Size doesn’t matter

Fintech tools bring big-business advantages to small businesses, helping with such problems as cashflow.

Small businesses are one of the biggest drivers of the Australian economy, yet many struggle unnecessarily when it comes to getting paid. Cashflow is one of the biggest pain points for small-business owners, and many do not have the right tools to support them.

Enter fintech, which is shorthand for financial technology. While the concept of financial technology evolved in the early 2000s, its use in the small-business realm really didn’t occur until much later. In a general sense, the term has come to refer to any technology related to finance, from financial education and digital currency to banking and investment.

For the small-business owner, what is really exciting about fintech is the accessibility and speed it offers even the smallest company in dealing with its customers.

A huge amount of investment and innovation has gone into fintech in recent years, democratising the space and opening up opportunities for small businesses. In particular, it enables small businesses to take control of such aspects as their cashflow. With increased accessibility and affordability, fintech is revolutionising approaches to administration and finance that enhance the ability of small businesses to understand their data and better protect their bottom line.

Time management

As a small-business owner, whether you are a tradesperson, creative spirit or consultant, you have a passion and skillset that puts you in demand. With demand comes the need for time management.

When you first thought about starting a business, you likely did not imagine you would be spending a large part of your precious time balancing books, trying to sort out client payments, and chasing your money. It can be all-consuming.

Unpaid invoices are a major factor in small-business cashflow problems. Not only do small-business owners lose time chasing payments, but those missing funds have a long-term effect on the business’s bottom line.

As a company that helps more than 250,000 businesses invoice their clients every day, we have observed a simple truth: some business owners are being paid on time while others are not. Unfortunately, many businesses have to play the waiting game.

However, fintech is making it easier for small-business owners to stay afloat by offering various platforms and tools for invoicing that will help ensure payments are made and cashflow remains steady.

“Collecting data on your business and your customers has historically been reserved for the corporates, but now fintech tools bring this ability to small businesses.”

Few things are more important to a small-business owner than cashflow. Commonly called “the lifeblood” of any business, cashflow can be the difference between a business swimming or sinking.

Significant issue

One of the most significant cashflow, issues for small-business owners are late payments. These can affect budget planning and erode valuable work time with extra time having to be spent chasing up bills.

A recent late-payments study has shown that the average invoice is paid 14.4 days late (Dun & Bradstreet, 2016). Fintech can support small businesses by providing the tools that will allow small-business owners to send payments immediately.

Extra cashflow pressures for small-business owners come during holiday periods. Business often slows down during these times, and cashflow becomes strained. A recent survey by Invoice2go showed that 24.75 per cent of small-business owners feel guilty about taking time off, even over the holidays, and 43 per cent worry about the impact a holiday would have on their business. At least part of this is because of the overwhelming time spent not making money, but managing money, or cashflow.

By using some key fintech tools, small-business owners can look at and understand their financial data in a way that protects them against seasonality and holiday periods. Embracing the right technology will show small-business owners the behaviours of their key customer demographics and help them prepare for the natural ebb and flow of income.

Anyone who has ever jumped through hoops to set up a merchant account knows that with new payment software it has never been easier to get paid. With little setup needed, just about every business can use a mobile credit-card reader, or a mobile invoicing app, to take debit and credit cards.

And as consumer preferences shift, more people are expecting to pay online.

That’s great news for business owners. Receiving payments by card has immediate cashflow benefits for your business, including less time being spent chasing down money, and getting paid faster.

When you are wearing multiple hats as a small-business owner, it can be a constant challenge finding enough time to run and grow the business day-to-day. You are tasked with processing transactions, invoicing clients, recording expenses and chasing payments, all while completing the work you need to do from an employee perspective.

Tracking on the go

With fintech tools, small-business owners are not only able to access their key financial data from any device, but can also send and track invoices on-the-go. Embracing technology that will support you in terms of saving time, and having accessibility from any device, will ultimately improve cashflow. For example, Invoice2go customers typically save three hours a day and are paid seven days faster.

When EOFY arrives, many small-business owners may have nightmares about paperwork, but the reality is less daunting with technology. Capturing transactions with an automated tool removes the paperwork burden when it’s time to reconcile. It is easy to run reports, view digital copies of receipts, and share information with your accountant.

Understanding data is one of the most important things a small-business owner can invest time into. Collecting data on your business and your customers has historically been reserved for the corporates, but now fintech tools bring this ability to small businesses. Having access to cashflow dashboards, customer data and financial statements gives small-business owners a better understanding and overview of their business, enabling them to make smart business decisions and measured predictions.

Almost as quickly as trends change, technology also advances. As consumers demand more, technology can grow and adapt to meet their needs.

Chris Strode, Founder, Invoice2go