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Access to financial services is critical for small businesses. And increasingly, those small businesses are looking for easy-to-access financial tools right inside the platforms they use every day. Products like Square Banking and QuickBooks Capital are raising the customer expectation bar, but it’s not too late to take advantage of this shift. 

If you're looking to scale your business, increase revenue streams, and deepen customer engagement, embedded finance could be the solution. In this article, we'll walk you through the steps to embed finance in your product or service in a way that benefits both your business and your customers.

Before you can embed finance in your product or service, you have to assess your needs. There are a variety of embedded finance options out there, and not all of them will be relevant for your business and your customer base. Here are some things to consider:

Anyone starting a business needs an understanding of their target market. Fortunately, if you’re considering adding embedded finance to your product or service, you likely already have a well-established customer base and a good understanding of their needs. Now, you just need to step into their shoes.

Embedded finance encompasses everything from lending and revenue advance products, to payment processing, to insurance. The products that will add value for your customer base will depend on whether they’re businesses or individuals and where they are in their financial journey. For example, if your customer base are small businesses, they likely need access to working capital, and an embedded capital product would be a high value-add for them.

Speaking of your customer’s journey, the next step is to figure out where your customers’ needs intersect with your offering. What financial needs do your customers have at the specific point where they’re interacting with your product or service? Analyzing how your customers use your offering will help guide your choice of which financial services to embed. 

Returning to our earlier example, if you’re a payment facilitator serving small business owners, what can you do to make your merchants’ lives easier? As they go about their day-to-day operations, concerns about payroll, inventory, and other costs are top of mind. Providing them with access to embedded capital allows them to run their business more efficiently without ever having to leave your platform. 

Now that you’ve thought about your target market and analyzed how they use your product or service, you can determine which financial features to embed. 

It's important to prioritize the financial features that will have the biggest impact on your customers and your business. Consider the cost and feasibility of implementing each feature, as well as the potential ROI.

Finally, don't forget to test and iterate on your financial services offering. The data you collect from your embedded finance customers can allow you to continuously improve and optimize your offering, identifying new opportunities to serve them even more.

Step 2: Choose the right embedded finance platform

Choosing the right embedded finance platform is crucial in ensuring the success of your offering. Financial partners play a vital role in providing the necessary infrastructure and support to help your business grow. 

When selecting a financial partner, it's important to consider a range of factors that will impact the success of your 

. Below are some things to keep in mind as you evaluate potential partners:

There are various types of financial institutions to consider when embedding finance in your product or service. These include banks, fintech companies, and other financial service providers. Each type of partner has its own unique strengths and weaknesses.

For example, banks may offer a broader range of financial products and services, while fintech companies will likely be more agile and innovative in their approach and offer more tech and engineering support to help you build out your embedded offer. It's important to evaluate each potential partner to determine which will best meet the needs of your business and your customers.

Regulatory compliance is one critical element of an embedded partnership. Many financial services require you to jump through regulatory hoops to protect consumers and businesses. This can be a huge lift for you if your partner doesn’t take care of regulatory issues on your behalf. It's important to partner with an institution that is fully compliant with all relevant regulations and has a robust compliance program in place. At Pipe, our team handles all the regulatory hurdles for our partners, so they don’t need to allocate any resources to stay fully compliant. 

Tech and engineering support are the next thing to consider. An embedded offering allows you to build financial products right into your platform, but a build that goes smoothly and feels natural to your customers takes the right tech team. This is a major advantage for fintech teams, who can typically provide a much more seamless turnkey offer along with more support for customization. For example, while Pipe’s UI is based on 100s of tests and proven optimizations, our team also supports and enables partners to customize their UI to perfectly match their own platform.

Finally, consider your revenue opportunity with a partner, which goes beyond just sharing in revenue. Compare how embedded partners help you with acquiring, onboarding, and supporting your customers. While some offer only a single channel (like email) to help you increase activation for your financing offer, others offer a suite of marketing and promotional services. The more customers you can activate on your embedded offering, the bigger the impact on your customers 

 your revenue. You’ll also want to take the long view, considering the future roadmap and how an embedded partner can build out new offers with you, as well as scale with you and your customers as you grow.  

Once you've chosen a financial partner, it's essential to strengthen that partnership. This involves clear communication, regular check-ins to assess performance, and a willingness to work collaboratively to address challenges and opportunities as they arise.

Regular communication is critical to maintaining a strong partnership. Schedule regular check-ins with your partner to discuss performance, identify areas for improvement, and share feedback.

Another key to a strong partnership is a willingness to work collaboratively. Be open to feedback from your partner and be willing to make changes. By working together, you can build a strong and successful partnership that serves your customers and grows your GPV.

Step 3: Overcome common challenges with implementation 

While embedded finance offers many benefits, such as increased convenience and accessibility, it also presents several challenges companies need to address.

Embedded finance has great potential for scalability and flexibility. As long as you choose a financing partner who can scale with you and look to the future with you, you’ll be able to grow your offering exponentially.  

Scalability depends on how much financing your partner is able to provide, and what size of businesses they can serve. As a capital partner, Pipe works with small businesses, all the way up to mid-market, allowing us to scale with your customers as they grow, as well as scale with you as you add more customers.

Embedded finance involves providing financial services which are subject to various regulations and compliance requirements. Companies need to ensure that they comply with applicable laws and regulations, such as 

(KYC) regulations. Failure to comply with these regulations can result in significant penalties and reputational damage. 

Staying current with regulatory changes requires ongoing monitoring and communication with regulatory authorities and industry associations. Your financing partner can help you with this, as they’ve got their finger on the pulse of changes in the industry. Regulatory checks are built into Pipe’s embedded offering, handling KYC and other processes automatically, so there’s no added burden on your team and no unnecessary friction for your customers.

Another challenge in implementing embedded finance is ensuring the security and privacy of customer data. Financial information is highly sensitive and valuable, making it a prime target for cyberattacks and other forms of fraud. Companies need to ensure that their security measures are robust and comply with applicable data security and privacy laws, such as the 

Companies also need to communicate clearly with their customers about how their data is being used and protected. This requires transparency and trust-building measures, such as clear privacy policies and secure data storage practices.

One of the biggest challenges in implementing embedded finance is integrating it with existing systems. Financial systems are often complex and highly regulated, making it difficult to integrate them with non-financial systems seamlessly. Companies need to ensure that their IT infrastructure can handle the increased complexity and any potential security risks associated with embedded finance. Let’s take a closer look at overcoming implementation challenges.

Key strategies for a frictionless implementation 

Embedded finance is a rapidly growing sector, and companies are increasingly looking to offer financial products and services to their customers. However, implementing embedded finance can be challenging, with complex technical requirements, regulatory hurdles, and security concerns. Here are some strategies you can adopt to overcome these challenges:

One strategy for overcoming implementation challenges is to adopt a modular approach to embedded finance. This involves breaking down the implementation into smaller, more manageable components that can be developed and tested independently. By doing this, companies can reduce the complexity of the implementation and allow for greater flexibility and scalability. 

For example, a company could start by offering a single financial product, such as a revenue advance, then gradually add more products and services as the implementation progresses. A modular approach also allows companies to iterate on each component independently, making it easier to address issues and make improvements. This approach helps companies identify needs and areas of potential growth so they can expand their offerings wisely.

Pipe uses an iFrame-style solution called 

. It plugs in easily, offering a turnkey revenue advance product with no need to build anything. This allows companies to offer capital to their merchants right away, taking advantage of a fully tested user experience, and gathering data on what those merchants may want next.

 is another strategy for overcoming implementation challenges. They enable companies to build and deploy embedded finance offerings quickly and efficiently while ensuring scalability and flexibility. By using APIs, companies can avoid the need to build complex, monolithic systems from scratch.

For example, a company could use an API to access a third-party payment processor, rather than building its own payment processing system. This would allow the company to focus on its core competencies, while still offering a high-quality financial product or service to its customers. 

Fintech companies are creating solutions that bypass these layers of complexity. At 

, we use a simple API to embed an offering without complex integrations and without deploying software on your end. This not only eliminates many potential integration issues but also allows you to go to market with an offer in just a couple of days

Embedded finance is a powerful tool to help you serve your customers and grow your own business. It can increase usage on your platform, improve brand loyalty, and help your b2b customers grow their own businesses. By following these three steps and leveraging a few key strategies, you can make the embedded financing process quick and painless, so you can start reaping the benefits right away.

If you're looking to scale your business, increase revenue streams, and deepen customer engagement, embedded finance could be the solution.

If you're considering added embedded financing to your product or service, find out how to assess the opportunity and align with the right partner to help you.

Follow these 3 steps to launch an embedded financing offer

3 steps to embed financing into your product or service

3 Steps to Embed Financing into Your Product or Service

Almost every company on the planet has to market and advertise their services if they want to acquire customers. The cost of this outreach is known as customer acquisition cost, or CAC, and it’s a critical metric that companies (especially SaaS) can use to determine how effective their marketing strategies and advertising campaigns are. 

Our CAC calculator is a helpful tool to make crunching the numbers faster and easier than doing it by hand—and it can help you quickly compare different metrics and look at your data from every angle:

, aka CAC, is the amount of money you spend on attracting new customers. It tells you how profitable your sales and marketing efforts are.

 looks at the expenses associated with paid advertising and helps you identify the most and least profitable channels.

looks at the whole picture—both direct and indirect costs associated with customer acquisition—to get closer to the actual costs of gaining new customers.

is how many months of customer payments it will take to recoup the cost of obtaining that customer.

looks at the lifetime value of a customer in relation to how much it costs to acquire that customer.

Just plug the numbers in above to calculate your CAC or keep reading for more details on CAC.

Calculating and understanding your CAC is crucial for making sound decisions about where to focus your marketing spend. It’s also an important indicator of the current and future success of your company. The idea is to understand how quickly you can afford to acquire new customers and ensure you make more money over the lifetime of the relationship than you spend to attract them. 

A company's ability to acquire new customers at a reasonable cost is a critical performance indicator. When you know how much it costs to bring in a new customer, you can better evaluate the success of your advertising campaigns and decide where to focus your efforts.

Two ways to look at CAC: paid and blended

There are two ways to calculate CAC—paid and blended. The calculation you should use depends on your business's objectives and the details of your desired CAC analysis (and many companies will want to use both).

Paid CAC helps you evaluate the expenses directly associated with advertising, like paid social media campaigns and referral programs. It helps you identify which marketing channels have issues that need to be addressed and which channels provide the best ROI.

By contrast, blended CAC considers both direct and indirect costs, like salaries and commissions, which many companies tend to overlook. Blended CAC offers a more robust picture of the actual cost of gaining a customer. It accounts for all your different marketing channels, whether they’re paid or not, and it gives you a high-level snapshot of your business’s acquisitions.

The customer acquisition cost is determined by totaling all relevant expenses incurred over a given period to bring in new customers and dividing that figure by the total number of new customers gained over the same time frame. Here is the formula used to determine CAC:

CAC = Total Sales & Marketing Expenses / New Customers Obtained

Imagine a SaaS company invested $50,000 in advertising and promotion during a single month, and as a result, it gained 100 new clients. For that month, the CAC would be:

Advertising and promotion costs = $50k / 100 = $500 Per Customer

The CAC payback period is the length of time it takes to break even—i.e., how long it will take to earn income from a client that is equal to the amount of money you spent acquiring that client. The CAC payback period helps you track, monitor, and evaluate any changes you’ve made to your 

as well as the effectiveness of your customer retention programs. 

Knowing the return on your CAC can help you see where you’re overspending, identify how you can improve 

, and determine why customers may be churning before the end of the payback period. Overall, it’s a helpful metric for deciding where to spend your advertising money and how to build your firm sustainably.

CAC payback is easy to determine: Simply divide your CAC by the monthly average revenue per client x your gross margin. The result is the number of months it will take to make a profit once you spend the money. The ideal payback period will vary by industry, but the shorter the better. The longer the payback period, the longer it will be before the customer is profitable for your business.

A low CAC payback period reflects a lower cost of acquiring new customers while still generating a profit. Keeping an eye on your payback period over time will allow you to see patterns and make the most of your marketing and sales initiatives.

The CAC:LTV ratio: what it is and how to calculate it

It’s possible for a business to determine whether its sales and marketing activities are profitable by calculating its CAC and then comparing it to the customer’s lifetime value (LTV). LTV is the total amount they are likely to spend on a business's goods and services throughout their relationship with the company. If the CAC exceeds the LTV, you’re spending more for customers than you’re likely to ever make back, and something needs to change. 

To determine the lifetime value of a customer:

ARPU = Average Revenue Per User (or customer)

GM = Gross margin, the amount of money made from customers after subtracting the cost of goods sold and any other related expenses.

Revenue Churn Rate = (Revenue lost in a specific period – upsells in that specific period) / revenue at the beginning of the period.

To calculate the CAC:LTV ratio, divide the LTV by the CAC. For example, if your average customer spends $100 per transaction, makes two purchases per year, and stays with you for three years on average, their lifetime value (LTV) will be $600. If your cost to acquire that custom is $100 your ratio looks like this:

While it’s useful for showing you whether your marketing is profitable, the CAC:LTV ratio doesn’t offer much direct insight into specifics you may want to address, such as whether your new referral program is working or your content marketing strategy is converting.

The CAC:LTV ratio is most helpful for businesses that have been around for a while. The more years of information you have to work with, the more precise the ratio will be and the better the  decisions you base on it will be.

Both of these metrics have value. The “best” one depends on the insight you’re looking for to better sustain and grow your business.

CAC:LTV is best for getting a general sense of your overall marketing success—is it profitable, or not? Since CAC:LTV is calculated using averages, it’s most accurate for established businesses with several years’ worth of data to work with. 

CAC Payback is a more accurate and detailed look at your marketing efforts, including marketing campaigns and 

. CAC payback is a snapshot that requires less data and can provide more insight into critical business decisions when you're a newer company. 

 when you measure CAC payback, as gross revenue or MRR will give a misleadingly fast payback.

The cost to acquire a new customer is a key performance indicator for any SaaS organization that wants to know how effective their marketing and sales strategies are. Whether you’re a SaaS 

, a growing company in any industry, or looking to scale, knowing how much you’re spending on acquiring new business helps you make better resource allocation decisions and hone your sales and marketing strategies.

With a solid strategy in place to acquire customer, 

 can give you fast, frictionless access to capital to fuel your marketing and sales efforts and help you grow.  

Almost every company on the planet has to market and advertise their services if they want to acquire customers.

Find out how to calculate CAC, why you need to know it, and how it can help you assess your marketing efforts and improve profitability

What is CAC and how do I calculate it? (with formulas) 

What is CAC and how do I calculate it?

If you’re looking to scale your company, you’ll need capital. 

And while traditional financing methods like bank loans and equity can no doubt be helpful at certain stages of growth, these options don’t work in all situations. In fact, many entrepreneurs find themselves looking for a different fit when it’s time to fuel growth and scale up the business. 

 landscape is changing, and today's founders have more options than ever to build their ideal capital stack. 

Download our new ebook, A Guide to Building Your Startup’s Capital Stack, to read all about it.

What’s in the book? Here’s a sneak peek…

challenges and opportunities facing startups

 and founders when it comes to accessing capital. We’ll cover 

options—from loans to angel investment—and how 

 can bridge common gaps. And, of course, we’ll tell you more about how 

If you’re looking to scale a startup with a well-designed capital stack that scales right along with you, 

Our new ebook explores how startup founders and CFOs can go beyond equity and debt to grow businesses on their terms.

This guide provides an overview of the most common financing options for startups, as well as tips on how to choose the right one for your business.

A guide to building your startup’s capital stack | Pipe Blog

A guide to building your startup’s capital stack

Lack of liquidity is a pressing—and common—challenge many entrepreneurs face. Even if cash is on the way and business is healthy, having the right amount of capital on hand at the right time can be critical both to managing day-to-day operations and continuing to invest in your core product or service. 

The good news: Pipe can enable business owners with predictable revenue to access non-dilutive capital by connecting a couple of key accounts securely to its platform. Pipe makes getting access to capital fast, flexible, and seamless to get started, so you can grow your company on your terms. 

Let’s take a look at how integrations make trading on Pipe more efficient for you and your team.

First things first: How does trading on Pipe work?

It’s that easy. Once you’ve signed up and connected your accounts, you can get a trading limit (that’s how much capital you can pull forward) and a bid price (that lets you know how much that capital will cost) so you know what’s possible today and can act quickly in the best interest of your business.

Keep in mind that as your company grows, so too can your trading limit. Bid prices and trading limits are updated regularly and can improve over time as you build trading history.

How integrations help unlock your Pipe trading limit

Pipe aims to help you be more financially agile so you can grow your business on your terms, without the heavy manual overhead and paperwork that often comes with traditional financing. 

That’s why Pipe’s trading platform integrates with popular billing managers, banks, and accounting platforms to make getting access to the capital you need easy. 

But remember it’s not about cutting corners—it’s about efficiency. By securely connecting your accounts to Pipe, we’re able to bring together speed and responsible analysis to quickly provide you with a trading limit and access to the best possible bid prices.

What platforms and services integrate with Pipe?

Pipe connects directly to the banking software, billing managers, and accounting platforms most businesses use to manage payments, send invoices, reconcile accounts, track finances, and more. By securely connecting your accounts with Pipe, we can keep your trading limit and bid price up to date with no extra work on your part.

Let’s take a look at the growing list of platforms and companies that integrate with Pipe.

Looking for something that isn’t listed here? Let us know.

Why Pipe integrates with banking software

Securely connecting your bank account is important for establishing your bid price and trading limit. Syncing your bank account helps us understand your company’s burn and runway. 

Pipe partners with Plaid to enable secure, frictionless connections with hundreds of financial institutions. This includes major banks like Chase, Bank of America, and Barclays, credit unions, and startup-favorite financial institutions like Mercury, SVB, and Brex.

Why Pipe integrates with billing managers

In order to trade, Pipe needs to identify your revenue streams and sync them to your Pipe dashboard. You can trade a single revenue stream or bundle multiple together to trade them for a bulk sum payout.

What billing managers integrate with Pipe?

Pipe currently integrates with the popular billing software below. Whether you currently work with these tools or are looking to level up your current setup, we’ve shared a little information about each to help you make the best decisions for your business.

Suite of web-based tools for managing the performance, sales, and reviews of apps that are sold on the App Store.

Billing and revenue management platform built for subscription businesses.

Subscription management software for B2B SaaS companies that leverages billing, accounting, and data analytics tools.  

Billing tool that enables businesses to create and send professional, customizable invoices to customers.

All-in-one subscription management and recurring billing platform built for recurring revenue companies. 

Suite of fully integrated payment products built for online and in-person retailers that simplify managing businesses online.

Syncing your accounting software makes it possible for Pipe to better understand the financial health of your business—now and over time—through your P&L and balance sheet. 

What account software integrates with Pipe?

Pipe connects to the following accounting platforms, and we’re always working on adding new integrations.

Accounting software solution built to help small to medium businesses manage their books with a variety of tools.

One of the most popular accounting tools in the world, for small and medium-sized businesses. 

All-in-one invoicing and accounting solution designed for small to medium business owners and accountants.

Integrated cloud business software suite that includes business accounting, ERP, CRM, and e-commerce software.  

Cloud financial management and accounting software for small businesses.

Online accounting software for managing business finances.

For companies with product-market fit and predictable annual revenue of $100k or more, Pipe can enable you to connect with non-dilutive capital to finance growth. Connecting to your current systems and platforms helps us quickly determine the financial health of your business so you can get access to the capital you need to continue growing and running your business on your terms. 

These integrations are just the beginning. 

 to request integrations with other tools that may not yet be listed above. If you use another software but want to get started right away, Pipe also offers manual upload options via .csv files. 

For more information on how to use your recurring revenue to access non-dilutive up-front capital through Pipe, visit our 

page, or learn more about how Pipe works for 

What integrates with Pipe? From Plaid to GoCardless to Quickbooks, learn which apps and softwares securely connect with Pipe.

Pipe’s trading platform integrates with popular billing managers, banks, and accounting platforms to make accessing the capital you need easy.

Tools and Resources

3 steps to embed financing into your product or service

What is CAC and how do I calculate it?

A guide to building your startup’s capital stack

Pipe & Friends: What integrates with Pipe?

Pipe Blog

SubscribeGet the best of Pipe's Blog

Tools and Resources

3 steps to embed financing into your product or service

What is CAC and how do I calculate it?

A guide to building your startup’s capital stack

Pipe & Friends: What integrates with Pipe?

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