A new approach: Company streamlines financial tasks for small enterprises

By Patricia B. Mirasol, Multimedia Producer

BORN as a fi

In 2020, NextPay evolved from a financial wellness app to a digital banking platform designed for small businesses. Its goal is to simplify, streamline, and reduce stress.financial operations.

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objective was

Our aim was to achieve our goal.ff

Don Pansacola, the co-founder and CEO, is focused on finding effective solutions that address the specific challenges faced by small businesses.fi

In an interview with BusinessWorld, the CEO of NextPay stated.

Companies utilized the platform of the business to compensate their employees, while NextPay would allocate funds on their behalf.

According to Mr. Pansacola, our app allows individuals to allocate a portion of their salary towards their savings goal, such as an emergency fund or a dream trip to Japan, upon receiving their paycheck.

During the pandemic, NextPay shifted its focus to providing assistance to businesses in managing their disbursement requirements.

According to Mr. Pansacola, the current public health emergency has greatly hindered businesses, particularly micro, small, and medium enterprises (MSMEs), from being able to compensate their employees.

Opening accounts and other banking procedures were often intimidating for smaller businesses.

He mentioned that another difficulty would be meeting the required average daily balance to open an account like that.

He pointed out that these are not issues that major corporations typically face. The target market is the MSME sector, including small businesses and individual entrepreneurs, who currently do not have access to these resources.financial services.”

According to Mr. Pansacola, NextPay has broadened its offerings to eliminate the necessity of opening a corporate bank account.

So far, it has provided services to more than 12,000 businesses and has handled a total of P5 billion in payments.

Small and medium-sized enterprises (MSMEs) play a crucial role in the Philippine economy, making up 99.5% of all businesses.

Based on information from the Philippine Statistics Authority, MSMEs accounted for 35.7% of the overall value added in 2020. They also made up 60% of all exports, bringing in 25% of the total export revenues, and provided employment for 62.7% of the workforce.

Numerous companies struggle with enhancing their digital platforms, presenting a difficulty in achieving online visibility. Converting online interactions into concrete sales is also a formidable undertaking, as stated in a 2022 report by the United Nations Industrial Development Organization.

Accessing suitable fi

Financing options can be challenging for numerous MSMEs.

1st quarter of 2020

During the first quarter of 2020, Philippine banks did not meet the required target for providing loans to small businesses.fi1st half of 2023, according to the BSP

In the first six months of 2023, data from the Bangko Sentral ng Pilipinas revealed that banks provided P189.08 billion in loans to MSMEs.fi

In the first quarter, 1.93% of their entire loan portfolio was below the 8% limit.

According to Mr. Pansacola, many small business owners face a roadblock in their growth. Once they reach a certain level, they struggle to expand due to being spread too thin.

He pointed out that it is difficult to simultaneously grow a business and handle its operations, let alone attract customers.

We are not discussing the task of overseeing your suppliers and ensuring that your employees are fulfilling their responsibilities.

QUICKER PROCESS

The company’s customer base includes Prosperna, a platform for creating online stores; Bizu, a bakery and restaurant; and KinderCare, a brand that specializes in accessories for feeding infants.

Prior to utilizing the NextPay system, KinderCare managed their employees’ paychecks by gathering timesheets from over 100 staff members, performing calculations, organizing the data in an Excel file, and ultimately distributing payments through two separate banks.

According to Mr. Pansacola, this company physically accompanies an individual to Palawan Express, a pawnshop that provides money transfers and corporate payouts. The driver acts as a bodyguard to protect the individual carrying a large sum of money for employee wages.

Previously, the entire procedure took three days, but now it can be completed in less than three hours using NextPay’s platform. This platform also allows companies to pay their employees’ salaries through their preferred e-wallet or bank account.

Although 80.34% of Filipinos have smartphones, only 56% of the population has access to banking services.

Automated systems also provide automatic payment reconciliation, eliminating the need for business owners to personally request proof of payment from each customer.

Mr. Pansacola stated that the current state of affairs showed a significant improvement.

NextPay’s focus is now on non-registered MSMEs.

ficant number of people.”

There is another potential opportunity in lending.

If we take into account the kind of data that we are able to access, particularly in regards to their fi

According to Mr. Pansacola, our platform is well-equipped to succeed in lending due to the large number of financial transactions we handle.

He pointed out that we are able to handle loan processing at a faster rate compared to the traditional approach of businesses submitting documents such as a business plan.

“We have always taken the perspective that there is always an unaddressed opportunity,” he stated.