Justin Meretab, Co‑Founder and CEO of Layer talks about the future of accounting and book keeping in an AI powered fintech environment:
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Hi Justin, tell us about Layer in brief and your new funding, how has the journey for the product been since inception?
Layer is an embedded accounting platform that allows SMB software companies to offer accounting and bookkeeping directly within their products. These software companies see their SMB customers struggling with legacy accounting software and service providers. They want to offer better products themselves, but these aren’t feasible to build.
Layer offers an all-in-one platform that eliminates the need for SMBs to use external tools like QuickBooks or a third-party bookkeeper. This makes a huge difference for small business owners, as they can now get higher quality accounting designed for their industry, right within the software they’re already using.
My co-founder, Dan O’Neel, and I started Layer in early 2023, and we’ve been shocked by how quickly SMBs and their platforms are adopting this embedded model for their accounting. We’re now working with over 20 customer platforms that have collectively onboarded tens of thousands of their SMBs to Layer.
As we’ve brought our solution to market, it’s been wonderful seeing the impact on the SMBs using our software, who can now manage their finances right within the software and workflows they’re using day to day. We’ve scaled the company to keep up with this growth, and this past month we announced our $6.6M Seed round led by Emergence Capital.
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What about the current state of fintech and innovations around accounting from the global fintech market make the ecosystem most interesting today?
For decades, SMB accounting has been stagnant. The core tools and workflows have remained largely unchanged since the early 2000s and are a huge source of stress for SMBs. However, two systemic shifts have laid the foundation for a revolution in the ecosystem.
First, over the last ten years, there’s been an explosion of SMB software platforms helping businesses manage everything from payments to payroll, marketing, and more. These platforms have become the core systems for how SMBs run their daily operations, and they also house the financial data needed to do accounting.
Second, generative AI has unlocked automation of many core accounting workflows that previously required significant human effort. Things like transaction categorization, document analysis, and financial insights can now be automated and streamlined with AI. Bookkeeping work that was previously manual can now be delivered at scale.
When you combine these trends, you get the foundation for a true revolution in SMB accounting, where SMBs can get dramatically better accounting that provides the high-touch specialization of an expert bookkeeper with the speed and scale of software. It’s the first time in decades that accounting has been ripe for innovation.
Why do several small to mid sized businesses still face challenges around appropriate fintech deployment and optimization?
Most SMBs are too busy to deal with the complexities of legacy accounting workflows. They got into business to practice their craft and serve their customers, not to become experts in accounting. Business owners wear so many hats; they don’t have time to learn complex accounting software themselves.
Because of this, SMBs are forced to use less than ideal financial tools (spreadsheets, pen and paper, etc.) or spend hundreds of dollars a month on outsourced bookkeepers.
That’s why embedded fintech matters. When business owners already run their daily operations on a software platform they love, that platform can start doing other hard tasks like accounting, financing, or payroll in a significantly more seamless and automated way. SMBs get robust solutions that are easy to use and meet them right within their daily workflows.
How is AI impacting accounting and bookkeeping workflows today?
SMB accounting and bookkeeping have traditionally involved manual processes to organize unstructured financial data and gather additional business context needed to do the books. These included tasks like collecting loan statements, asking questions about expenses, or highlighting trends in recent financials.
AI is now able to automate many of these processes. This frees bookkeepers and accountants from doing tedious data management work and allows them to focus on providing more strategic guidance to their clients.
As AI automates more accounting workflows, new AI-native accounting providers will be able to provide high-quality service, at scale, and at a significantly lower price point than legacy providers.
Many SMBs are priced out of accounting and bookkeeping services today because they typically cost hundreds of dollars per month at minimum. AI-powered accounting and bookkeeping can be offered at a lower price point and democratize access to these services for millions of SMBs.
How should modern accounting teams self train to ensure they are more fintech enabled and fintech ready?
This landscape is shifting so rapidly, the best way to become more fintech ready is to stay close to the latest fintech companies and tools. Whether that’s the latest expense management platforms or new AI document ingestion tools, closely following the latest fintechs will help accounting teams stay ahead of the requests and workflows of their clients.
Accounting teams should also be intentional about stepping back and identifying what steps in their workflow can be automated by new AI tooling. Modern teams shouldn’t try to compete with AI automation. They should use it to give themselves leverage to grow their capacity or increase the strategic planning services they can offer to their clients.
For example, we’ve seen huge leverage improvements automating data ingestion and document processing within our bookkeeping service.
A few thoughts on the future of fintech and AI’s impact in this market?
AI is changing what fintech products can do. Fintech is no longer just about building tools for tasks like invoicing, bookkeeping, or bill pay. It’s about actually doing the work on behalf of the customer.
With AI, fintech products can now deliver full-service experiences, whether that’s reconciling books, paying bills, or balancing cash flow. At the same time, AI is increasing the speed at which products can be built, allowing companies to launch more comprehensive fintech offerings faster.
We’re still in the early days of this shift, and it’s exciting to see how things will evolve over the coming years.
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Layer is an embedded accounting platform for the modern SMB stack. Layer enables software platforms to offer accounting and AI-bookkeeping services directly within their products, giving business owners accurate, real-time financials without ever leaving the tools they use to run their business.
Justin Meretab is the CoFounder and CEO of Layer. Prior to Layer, Justin was a product leader on Square’s Banking team, where he worked on SMB banking products and cash flow management tools.
