Product Strategy ROI: Why You Need To Integrate Embedded Accounting APIs into Your Vertical SaaS Platform

In the dynamic world of vertical SaaS platforms, you've likely built a powerful solution that addresses a plethora of challenges for your small business customers. Whether it's streamlining inventory management, optimizing customer relationships, or enhancing operational efficiency, your platform is at the heart of your customers' daily operations. However, there's a critical set of pain points that continues to bog down your customers: accounting and financial management.

The harsh reality is that many of your customers are still grappling with a fragmented approach to their finances. They're juggling spreadsheets, separate accounting suites, specialized apps, and sometimes even relying on third-party support or no tech support at all. While they turn to your platform for much of their operations, their accounting functions remain disjointed and removed from your ecosystem. In fact, nearly 6 in 10 small businesses complain that their overall accounting processes are manual and labor-intensive.

This disconnect presents not just a challenge, but a golden opportunity. The solution? Integrating embedded accounting APIs into your platform. This isn't just a nice-to-have feature – it's a strategic move that has the potential to significantly increase the overall ROI of your product while addressing a critical need for your customers.

Building Embedded Accounting APIs Into Your Product Roadmap

At first glance, the idea of building an entire accounting suite into your platform might seem daunting. You might worry that it would consume your entire product roadmap and struggle to get buy-in from leadership. However, the landscape of financial technology has evolved, and there's a smarter way forward: leveraging credible APIs or a comprehensive embedded accounting API.

The proliferation of robust, customizable, and scalable APIs presents a significant opportunity for vertical SaaS companies. Instead of building an in-house solution from scratch or incorporating clunky integrations, you can seamlessly embed accounting functionalities into your platform. This approach allows you to solve your customers' financial challenges without the headache, resource drain, and extended timeline that an in-house build would require.

Moreover, the demand for such integration is clear. According to recent surveys, 44% of small businesses are definitely interested in obtaining accounting and financial management services from their vertical SaaS provider, with another 42% expressing potential interest. This overwhelming demand signals a clear market opportunity for platforms willing to step up and meet this need.

ROI for Vertical SaaS Platforms Utilizing Embedded Accounting APIs

Higher Contract Value or Increased Average Revenue per User

A quick scan of vertical SaaS platform monthly costs reveals that most platforms charge between $60-$150 per month (per user), with costs potentially higher depending on business size, number of users, and customizations. Most of these platforms don't offer embedded accounting features. This gap in an embedded accounting offering represents a significant opportunity to increase your contract value and average revenue per user.

A survey conducted by Cornerstone Advisors of 750 small business owners and executives revealed that most small businesses spend between $9,800-$14,000 per year on third-party accounting services. That translates to $816.67-1,166.67 a month – a substantial sum that could be redirected towards your platform if you offered integrated accounting services.

By incorporating embedded accounting into your platform, you're not just adding a feature – you're potentially increasing your revenue per user exponentially. You can embed, automate, and reduce the reliance on more costly third party services. This isn't about charging more for the sake of it; it's about providing a comprehensive solution that justifies a higher price point while saving your customers money in the long run. You can make money while helping your customers save money — it’s a win win.

Retention

Customer retention is the lifeblood of any SaaS business, and it's an area where embedded accounting can make a significant impact. 

About 6 in 10 small businesses use a vertical SaaS platform like Shopify, Toast, or Jobber, 74% are very or somewhat likely to be looking for a new industry-specific platform. This presents a serious threat to your retention strategy.

It's a well-established business principle that retaining an existing customer is more cost-effective than acquiring a new one. For SaaS platforms, retention rate is one of the most critical metrics for long-term success. By integrating embedded accounting features, you're addressing a key pain point for your customers and giving them a compelling reason to stick with your platform.

Remember, many small businesses are actively seeking a vertical SaaS provider that can help with their finances. By meeting this need, you're not just improving your product – you're aligning your platform more closely with your customers' evolving expectations and requirements.

Higher Lifetime Value

The odds are often stacked against small businesses. According to the U.S. Bureau of Labor Statistics, approximately 20% of new businesses fail during the first two years, 45% during the first five years, and 65% during the first 10 years. One of the main culprits? Poor financial management.

By integrating embedded accounting APIs into your platform, you're not just improving your product – you're potentially extending the lifespan of your customers' businesses. This has a direct impact on the lifetime value (LTV) of your customers, a metric that's essential for SaaS businesses and a key determinant of overall platform performance, success, and profitability.

With both a higher revenue per customer and improved retention rates, the lifetime value of each customer naturally increases. By providing an all-in-one solution that includes embedded accounting, your platform has the potential to help small businesses not just stay afloat, but thrive. As your customers grow and succeed, their value to your platform grows as well, creating a virtuous cycle of mutual success.

Maximizing Vertical SaaS Platform’s Potential

The decision to integrate embedded accounting APIs into your vertical SaaS platform isn't just about adding a new feature – it's a strategic move that can reshape your product's value proposition and dramatically improve your bottom line. The resource efficiencies and scalability of adding an embedded accounting API to your product roadmap, the potential for exponential increase in revenue per customer, improved retention rates, and higher customer lifetime value all point to a significant positive ROI.

By taking this step, you're not only addressing a critical need for your customers but also positioning your platform as an indispensable tool for small business success. In the competitive landscape of vertical SaaS, embedded accounting could be the differentiator that sets you apart and drives your platform's growth for years to come.