Guide to Fintech for SMEs

As we head into the holiday season, Small Business Saturday is one of the most notable days on our minds. Following Black Friday and Cyber ​​Monday (BFCM), Small Business Saturday encourages shoppers to support and support their local businesses and strengthen the region’s economy. One of the ways to make the most of this opportunity is to invest in a fintech system, which makes it easier for small and medium-sized companies to do business and streamline their growth.

Understanding the importance of Fintech for small and medium-sized enterprises (SMEs)

Technology has had a significant impact on the development of small business solutions. The use of fintech or financial technology, which can increase resource utilization, is a strategy to optimize use.

Fintech is defined as the use of digital tools to process payments, invoicing, cash flow management and other financial processes (both transactional and operational) within the organization as well as with external stakeholders such as customers, suppliers and credit providers.

The majority of businesses use it to effectively manage their funds or resources. Incorporating time-saving services such as smartphone wallets, capital asset trading and accounting automation also enables businesses to compete successfully in a competitive market. Understanding how fintech works in an SME can increase not only productivity but also customer satisfaction.

According to a 2019 poll conducted by EY of over a thousand SMEs, 25% of SMEs worldwide and 23% of SMEs in the US have used fintech, which EY considers a strong technology adoption rate. Adopters are organizations that use all four of the aforementioned categories: financial services and payments, financial planning, financing and insurance. Another 22% of SMS respondents were in the process of adopting since they used three of these categories.

There is more to fintech than technology; Is it a new approach to thinking? For example, does a new bank need a branch? Do you need individuals? You only need an algorithm, an application and a banking license. Numerous fintechs offer a wide variety of links with other services, thereby automating procedures. For example, payment systems and payroll applications interface with accounting software, while accounting software interacts with banks. This also signals a change in mindset and culture for SMEs.

How can Fintech help SMEs?

Solutions based on fintech can enable small businesses to:

1. Offer online counterparts to their brick-and-mortar business

In recent years, e-commerce has experienced extraordinary growth, especially in light of the COVID-19 pandemic-related shutdown in many nations. Therefore, small businesses have started to depend on e-commerce. E-commerce and electronic payments have enabled market adjustments.

2. Get fast credit and business loans

FinTech enables more small businesses to raise the capital they need. While the majority of small entrepreneurs prefer to deal with community banks, FinTech streamlines the loan application process. In addition, the capacity for soft-pull lending is significantly expanded.

3. Forecast cash flows

A cash flow projection is used to predict the incoming and outgoing cash flows of a company. It is a crucial instrument for SME managers to use when making critical decisions. It notifies business owners of expected fluctuations in cash flow that may affect their ability to pay taxes, wages, etc.

4. Use the cloud to store receipts

You can securely post receipts to the mobile app or a web app. In this way, you will save time on data entry. In addition, SMBs can create notes and link them to the relevant transactions. It would be easier to perform tax and expense-related activities if receipts could be downloaded at any time from the app or website.

5. Move expense management online

Managing a variety of expenses is necessary for running a small business. These may include business travel expenses and office infrastructure expenses. Fintech expense management systems can help eliminate most of the paperwork and give business owners and their employees the freedom to transact from their accounts.

6. Analyze and learn from customer behavior patterns

One of the biggest advantages of fintech is that it provides businesses with extensive customer knowledge. Payment processing fintech offers companies information about customers’ interests, wishes and requirements. By using the data provided by fintech, small companies can increase leads and market to customers.

7. Exchange funds with international stakeholders

Powered by fintech, US-based small businesses with global suppliers can participate in international money transfers and foreign exchange services, thus avoiding expensive bank fees. Fintech organizations protect user data and adhere to regulatory standards to preserve customer assets.

8. Keep customer data secure

Small businesses must be vigilant every day to protect their data, especially customer and financial information. Fintech eliminates this problem as it offers multiple security solutions, allowing businesses to protect themselves from cyber threats. This insurance can also reassure customers when they register with the company and make purchases.

How to get started with Fintech?

If you’re an SME, one of the easiest ways to get started with fintech is to talk to your local bank. Most major banks and insurance providers now offer fintech products that simplify the business user experience.

You can also research sites like Techfunnel to learn more about the fintech landscape and what it has to offer. Getting started with fintech is often as simple as downloading an app and entering your business details to start using services such as quick access to credit, digital invoicing, international payments, etc. Here’s an example of fintech implementation for small and medium-sized businesses to inspire you.

SMB fintech example: Microsoft and Autobooks help small businesses get paid faster

One of the biggest hurdles for small businesses is getting paid faster. By automating invoices and managing financial accounts, Autobooks reduced the cash flow dilemma and enabled small and medium-sized businesses to be paid up to nine days earlier. The company constructed a framework on Microsoft Azure, transforming it into a reliable digital business banking solution.

Autobooks also uses complex analytics to offer information and insight into future cash flow, giving business owners greater financial transparency and control. It is precisely this type of service that small businesses want to help them better manage their financial requirements.

Conclusion

Fintech, short for financial technology, is changing the way small businesses work. Along with operational benefits, one of the biggest benefits of this technology is its ability to alleviate the cash flow problems that many entrepreneurs and small business owners experience.

Fintech’s expansion over the past ten years has made it a disruptor of small business challenges and boundaries, such as time-consuming banking procedures, reluctance to lend to startups, and expensive services such as accounting. Fintech offers several benefits to small companies, which can use financial technology to streamline procedures, save costs and improve customer service. Expect new financial technologies, such as blockchain technology, to be integrated into SMB applications.

As the fintech sector evolves, more opportunities exist for SME entrepreneurs. In the spirit of Small Business Saturday, keep this guide close by to digitize a key pillar of your organizational infrastructure: its finances. Also, use these five tips for small business entrepreneurs to drive growth.

Thanks for reading, and happy holidays!