions like processing transactions, closing the books and producing internal/external reporting should all be efficient. And those efficiencies should drive the relative cost of the finance & accounting function down as the organization scales up.

In this eBook, we’ll explain the common mistakes to help you identify potential failure points. We’ll provide insights into how they can be resolved so you can begin getting more value out of the finance function. And we’ll show you how the finance function can provide the foundation to build for the future and guide the business strategically.

 Five Common Mistakes:

  • Misaligned skill sets in finance & accounting
  • Re-creating the finance & accounting wheel
  • Disconnected finance & accounting systems
  • Processes that won’t scale
  • Buried information

 The Fix:Driving efficiencies through automation and AI with Finance as a Service

BigCommerce

Robert Alvarez is a two-time winner of the Austin Business Journal’s “CFO of the Year”. Hear how he gained efficiency and control by eliminating manual processes and having access to reporting that is real-time and actionable. Working with Consero has been so effective that this CFO would never build his own finance department to manage back-office and technology resources again.