Finance As A Service (FaaS)— Tech Stack for Modern Finance Teams

Geoff Charles
The Startup
Published in
8 min readJul 22, 2020
Finance-Tech Stack

Software is eating the world. The SaaS (Software As a Service) market is growing by 10% annually, expected to reach $157 billion in 2020.

Today, teams are working exclusively in software applications to be more productive and grow their businesses faster. This is especially true for areas where the ROI for investing in SaaS is clear — most notably communications (Slack, Zoom, Calendly), software development (AWS, Twilio, Figma), and sales/marketing automation (Salesforce, Hubspot, Marketo).

When it comes to finance, SaaS adoption is only just starting. In a recent survey, 88% of CFOs still relied on spreadsheets for budgeting and forecasting. The financial stack has largely been unchanged due to an industry skewed towards being late adopters and a lack of compelling innovation. That is — until the recent explosion of FinTech brought about a proliferation of FaaS tools (Finance As A Service).

FinTech is a thing.

Today’s finance leaders need to be equipped with a strong understanding of technology to enable them to scale their team and the rest of the organization. A revolution is coming — one where innovative solutions will redefine not only the way finance teams will manage company financials, but their very roles within the organization.

Here’s a basic rundown of the different sectors of finance, trends in the space and most innovative solutions for growing companies.

  1. Payments: send and receive money — the life and blood of any business.
  2. Spend Management: manage spending across employees and vendors.
  3. Payroll & Benefits: give your employees the financial capital to succeed.
  4. Equity & Financing: keep company afloat with optimized capital.
  5. Accounting & Reporting: maintain visibility into accurate financials.
  6. Financial Planning & Analysis: plan for the future to make decisions.

Payments — send and receive money

Payments is a broad term and complex space. For our purposes, let’s boil down to two things: 1) making payments, 2) receiving payments.

Making payments — the rise of virtual cards

Winner: Ramp (credit card) + Mercury (bank)

Businesses need a way to make payments easily for goods and services (e.g. marketing, SaaS, T&E, etc.). The use of virtual cards for B2B payments is on the rise — which makes sense given their benefit: cash back for the business, traceable payments, easy reconciliation and fast settlements for cash flow. Previously, finance teams leaned towards putting everything in invoices they managed manually, uploaded to their accounting software and manually sent payment files through their bank. With VCC solutions like Ramp, finance teams can issue virtual cards with 1 click and pay vendors on the fly.

Receiving payments — a simple plugin to accept all payments

Winner: Stripe

Accepting payments is now easier than ever. Stripe has built a payment processing empire that can be integrated with any application in minutes. Sure, outsourcing is expensive, but you finance teams can leverage expertise (e.g. fraud analytics) and know the solution scales. Stripe is also expanding to other areas as well including payments (Stripe Issuing) and financing (Stripe Capital).

Spend Management — manage spending across employees and vendors

AP/AR — automated workflows for complex operations

Winner: Routable

For any payments that are on specific terms or require invoices, an AP/AR solution is a must. These systems handle invoices, approval workflows, payments (ACH, Wire, Check) and reconciliation with accounting systems. While Bill.com has a nice domain, many startups are competing to eat their lunch and offering more automation to save teams time (e.g. OCR for data entry, automated approval, better integrations, etc.).

Procurement — smart platforms that negotiate for you

Winner: Procurify

In early stages, companies don’t have a centralized procurement function. Spending happens amorphously, optimizing for growth and sacrificing chaos. Once you hit a certain scale, a centralizing procurement process is put into place to regulate what employees purchase. Procurify is an industry standard, but a few exciting startups are arising here focused on SaaS management — including Vendr (professional procurement) and Intello/Blissfully (SaaS for… SaaS).

Expenses — real time expense management

Winner: Ramp

Expense reimbursements are painful, inaccurate, late, and expensive. Finance teams are progressively moving away from forcing employees to front money and get reimbursed via solutions like Expensify. Today, leaders issue corporate cards (physical + virtual) via advanced spend management platforms like Ramp. Cards have embedded controls on what you can spend on, transactions on these cards are automatically visible and reconciled, and anything outside of the expense policy is flagged. The result: hours saved chasing receipts and expense reports, real time visibility, more control and faster reconciliation.

Payroll & Benefits — give your employees the financial capital to succeed.

Payroll & benefits — one platform to rule them all

Winner: Justworks

One of the largest expenses companies incur is payroll. Leading solutions offer not just payroll, but a suite of other benefits that employees need to thrive, including retirement, insurance, onboarding, time tracking etc. This space (ERP, HRIS, HRMS) is competitive and fragmented — with ADP/Trinet dominating upmarket and Gusto/Zenefits/Justworks/Rippling fighting for SMEs. Pick a solution that can scale since it’s highly sticky.

Equity & Financing — keep company afloat with optimized capital.

Treasury — automated investments

Winner: Betterment (for business)

Given we’re talking about software, a treasury robo-advisor was bound to win. Many companies are using their existing banks or specialized financial services for their treasury management. The digital revolution that happened with consumer asset management is bound to happen to the business sector. Returns on cash is less important for smaller companies, but can make a large difference at scale.

Equity — liquidity to private markets

Winner: Carta

If you thought understanding your stock options was hard — try administering them! Ensuring that a company is not just well capitalized but well structured is important to acquire talent and investors to grow its valuation. Cap table software like Carta helps make it easy to structure and issue stocks. Startups are increasingly entering this space to try and create liquidity in the private equity space (e.g. vested which allows employees to sell their stocks) or help consumers become investors (e.g. Angelist Access Fund).

Credit — cheap loans fast

Winner: BlueVine

With interest rates lower than ever, it’s important to think about whether to fund a business using debt or equity. FinTech has focused on making small business lending easier than ever and cheaper by leveraging alternate data sources (e.g. cash flow via bank transactions through Plaid, accounting information from Quickbooks, payment data from Stripe, sales data from Shopify, etc.). These data owners are also trying to get into the lending business — Amazon, Intuit, Stripe, Shopify and Square all have a small business lending arm leveraging proprietary data to underwrite.

Accounting & Reporting — maintain visibility into accurate financials.

Accounting — automate or outsource

Winner: Xero

Like any solution — the best accounting software for your business highly depends on your business. Most commonly, companies start on Quickbooks and graduate to the expensive and powerful NetSuite. But Xero is definitely making waves in the accounting community with their better UX, exhaustive integrations, and fast development cycles. Startups like Pilot are increasingly focused in automating or abstracting away the accounting function completely.

Reporting—real time visibility

Winner: Looker

In today’s environment, financial leaders need access to real time financial data across the organization. Many still pull reports from their accounting systems which are ~20 days stale on average. Leaders leverage a strong data warehouse and BI tool to be able to pull data and slice as needed. This enables a much more granular and up to date view of financials to make faster more informed decisions.

Financial Planning & Analysis — plan for the future to make decisions.

Analysis — smarter than spreadsheets

Winner: Airtable

Analysts love spreadsheets — they aren’t going away anytime soon (until AI takes over). But at the very least, use smarter spreadsheets. This includes: cloud collaboration (please don’t email a spreadsheet ever again), version and access controls, and integrations with your data warehouse to automatically update the analysis. A flurry of startups are entering this space and building more automated analysis of financials for businesses — including Runway, Valencia Data, BurnRate, etc. Their goal: bridge the gap between private financial data and private investors.

Planning — CFO as a service

Winner: Planful

Modern financial leaders have shifted away from annual financial planning to Zero-Based Budgeting (ZBB) which leans into Agile financial planning — allocating money more fluidly based on the strategy and needs of the business instead of trying to predict the future. Expect many of the analysis companies entering this space to increase their value ad.

“In preparing for battle I have always found that plans are useless, but planning is indispensable.” — General Dwight Eisenhower.

How to navigate

The finance tech stack is complex. There is no one size fits all. When choosing solutions across the sectors, finance leaders and need to keep the following considerations in mind:

  1. Ease of integration: Does the solution fit neatly within your existing tools? Does it replace a tool you are currently using? → go for solutions with direct integrations with your critical systems.
  2. UX: Do you users enjoy using the solution? Is it intuitive or does it need a user manual? → go for solutions that make your employees happy.
  3. Speed of development: Is the company still investing in the product? Is it responsive to feedback? → go for innovative solutions over comprehensiveness.
  4. Flexible pricing terms: Does the company offer low cost trials to test out the product? Are you forced into expensive multi year contracts? → go for transparent and low cost solutions.
  5. Scalability: Will the solution scale with your organization as you grow? If it doesn’t, will it be painful to switch? → go for solutions that scale especially if they are hard to replace.

Closing thoughts

Ultimately, leading players want to take over the rest of the finance space leveraging their user base, technology and brand. Payment companies doing loans. Payroll providers starting to act like aggregators of services. Accounting solutions doing planning. Expense management platforms doing procurement. Strap in — The world is about to get even more messy.

Thanks for reading. What’s your favorite SaaS tool and your biggest need as a business leader? Hit me up in the comments!

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Geoff Charles
The Startup

I enjoy building products that try to make the world more equal. Head of Product @Ramp.