Fintech is a buzzword that you likely have heard thrown around the business sphere over the last ten years or so. If you don’t know yet, Fintech, or financial technology, is any piece of technology that is intended to improve financial processes.
After the global financial crisis that took place in 2020, many businesses are going to be looking to 2021 as a new start. Fintech can provide your business the momentum it needs to start 2021 on the right foot. Whether you are looking to expand, or just shore up your finances, the right Fintech can be of assistance.
Here are four ways that Fintech can be used to help improve your company’s financial situation.
1. More Accurate Budgeting Tools
While nobody could have seen the financial disaster that was 2020 coming, more businesses should have been equipped to go through a recession.
Far too often, businesses operate too close to breaking even. In 2020, almost half of small business owners said that if they went just 27 days without bringing in revenue, they would have to close their doors.
No matter what type of business you lead, or the size of your business, you should have enough cash reserves to make it through at least one month of tough sales numbers.
Using the power of technology, your business can more effectively budget this year. Planning Maestro, our cloud-based intelligent planning platform, will empower your team to make better decisions overall. The platform puts all your company’s financial information into one convenient place, making it easier to plan, forecast, and report on your business’s finances.
With real-time scenario management, complete access to financial dashboards, and the ability to create a driver-based budget, your business’s financial health should improve dramatically using this system. Speed is another benefit of using the Planning Maestro tool. One of our clients was able to save 24 workdays annually that were previously spent handling budgeting and financing.
Moving forward, being able to budget and forecast effectively will only improve your business.
2. Using Fintech for Better Financing Opportunities
One area of business that Fintech has greatly impacted is the business lending sphere. In the past, businesses that required funds had to go through traditional lenders. National banks, community banks, and credit unions all classify as traditional lenders.
An issue that many businesses face when going through a traditional lender is, they have strict requirements that can make qualifying for funding extremely difficult.
Every lender will look into an applicant’s personal and commercial finances. These lenders look specifically at your:
- Personal Credit Score – if your credit score is lower than 600 it will be extremely difficult to qualify for a loan of any kind
- Business Credit Score – lesser known than a personal credit score, each business should have a business credit score, if you don’t it could impact your odds of approval
- Monthly Income – most lenders will need to see revenue stubs that prove your business is successful
Requirements will range depending on the type of lender you apply through. Traditional lenders will typically have higher credit ranges needed, higher monthly income requirements, and even after you qualify, you may still be deemed “high-risk”.
Out of all lenders, banks and credit unions have the worst approval odds for business loans. The thing is, alternative options did not always exist. This meant that, before, if a business was denied funding from a traditional lender, they had no other options. Today, with the evolution of Fintech, there are a variety of ways that businesses can receive funding, outside of traditional lending institutions.
Business that are having trouble qualifying for a business loan from a traditional lender often look into a business loan from an online lender. With the evolution of technology, smaller companies, such as these alternative lenders, can offer the same capital solutions that traditional lenders do. Online lenders have become increasingly popular within the business lending space as they boast better approval odds than traditional lenders.
Business loans are not the only funding option anymore either. Thanks to Fintech, small businesses can easily try fundraising themselves through a variety of crowdfunding platforms. Crowdfunding puts almost all of the power in the hands of the business owner. Just now, crowdfunding is a big commitment, and receiving funds can be extremely competitive.
Whatever you may need financing for this year, expansion or survival, Fintech has made business financing more accessible and efficient for all.
3. Smarter Business Banking
In previous years, business owners would be limited in their business banking options. Typically, you would need to go through one of the large-scale national banks for most of your business needs. Now, going to the bank may be a thing of the past with the evolution of business banking technology. Modern, sleek, challenger companies are beginning to reimagine the way that we utilize banks.
Today, business owners can sign up for a completely virtual business bank account that comes with both virtual and physical corporate cards. Virtual banking is going to be crucial as remote work continues to fragment the workplace. The ability to give and track an employee’s corporate credit card usage online will only improve financial tracking and responsibility.
The best Fintech tools can integrate with other tools. For business banking, integrations are extremely important. Modern banking platforms can integrate with the most popular accounting, budgeting, and other ERP solutions, making it easier than ever to manage books, track transactions, and monitor spending.
Experts estimate that digital banking in the business sphere could be the ERP of the future. As these banking platforms continue to scale the scope of work that they can do, they will become more and more integrated into the daily operations of your business.
As the world becomes more digitally connected, online banking will only continue to grow. Integrating bitcoin and other virtual currencies is something that most virtual banks are going to try in the near future, so getting in now may be worthwhile.
4. More Robust HR Solutions through Fintech
Many are claiming that 2020 was the year of remote work for businesses. Remote work has been an option for a small number of companies for some time now, but until last year, it was not a widely accepted idea.
The pandemic accelerated the adoption of remote work, and now, more companies are going to offer remote work, at least in some capacity.
While remote work comes with a laundry list of benefits, there are some hurdles associated with implementing it. The ability to effectively hire, manage, and monitor employees have been negatively impacted due to the fragmentation of the workforce.
To accommodate for the more spread out world that we live in, the HR team can leverage online tools to manage their department tasks. Robust HR platforms will allow your team to manage every aspect of HR, from onboarding, to payroll, and everything in between.
Some HR companies also offer excellent benefit shopping plans. Being able to view tailor-made benefit plans for your employees will allow your team to choose the right fit for the company. Saving money on payroll, hiring, and benefits are just a few ways that HR tools can improve your team’s financial situation.
One thing to keep in mind is that HR software can difficult to implement at scale. One study showed that 8 out of 10 companies struggle with the adoption of HR technology. If employees are not filling out timesheets and utilizing the tools correctly, then they will not be effective.
Getting complete adoption will be tough, but the long-term impacts will be worthwhile. Using HR technology will only improve your time management across the entire organization.
Be sure to implement some of these Fintech solutions to easier manage your business finances this year. As the world becomes increasingly reliant on technology, Fintech will become imperative to your success.
Centage Corporation’s Planning Maestro is a cloud-native planning & analytics platform that delivers year-round financial intelligence. With Planning Maestro, Centage offers the sophisticated features needed by small and mid-market organizations to integrate budgeting, forecasting, and deep data analysis within one easy-to-use, scalable SaaS solution. For more information on how to modernize your office of finance with intelligent planning, view our product demonstration video, or call 800-366-5111.