“This is nobody’s job – and nobody should be wasting even a second of their time on it,” says Yashwanth Madhusudhan, CEO and co-founder of Fyle, of the work and hassle involved in managing expenses. Fyle, the start-up launched seven years ago, is all about making that a reality, he explains.
“The work involved in administering staff expenses isn’t core to anyone’s role, but it’s just so time-consuming and frustrating,” he says. “We want to get to a point where people just say ‘Fyle it’ when they’re dealing with this issue.”
Fyle’s focus is on corporate credit cards, which have become the default way for many US companies to ensure their staff can pay for business expenses. Indeed, credit cards were the second-most-sought-after form of financing for small businesses in the US last year according to Federal Reserve.
Around $1.4 trillion is spent on these cards each year; employers then have to check that credit card bills have been run up appropriately – and ensure that the data from them flows through into the company’s finance and accounting systems.
The problems with the status quo are three-fold according to Fyle. First, financial controllers at companies that have issued credit cards to staff have little visibility over how they are being used. To see what’s been spent on them, they have to wait for statements to arrive at the end of each month, or log into their credit card provider’s portal and download transaction data, typically in a format that is far from user-friendly.
The second issue, Fyle maintains, is that even when the business has all the data it needs, this information has to be entered into its accounts manually. Finance departments are wasting valuable time processing what may be thousands of transactions in this way. Problem number three is the challenge of dealing with receipts, with many companies stuck in a cycle of chasing staff to supply the correct receipts for their spending.
Fyle’s solution is a software package that taps straight into the business’s credit card transaction data; managers can then monitor spending as it happens through Fyle’s app. The data also comes in a form that can be automatically be integrated into the accounting software used by the business, so that it doesn’t have to be re-entered. And when an employee uses their credit card, Fyle’s software sends them a message asking them to submit a photo of the receipt.
The obvious place to go for this data and functionality is the credit card provider itself. In practice, however, most US banks providing credit cards are unable or unwilling to help. They’ve either not built the technology infrastructure necessary to provide transaction data in this way, or they’re not prepared to put such technology to work other than for their largest corporate customers.
The result is that credit card providers – with the exception of new fintech entrants to the market – have not typically offered this functionality to small business customers. Nor have providers been prepared to offer it to Fyle.
The company’s solution has been to focus on another link in the credit card payments chain. Last year, Fyle announced a partnership with Visa that allows it to access the transaction data of corporate credit card holders – assuming they agree. And this week it is announcing a similar deal with Mastercard. The result is that it will be able to offer its services to the vast majority of US businesses that have issued credit cards to staff.
“This integration will empower small businesses to harness the power of real-time visibility for any card that suits their business needs,” says Madhusudhan of the Mastercard collaboration. “We are democratising access to businesses’ own expense data and removing their dependence on the issuing bank.”
It’s a software-as-a-service solution through which small businesses pay a monthly fee per user of Fyle’s technology. Irrespective of which bank they use for corporate credit cards, Fyle is then able to supply them with real-time data, secured from Visa and Mastercard, on how employees are using their cards. This information can be used for monitoring purposes, and can also be dropped straight into accounting software. Employees get reminders of their employers’ expenses policies, and messages to submit their receipts with a picture sent by their phone.
It’s an elegant way to deal with US banks’ reluctance to address this problem for themselves. But one irony of Fyle’s approach is that it is increasingly attracting interest from these very same banks. Small business banking in the US is becoming more competitive, particularly as new fintechs enter the market, prompting providers to look for points of competitive advantage. Fyle therefore offers a white label service to banks, enabling them to offer small business customers the same functionality, built into their banking apps.
In time, therefore, Fyle’s distribution model may change. Right now, it makes most of its revenues from selling its subscription straight to small businesses. In future, it may earn more from providing its services within the bank’s own value proposition, charging the bank, rather than its small business customers, for the software.
Either way, small businesses can’t afford to waste more time on administering expenses, argues Madhusudhan. “We need to automate as much of this work as possible,” he says. “We can do that directly with small businesses, or through their banks, but the goal will be the same, providing real-time visibility and automation.”