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The emerging value of embedded finance for the flexible workforce

Open Finance is gaining momentum and API connectivity is helping equip organisations with the right tools to make better decisions, writes Richard Prime, co-founder and Co-CEO of Sonovate,


Richard Prime/Sonovate

The B2C value of embedded finance is well-established, with payments via apps such as Uber representing a prime example of a financial product being seamlessly placed within a non-financial consumer journey.

In a B2B context, the value of embedded payments is starting to gain the recognition it deserves with an ever growing number of use cases.  

From Sonovate’s record growth alone in 2022 (we funded a staggering £1.1bn in invoices) it is clear that the demand for flexible, tech-powered B2B payment solutions has the potential to create new revenue streams for fintechs and drive efficiencies for businesses across industries. In fact, McKinsey estimates that this market will double in value over the next few years. 

Embedded payments in B2B enable tasks such as speeding up request-to-pay purchase order processes or buy now pay later options in a business setting.

However, I personally believe one of the most compelling use cases for embedded finance, catalysed by the shift towards greater flexibility in the workplace, is in supporting businesses to manage the challenges which stem from the rise in the contingent (contract and freelance) workforce. 

Though the global contingent market is estimated to be worth $5.4 trn, 74 per cent of freelancers say they often get paid late while 54 per cent report not to have been paid at all.

Additional research from Sonovate also shows that 23 per cent of businesses say they struggle with the extra administration required to manage invoices from contingent workers, with 38 per cent agreeing that as a business their cash flow is not set up to handle such payments, which tend to fall outside of standard payroll cycles. At present, it is clear that many businesses are lacking the appropriate infrastructure to support the shift to a post-pandemic work setting.

These findings demonstrate the sizeable opportunity that embedded payments represent as a B2B solution. As the contingent workforce becomes more prevalent, (67 per cent of businesses report a shift towards an increased reliance on contingent workers) a change in mindset, and in processes, is required to manage more frequent and flexible payments and means that the need for quick access to a fluid stream of capital has never been more crucial.

Becoming a native part of a client’s technology system, embedded finance can help support fintech organisations, recruitment agencies and online labour marketplaces to adapt to today’s world of work, by integrating technologies across the workforce supply chain, from recruiting to placing and paying workers.

As Open Finance continues to gain momentum, API connectivity is helping to allow safe and fast access to data and equipping organisations with the right tools to make better decisions.

Platforms, such as Sonovate’s for example, can onboard clients with integrated Know Your Customer (KYC) / Anti Money Laundering (AML) modules creating a smoother customer journey from the start.

They also connect to accountancy software to provide instant funding decisions, immediate allocations and better reconciliation and reporting than ever before.      

While the use cases for B2B embedded finance are potentially endless, leveraging its capabilities to power-up the workforce is a crucial one. It can ensure contingent workers get paid on time, employers can benefit from longer payment terms and businesses of any size can grow with confidence, regardless of their cash flow situation or payroll constraints. 

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