B2B Buzz
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B2B Buzz

Square and Your Company’s Lifeblood

aka Cash Flow

Source: Medical News Today

Do a search on Organization Lifeblood and you will find many choices:

  • KPI’s and Metrics
  • Communication
  • Employees
  • Customers

I am going to argue all of these are very important but without Cash Flow there is no metrics to measure, tools to communicate or employees to pay. Today’s B2B Buzz was inspired by Square announcing yet another new product, seems almost weekly at this point.

Square Checking for Small Business.

As usual Square (www.squareup.com) does a great job simply communicating what they are doing. Great message for an SMB operator. “Payments, Banking AND Cash Flow as one” might be the best SMB message I have seen.

Small Business Operators are really focused on spending as little time as possible on their finance, banking, payments and other such “non value add” overhead operations.

If you operate a small business you know how important it is to manage cash flow. Here is a good overview diagram about Working Capital and Free Cash Flow from David Gustin that runs GBI (Global Business Intelligence) one of the foremost authorities on all things procurement, B2B payments and such areas as Working Capital.

Source: David Gustin of GBI

As you can see it is Cash Flow and Working Capital that allows all the other parts of a business to operate. For small businesses this is very important as getting SMB loans remains an arduous process that takes far too much of an entrepreneur’s valuable time.

Source: Squareup Website

Everything an SMB operator wants to hear in one ad…

Sell | Save | Spend | Borrow are the keys to an entrepreneur’s heart. The absolute bonus and a bit of a dig to traditional banks is SPEED, as fast as you need it.

The Square ad team really should get a bonus for understanding how SMB operators think and what their care abouts are. This really nails it !

How does Square do this? The first thing to remember is that Square got their bank charter in March of this year (2021). So per some Twitter chatter the other week, they can call this banking because they are indeed a bank…and a Fintech. Square Financial Services (their Bank) is chartered in Utah as an industrial bank and operates as a subsidiary of Square. Utah’s Department of Financial Institutions (DFI) issued the charter for Square. Don’t read too much into the Utah charter, it was likely the fastest path and the appointed CEO lives in Utah.

Square’s bank has the usual C-suite of a bank:

  • CEO Lewis Goodwin
  • CFO Brandon Soto
  • Sharad Bhasker, Chief Risk Officer
  • Samantha Ku, Chief Operating Officer
  • Homam Maalouf, Chief Credit Officer
  • David Grodsky, Chief Compliance Officer
  • Jessica Jiang, Capital Markets and Investor Relations Lead

The CEO and CFO came out of Green Dot’ banking C-suite. The Chief Risk Officer came out of Webbank and Discover FS as a risk executive, so nothing surprising there. Actually with the exception of Homan Maalouf, everyone in Square Bank’s C-suite are really pretty traditional bankers. Like an old school banker’s banker.

The most interesting part of the “Square is now an SMB bank” to me is that they play where even my friends at Community Banks rarely play, the micro-sized businesses. My recent set of bank meetings leads me to believe that Community Banks will cede this space to Square as well as Shopify and Amazon. Most bankers I meet are really focused on the SMBs that need a hands on personal banker that can play golf and sign off on a $1.5 million loan.

However, I think it is like the alternative lending space, it goes from a small slice of the business to a meaningful portion quicker than anyone expects.

There is a great joke about bankruptcy that seems apt here: Q. “ How did you go bankrupt?”

A. “Slowly…at first”

It would be wise for banks of all sizes to either partner or develop an easy SMB lending solutions based on data and not handshakes to ensure they continue to be the bank of choice for their SMB customers. Bankers new SMB mantra should be:

Data NOT Handshakes




Blogs, articles and musings about B2B payments including Treasury, CFOs and how payments move from one business to another business and around the world.

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Dion F. Lisle

Dion F. Lisle

The Rosetta Stone between Legacy Banks and Fintech. My career is the culmination of working between the worlds of Fintech Innovation and Banks www.fortygrand.co

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