Silicon Valley Bank, a unit of SVB Financial Group in Santa Clara, Calif., is the first bank to implement the MineralTree solution and offer it to its SMB customers.
Problem #1: SMB payment systems are inefficient and costly
There are approximately 2.5 million SMBs in the United States with annual revenue between $500,000 and $50 million. While many of these businesses process tens to hundreds of payments per month, most are not large enough to install the more sophisticated systems (e.g. ERP software) that larger corporate customers use. Instead, SMBs are stuck using ad hoc processes that are manual, paper-based and which take valuable time and money. Controls, oversight and approvals are inefficient and often informal.
For example: The average paper check costs about $2.00 to create, print, stuff in an envelope and mail and that's just material costs. Overhead time and costs for processing and approving are significant additional drains on company resources.
Problem #2: Current SMB payment methods are not secure and current regulations provide little protection
While online banking can be secure, banks can't police their customers' computers. People can contract dangerous malware through relentless phishing attacks, or by inadvertently visiting a malicious web site just once. If the user then accesses their online banking site from their now infected computer, creative criminal fraudsters can gain access to and drain their account in mere minutes.
Unlike consumer accounts, where a customer has 60 days to notify the bank of unauthorized transactions, business account holders have only one business day. After that, the bank is no longer liable.
Paper checks can be stolen and forged. Employee fraud is rampant, but can go undetected for years.
"We immediately saw the value for our customers and our own business, which is why we are thrilled to be part of the MineralTree launch," said Bruce Wallace, Chief Operations Officer, Silicon Valley Bank. "So many of our customers are in fast-paced, high-growth businesses and the less time they have to spend on banking overhead and worrying about security, the more resources they can devote to doing what they do best: building great products and companies.
MineralTree: How it works
As with all enterprises, SMBs typically make four common types of payments: employee expenses, vendors, recurring bills (e.g., utilities), and government taxes. The number of monthly payments may be anywhere from a few dozen to several thousand.
While SMB payments and cash management processes are generally manual, they are routinely supported by two types of electronic systems—internal accounting systems (e.g., QuickBooks), and external banking systems (e.g., online banking and online bill pay).
The MineralTree solution is layered over existing accounting applications and integrates directly with the bank’s payment systems, with no change to either.
The MineralTree Accounting Manager Application is a web-based add-on to the SMB's existing accounting system. It is used to manage payables including entering payment information, associate payments with backup documents and to prioritize, recommend and submit payments to the CFO or business owner for approval.
The MineralTree CFO Application is used by the CFO or responsible executive to approve and release payments. It is available as an iPad app and as a secure web app.
The MineralTree Bank Operations Application is a web-based app used by the bank to manage MineralTree users.
All three apps are linked via the MineralTree Payments Server, which coordinates and manages all payment functions of the system - between customers, the bank and payment service providers such as check issuers. It also provides a single, universal conduit for all payment channels: Check, ACH, Wire, payment cards, and other emerging payment channels such as PayPal, and mobile banking.
"MineralTree is a win-win for banks and their SMB customers," said BC Krishna, founder and CEO of MineralTree, Inc. "SMBs save time and money by automating the entire process, while gaining peace-of-mind that they won't become a victim of the increasingly sophisticated methods of today's cyber criminals. Banks, in turn, can differentiate their services, increase customer loyalty and protect themselves from potentially costly litigation and bad publicity associated with criminal acts against their customers."
Ease of use through one simple interface— MineralTree streamlines the accounts payable process by enabling users to handle multiple payment types (checks, ACH, wires, credit cards) through one simple interface.
Reduced cost and fewer errors through automation— MineralTree applies modern electronic document-management technologies to eliminate paper for backups and approval processes introducing simple, auditable workflow through final approval of payments.
Improved cash management, operational visibility, and reduced risk of fraud through daily matching and reconciliation—MineralTree automatically matches bank statements with general ledger entries. This enables the business to maintain a real-time view of its cash position. By alerting the business to unauthorized debits, fraud risk is mitigated.
Dramatically increased security—MineralTree’s secure architecture and locked-down system are designed to protect small- and medium-sized businesses and banks from both traditional forms of fraud and risk (e.g., check forgeries) and newer, sophisticated schemes (e.g., online account takeover).
Enhanced reporting—MineralTree provides several reports of value specifically to small- and medium-sized business accounts payable and audit teams. For example, reports are readily available for various payment controls that are addressed in audits. Payment controls can be continuously monitored.
Availability and Pricing
MineralTree is available immediately. Banks interested learning more can contact the company by sending mail to [email protected], or calling 617-299-3399. The iPad app is available through the secure Apple iOS Developer Enterprise Program.
Pricing of the MineralTree solution to business customers is determined by each bank MineralTree's pricing to banks is a royalty fee based on volume.
MineralTree is a venture-backed software company based in Boston, Massachusetts. Our team has a long track record of creating innovative new technology-based solutions to long-standing problems in banking and financial services. Our experience is both wide and deep—from a strategic understanding of what drives value in small business banking to the everyday tactical issues covering payments and fraud.