Fintech For SMEs: Tools Small Businesses Need

Fintech (which is short for financial technology) is a term you may hear fairly often in the modern business world. But what does it actually mean? And how can fintech help your small business thrive and expand? Having a strong understanding of the assets available to you is crucial if you want to take advantage of them.

In this article, we’ll define fintech, explaining exactly what it is and how it can benefit UK-based SMEs. We’ll also provide examples of fintech tools your small business can implement into day-to-day operations. Read on to learn more.

 

What is Fintech For SMEs?

Fintech is an umbrella term that applies to several different things — it encompasses financial solutions, start-ups providing those solutions, and traditional financial service providers. However, the common factor shared by all of these is the idea of innovation and technology. Fintech is about making financial services simpler and more accessible, which makes it a perfect match for SMEs.

The key benefit fintech holds for SMEs is that it reduces their reliance on traditional financial services. Often, the providers of these services (well-established banks, financial planners, and accountants) can be difficult to access for smaller businesses. For example:

• Bank loans can have unachievable terms and high monthly repayments.
• Specialised or accredited accountants may not be locally available to the SME.
• Being limited to traditional payment methods can reduce an SME’s audience and lower customer satisfaction.
• Financial planning without automation or expensive external support requires a financial background and an understanding of financial principles.

However, fintech (whether that means providers or the tech itself) makes these crucial business functions and activities much easier for small businesses.

So what are the specific fintech tools your small business needs? Below, we’ve listed four areas where fintech can be implemented for a significant business advantage.

 

Fintech Tools For Your Small Business

Bookkeeping and Accounting

Small business owners must keep detailed and accurate financial records to make effective, informed decisions. These records also help with day-to-day tasks like monitoring cash flow and ensuring compliance with tax and regulatory obligations. It’s also vital for you to analyse and interpret your financial data regularly to provide insights into the business’s financial health.

Although they are often conflated as one task, maintaining accurate financial records is known as bookkeeping, whereas analysing those records is known as accounting. Both are necessary for an SME to have a clear understanding of its financial position and achieve long-term financial sustainability.

Fintech has made both bookkeeping and accounting much easier for small businesses. For example, fintech platforms offer cloud-based accounting software and mobile bookkeeping apps that can be accessed anywhere, eliminating the need for an onsite bookkeeping department or regular trips to an accountant.

Here are some of the other benefits that fintech bookkeeping and accounting offers:

• Intuitive interfaces
• User-friendly dashboards
• Easy-to-use automation
• Simplified versions of crucial bookkeeping tasks
• Tools for reducing the learning curve for business owners.
• Integration with other finance tools to allow for seamless data sharing.
• A variety of levels and pricing models to ensure you get the exact package you need.

To help you use these fintech tools, we’ve also provided a list of some of the more popular bookkeeping and accounting solutions suitable for small businesses:

• QuickBooks
• Xero
• Sage

 

Payment Services

As mentioned above, SMEs are limited by traditional payment methods. Most of the time, this refers to old-fashioned methods like cash or cheques. Modern business models mean that these methods are limiting, particularly in the case of e-commerce where payments must be made electronically.  In addition, they can also result in delays, higher administrative costs, and increased risks of fraud or theft.

One of the many innovations under the fintech banner is the concept of a payment service provider (PSP). These businesses leverage digital technologies to automate and simplify payment processes, enabling companies to accept electronic payments, conduct online transactions, and manage payments efficiently.

By working with a PSP, businesses can streamline their payment operations, increase efficiency, and provide a seamless payment experience to their customers. This increases customer satisfaction and allows access to a wider customer audience (because a greater number of payment methods can be accepted), which ultimately drives growth and success.

Below are a few of the most popular PSPs for UK-based small businesses. However, if you’d like to learn more about picking the right payment service provider for your business (and understand the benefits of each listed provider), check out our article on Picking the Right Payment Service Provider.

Top PSPs for UK businesses:

• Global Payments
• TakePayments
• Trust Payments

 

Financial Planning

Financial planning plays a critical role in the success of your small businesses. Without having a clear vision of your financial future, it’s much harder to set clear goals or create budgets for future projects and general business development. Financial planning also helps mitigate potential risks and take advantage of upcoming opportunities.

As with the other business functions mentioned, fintech tools can automate the various financial planning tasks, making the job much more manageable. Additionally, using fintech tools means you can integrate your financial plans with your bank accounts, payment platforms, and accounting systems to save time and streamline data synchronisation.

One of the other benefits of financial planning tools for SMEs is that they lower the bar for entry—that is, using financial planning fintech tools eliminates the need for significant knowledge of how finance works. This is primarily due to the automation offered by the tools but also because of the visibility they provide. Fintech tools allow for real-time financial tracking so that you can monitor your small businesses’ cash flow, revenue, and expenses at a glance.

If you’re interested in investing in a digital financial planning tool, there are a wide variety of options you can take a look at:

• Quicken
• Emma
• Acemoney
• Banktivity

 

Fintech Funding Options

One of the financial services that has been vastly changed by the rise of smaller, independent fintechs is the provision of capital — SMEs looking for funding no longer have to rely only on big banks to get access to finance. This is a hugely positive development because of the difficulty in accessing traditional bank loans: applicants are required to submit extensive paperwork, including business plans, financial statements, and collateral documentation, to demonstrate their credit history and ability to repay the loan.

Fintech offers alternative funding models that are more accessible, efficient, and flexible than traditional systems. Generally, these fintech platforms leverage digital technology, data analytics, and automated processes to massively accelerate the application and approval process and make funds available to approved applicants faster.

Rev&U cash advances are a particularly innovative example of a modern fintech platform that allows for fast, easy access to funding. By leveraging fintech staples like automation, Rev&U applications can be completed in minutes and approved within 24 hours. Then, approved applicants can receive their funding in a number of days instead of weeks.

Funding Fintech: How 365 finance Can Help You

365 finance is an award-winning provider of revenue-based finance to UK-based SMEs. Revenue-based finance is a low-risk alternative to traditional bank loans. Instead of unaffordable monthly payments, revenue-based finance is repaid using a small percentage of the card payments your business processes. As such, you don’t need to worry about low-revenue business periods — repayments are not set, so if you earn less, your repayments will be lower.

At 365 finance, we can provide both long and short-term financial solutions, with revenue-based funding available from £10,000 to £400,000 in capital. Apply for Rev&U today without affecting your credit score, or speak to our team to find out how we can help your business. To find out more, head to our website.