Financial technology might sound new, but the truth is that it’s been around for centuries. Innovations like the wire transfer in 1872 were early examples of financial technology; only the word “fintech” hadn’t yet been coined. Nowadays, when the latest fintech emerges, small and medium-sized enterprises (SMEs) are often the first in line to use it.
And as business owners are discovering, financial technology can save them money and time. From apps to APIs, fintech helps SMEs increase efficiency while lowering costs. It’s innovation like this that’s challenging traditional financial service providers. Consequently, many fintech companies are known as challenger or disruptor brands.
So, how can SMEs use fintech to save money?
The way businesses accept payments is changing. Take a humble market stall that sells pancakes. A decade ago, a small business like this might only take cash payments. But in 2021, as vendors know all too well, turning away cashless customers is a recipe for disaster.
So when point-of-sale (POS) apps like iZettle and SumUp emerged, it changed the game for businesses that were previously reliant on cash transactions. With apps like these, you can take card payments anywhere from ice cream vans to coffee kiosks. All you need is a smart device, an external card reader and a WiFi connection. So rather than turning customers away, you can keep your sales ticking over for a small fee.
Businesses are spoilt for choice when it comes to banking. On one side, there are centuries-old banking institutions. On the other, there are a plethora of banking fintech companies like Monzo and Tandem. Modern businesses need modern banking features. From digital receipts to invoices, new banking tools make running a company easier.
The same is true for automation. With so many in and outgoings, fintech banks make separating funds simple with features like automated “pots”. Need to set money aside to complete your annual self-assessment? It’s a breeze with a tax pot. You can automatically store a percentage of your income in a separate pot whenever your business gets paid. Not only does a feature like this save you time, but it also helps you avoid miscalculating your tax return.
Money transfer providers
Speaking of banking, both old and new banks offer international money transfers. However, you can save time and money by making payments to overseas contractors with a dedicated provider instead. The average cost of sending an international remittance is around 6.5%. But if you use a dedicated digital provider like Azimo instead of Western Union or your bank, you will usually pay less than 2%.
Based on making at least one payment per month, businesses can save up to £1,000 every year. Even better, newer providers are beating the old guard in terms of speed and flexibility too.
If you’re a small business owner, hiring an accountant can save you money. That’s because accountants can help businesses with issues such as compliance and tax queries. Tasks like these can cost a business dearly if they’re handled incorrectly.
However, if your business can’t afford to hire a professional, turning to fintech may be the best alternative. Many start-ups now automate their finances with accounting apps like QuickBooks, covering the basics like invoicing, payments and payroll.
With various free or low-cost apps available, your business can keep accurate records and create basic financial statements.
Fintech apps like IDX Privacy can save businesses money by preventing catastrophic data breaches. These cloud-based security apps are helping companies automatically protect their sensitive information.
From virtual private networks (VPNs) to email encryptors, privacy apps can help keep prying eyes away from your business interests.
Take the guesswork out of stocktaking with the help of financial technology. Apps like Sortly help businesses easily track what they have in stock and where it’s located. Stock takes are notoriously slow and can create bottlenecks for your business. SMEs can avoid this with a real-time stock-taking app and keep business operations flowing.
Companies looking for investment have more alternatives to high-interest bank loans thanks to crowdfunding. Start-ups across the UK are benefiting from funding from millions of like-minded investors and venture capitalists. Simply add your company to platforms like Crowdcube and see what kind of seed or growth funding you might be able to attract.
What does the future hold for SMEs and fintech?
In closing, it’s fair to say that fintech is here to stay for SMEs. And as advancements in fintech occur, so will the way that start-ups conduct business. Consequently, it will become easier for consumers to trade, bank, invest and exchange their money. With innovation like blockchain already commonplace, it’s time for every business owner to adopt fintech to win tomorrow’s consumers.