As small businesses face the challenges of an uncertain market, their biggest struggle is amplified. They don’t have the seemingly endless resources of bigger companies. Fortunately, along with it comes their biggest strength, resourcefulness and flexibility. With the right tools and strategies, small businesses can give themselves the upper hand. Here’s how fintech can help small businesses boost performance and make the most of their strengths.
Efficiency that gives you back your time
One of the biggest advantage fintech gives to small businesses is efficiency. When you’re running with a small team and small budget, you need to make the most of what you have. Fintech gives your team leverage to accomplish more in less time and a smaller headcount. Which is crucial at a time when you may not have the budget to grow your team.
One example of fintech improving efficiency is the monthly close. Close management software can save you hours every month by centralizing the information you need and automating much of the reconciliation process. Rather than combing through the chart of accounts each month and manually reconciling all needed accounts. You can let your close software do the heavy lifting. While keeping you organized so you have more time to run the business. With a small accounting team (or maybe you are the accounting team), this can be a lifesaver!
Financial insights that rival the “big guys”
Large companies rely heavily on data. Unfortunately, many small businesses count on guesswork to compensate for the lack of hard data. That’s where fintech comes in.
Tech tools can give you the information you need to do financial planning and analysis (FP&A) like a much larger company. By pulling in data from sources like your accounting software and bank account, fintech apps can give you deep insights that wouldn’t have been possible just a decade ago. At least not without someone dedicated to pulling all those numbers together manually.
And don’t worry, all that data doesn’t need to be gathered and dumped on your doorstep. With machine learning and AI fast becoming more and more powerful, the right software can also help with the analysis. By “crunching the numbers” for you, the financial tools turn your raw data into actionable information that can guide better decisions. For instance, a flux analysis of your accounting data can show you more than which numbers changed from month to month. But also if any are particularly concerning and what may have caused those changes. With that information, you can take steps to correct any problems quickly.
Easier access to financing
Alongside economic challenges, securing financing to grow your business is also becoming harder. Traditional loans and equity funding have been harder to come by and also more expensive recently. As competition heats up for the available funds, it takes more and more time for business owners to get their piece of the pie. Who has time for that?
Alternative financing can be a great way to finance your operations or fund new growth. And it’s often powered by innovative fintech. Like the FP&A software we just talked about, these tools can connect to your data through open banking and by syncing the various software you use to run your business. In this case, however, it analyzes that data to help you qualify for financing. Instead of filling out reams of paperwork on the financial health of your business in hopes of getting a loan, fintech can pull that information together for you and determine how much you qualify for, often in minutes.
The day-to-day only faster
While all of these fintech features can help boost small business results, there’s nothing quite as powerful as fintech solutions that make day-to-day business operations go more smoothly. The right technology makes serving your customers and getting paid for that service much faster, easier, and more secure.
Billing and invoicing tools are at the top of this list. Nothing hinders cash flow more than a slow invoicing process or customers who are slow to pay. With automated billing and invoicing, you can streamline the process to be instant and automatic. Allowing you to save time and energy for you and your customer while also improving your cash flow.
At its most basic, fintech can power payment processing in the field or a physical store through a phone or tablet. As your business grows or you need more advanced solutions, payments can be automated, direct bank payments can be secured, and recurring subscriptions can be created to make your interactions with your customers as frictionless as possible.
Whether you’re moving money in and out of your business, tracking and measuring that money, analyzing where the money went, or trying to get more money to help you grow, fintech can give your small business the boost it needs to thrive in any economy. And with most fintech tools being cloud-based and subscription or usage priced, it’s easy to get started and scale up your tech stack to fit any stage of business growth.
About the author
Mike Whitmire, CPA, is CEO and Co-founder of FloQast, a provider of accounting workflow automation software created by accountants for accountants to help them work smarter, not harder. Before founding FloQast, Mike began his career in audit at Ernst & Young, focusing on media and entertainment, before joining the accounting and finance team at Cornerstone OnDemand as the company prepared for its IPO. During his time at Cornerstone OnDemand, Mike first developed the idea for what would be FloQast.
In July 2021, FloQast raised $110 million Series D at a $1.2 billion valuation. Today, it has more than 400 employees worldwide. In January, FloQast released PBC, a comedy series written and developed by FloQast employees, including Mike, based loosely on his experiences as an auditor.
A proud Angeleno, Mike is a big Los Angeles Dodgers fan and an avid baseball card collector. He resides in LA with his wife and daughter.