Financial technology covers a host of financial services software that has come of age in the 21st century. FinTech is an economic industry composed of companies that use technology to make financial systems more efficient, as Wharton describes it. Most SMBs are affected by some application of financial technology, whether they know it or not, and FinTech is changing how small businesses meet cash flow concerns within their business. Here are the six ways FinTech startups can help small business owners meet cash flow challenges:
FinTech is making it possible for more small businesses to get the funding they need. While most small business owners prefer to work with local community banks, FinTech has brought online lending to a certain level of popularity even with those business owners by making the loan process quick, painless, and putting funds where they need to be in a lot less time than community banks ever could. A great win-win situation for small-business owners is a small community bank that offers a FinTech-based online lending experience.
The ability to do soft-pull lending is also greatly increased. Since the process no longer requires a hard credit pull against an individual or business, the lending application phase has become far easier, faster, and more efficient – leading to more business owners taking the plunge to go after the funding they need to expand to a new location or infuse their venture with some working capital.
The right financial tools can mean the difference between hundreds of person-hours being spent on things like payroll and being able to divert those person-hours to other avenues of productivity. FinTech packages such as Intuit QuickBooks’ suite of products – and many others in recent years – can move your payroll to an in-house venture that’s entirely automated and a lot less likely to make costly mistakes.
Being able to get paid by customers is just as critical as making payroll; being able to automate that as well is a huge way that FinTech helps small businesses push back against cash flow challenges. With global payment systems, getting paid is easy and even instant no matter where in the world it’s coming from – and the technology minimizes the amount of human interaction needed to process those payments. With lesser personnel needed, it saves the business much-needed cash. Now, even peer-to-peer transactions are going on every day worldwide.
A wide variety of tools for managing everything from client profiles to accounts exist now, and even though those professional-level tools were once out of reach for smaller businesses with less cash, FinTech has made them accessible – and affordable. Now, it’s a commonplace to see a business that has their business credit integrated with their accounting software, which automatically pays off their loan, line of credit, or even credit card with cash from customer receipts – no human interaction needed.
Data leaks are unfortunately here to stay, and they remain a real threat for a lot more than huge businesses like Google or Yahoo. For small businesses, keeping their data secure – and that of their vendors, customers, and contacts – is a necessary expense that they’re often ill-prepared to handle. With FinTech, cybersecurity is an attainable prospect, as various software packages exist to help business owners tighten up their defenses. Business owners don’t need to be computer geniuses to install and manage those defenses, either; through FinTech, they can talk to the gurus who are – all from the comfort of their office chair.
Even landlords and property managers are getting in on the FinTech revolution. New tools allow them to manage their tenants and properties remotely, or send rent notices and accept payments via smartphone. Some software packages, such as Domuso, even make it possible for landlords to allow tenants to finance their security deposit through an installment loan that still pays the landlord upfront.
FinTech is making it possible for small businesses to serve customers worldwide in real time, accept payments, pay employees, and even manage inventory while still spending less than ever imagined with traditional, local methods of financial management. While many facets of FinTech are now integrated into businesses so tightly, it’s hard to imagine operating without them; others are new and exciting – and some haven’t even been designed yet. However, with the exponential growth of technology, it’s certain that there are even greater discoveries and inventions just around the corner.
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