I’ve been a founder for the better part of twenty years now across multiple startups in different industries. And when seemingly basic startup infrastructure turns out to be cumbersome, it creates a real drag on a business. This was my experience when attempting to transfer funds to hundreds of game developers in my days at Heyzap.
My painful experiences and the lack of great business banking solutions led me to start Mercury, and for the past several years now, we’ve worked to build Mercury into the best banking and financial workflow product in the industry today.
How online banking reshaped an inefficient industry
Traditional banks are notorious for their cumbersome, legacy infrastructure. Walking into a physical branch to open a new account. Wet ink signatures to add authorized users. Slow money movement and a lack of integrations into other finance and account services.
But as fintech was expanding around the time I started Mercury, the industry saw better banking and banking-adjacent products that provided founders with the tools they needed when they needed them. One-by-one, slow, frustrating processes were replaced by tech-enabled features.
While some traditional banks began building better digital features, many fintech companies decided to work with regulated partner banks, building modern payment infrastructure, security features, and finance automation on top of their partners. This is the path we took at Mercury and why you might have noticed our disclosure, Mercury is a fintech company, not an FDIC-insured bank.
Today, nearly every bank has digital features and the fintech category represents a far broader set of products than what we would typically consider banking.
The online banking landscape
Fintech & online banking encompasses a broad spectrum of products aimed to make your finance and accounting experience seamless. When I think of all the companies helping founders move, store, and track their funds, I generally break it down into the following categories:
Business Banking
Business banking includes your basic banking services like account setup and payment rails, as well as robust services like capital solutions, high yields on deposits, and software integrations.
There are a lot of companies in this space who have built good tools. I’m a little biased, but Mercury is a great option here for founders. If your business involves a high volume of in-person payments or cash transactions, your best bet is to find a local bank in your area that is founder-friendly and use online banking tools for other things, like credit cards or investing.
Business Credit Cards
Business credit cards provide short-term working capital for financing business expenses. Some solutions in this space provide charge cards, while some offer credit cards. The main distinction is that charge cards must be paid off each month, while credit cards can carry a balance.
This segment of the market is competitive. You probably see ads for corporate cards all the time. Shop around and compare fees, rates, perks, and other factors to see what fits your business best.
Payments
The payments segment includes products that make the transfer of funds between businesses and customers easy and seamless to use. Businesses may use Stripe or another payment processor to accept payments online and in person, while Square is popular if you need a physical point-of-sale. Mercury is great for automating accounts payables and receivables, along with seamless invoicing right from your bank account.
Accounting
Many providers offer accounting software and tooling to manage your business’s finances, including bookkeeping, invoicing, expense tracking, and tax preparation. It’s important for founders to use an accounting service that satisfies the requirements of the size and complexity of their business. While some tooling might be more basic, like recording transactions, some companies require complex tax preparation and financial reporting analysis.
SMB’s looking for comprehensive bookkeeping and accounting often choose QuickBooks Online or Xero. FreshBooks is popular with freelancers and small businesses for accounting with time tracking built-in, while Netsuite is an advanced business management software with enterprise features for scaling finance and accounting teams.
Payroll
Payroll providers handle the processing of employee paychecks, including calculating wages, withholding taxes, and managing benefits. This is particularly important for the growing popularity of global workforces, and the compliance requirements necessary to onboard contractors and employees.
Gusto and Rippling are two popular options here. Gusto has an easy setup for paying employees and contractors, and Rippling is an all-in-one platform for HR, IT, and finance workflows.
Spend Management
Spend management solutions can offer an array of services for helping businesses control and optimize their spending, like expense tracking, approval workflows, and corporate cards. Spend management also serves an important role in ensuring compliance with company policy. Many corporate cards like Mercury’s come with spend management, so check if that’s something you’ll get access to with your credit card vendor.
Bringing it all together
There are many different tools to consider, but you don’t need them right away. The best thing to do is start with a bank account and grow from there as your needs evolve. That’s why we built Mercury with a bank account at its core and the option for additional feature sets as founders' needs change.
What to consider in an online banking partner
When you’re first deciding on an online banking partner, you’ll often be tempted by flashy feature sets. This is a common mistake for founders, conflating features with value.
In my experience, the real value of financial tools is actually the opposite. When your banking tools work well and are simple to use, you can spend as little time using them and more time building your business.
Founders should choose a banking partner based on the core feature set they currently need. Does the company enable the right payment rails for your business? Will you be able to set unique permissions for your team? Can you integrate your banking data with your preferred finance and accounting systems?
In addition to your unique feature set needs, there are a handful of other important considerations:
What is their fee structure like?
How much money is covered under FDIC insurance?
Does the company have responsive customer support?
Do they have a good reputation? Do your founder friends use them?
What are their security controls like?
Why your banking needs change as you scale
While the fundamentals of your banking experience—like storing funds in a checking account, logging in from your smartphone, and adding authorized users—might suffice as a sole proprietor or small business, your financial needs will grow as your business grows.
The best tools in today’s banking universe can address many components of your business’s financial health in one place and mature with your business as you grow into more sophisticated features.
A scaling business might worry about its cash conversion cycle and therefore need access to corporate cards to finance inventory. Or, your “tech debt” might be out of hand, and you need to streamline where you pay bills, invoice customers, and submit payroll.
As you grow, you’ll need a broader set of functionality from your banking partner, and the more use cases you can get out of a single product, the less administrative work your team will have to spend time on.
At Mercury, we’ve built our product to serve our customers throughout the lifecycle of their business, from the earliest days to a scaling business that needs robust accounting automation, access to capital, and Treasury management.
My recommended startup finance and accounting stack
In keeping with my personal preference to streamline the tools I use while building my startup, I put together a short list of my recommended finance and accounting tech stack for founders who are just getting started:
Banking, corporate cards, spend management, & invoicing: Mercury
Accounting software: QuickBooks Online
Financial forecasting and planning: Excel & Google Sheets
Business Intelligence: Metabase
Conclusion
The online banking universe is as robust as ever and rapidly expanding to address everyone’s needs. Chances are if you’re struggling with a financial workflow, there’s either a solution available to solve it, or there will be soon. So if you’re looking for a banking partner, check out the ones listed below and get back to building.
Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.
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