The Missing Middle: Addressing the Financial Needs of Middle-Market Businesses
Middle-market businesses, those with 50 to 250 employees, are increasingly driving global growth, with an annual spending of $24.2 trillion worldwide. However, many of these firms are facing challenges due to a lack of tools to digitize, automate, and streamline their financial and operational processes.
A recent Mastercard survey revealed a substantial gap between the needs of middle-market businesses and the financial tools available to them. This issue is not unique to the U.S, as similar challenges were found in countries like Brazil, South Africa, the U.K., Germany, Japan, and Australia.
One of the key challenges faced by middle-market businesses is the difficulty in accessing adequate credit quickly and seamlessly. Lenders often lack an understanding of these businesses’ creditworthiness and tailor their products more towards large corporations or small businesses, leaving the middle market underserved.
Cash flow management is another significant issue for middle-market companies, as they often rely on multiple financial providers, leading to a lack of visibility and holistic view of their financial health. To address these challenges, there is a growing demand for new and better credit intelligence and decisioning tools.
Implementing solutions like open banking-powered tools for middle-market companies could help improve creditworthiness assessments and speed up the lending process. Automated invoicing and collection processes, virtual cards, and robust cybersecurity measures are also crucial for the growth and success of these businesses.
As more small businesses transition into the middle market and new companies emerge with venture capital and private equity backing, the need for innovative financial tools will only continue to grow. Financial institutions have a major opportunity to support middle-market firms by offering tailored solutions that address their specific needs and help them flourish in today’s economic landscape.
