Banks are a necessary part of the small business landscape, a 2020 survey of SMEs by Statista found that 99% of SMEs work with a bank or building society. Small businesses are often extremely loyal to their bank, unfortunately, that loyalty is rarely reciprocated.
Banks rarely go beyond the bare minimum when it comes to supporting SMEs: products are designed for mass use, but poorly suited to the needs of any individual business. While banks are increasingly coming around on the need for technology and digitalisation, they are followers, not leaders in this space.
Why banks don’t serve modern SMEs
For an example of the issues with banks, let’s look at onboarding. Getting a small business set up with a bank is a frustrating, time-consuming experience at the best of times, and it’s made significantly more challenging by the inclusion of any changes, such as complex entity structures and special purpose vehicles (SPVs). The old-fashioned process often requires in-person attendance at a branch, even following Covid, and can take weeks.
Overall, banks are large, slow-moving institutions. They have historically been successful, and they’re reluctant to rock the boat as a result; innovation is risky, and banks like to play it safe. They’re wrapped up in legacy red tape and long-outdated processes, but every bank is in a similar position, so there’s no competitive pressure to do better. Unfortunately, the very loyalty that SMEs show to their banks also means that they have little incentive to improve.
FinTech’s enter the scene
According to the Federation of Small Businesses, SMEs make up more than half of all UK business turnover. This represents a remarkable opportunity, so it’s no surprise that entrepreneurs have leapt into action. Seeing a clear gap in the market, newer, nimbler companies have emerged specifically to serve the needs of SMEs.
Unlike the big banks, these businesses are eager to innovate and leverage technology to deliver a set of features designed to make life easier for small business owners. Compare the weeks-long process of signing up for a bank with that of signing up with a fintech - which is straightforward, takes minutes, and can be done from the business owner’s smartphone.
Over the past decade, these alternative financial services (AFS) have evolved from plucky start-ups to trusted institutions in the small business world. Providers have built out their ecosystems, ironed out early issues, and now represent a realistic alternative to the old banking giants.
What can SMEs do?
Every SME is unique, and each one has different needs from its financial provider. The first step that small business owners should take is to ask themselves questions about what they need from banking and expenses and the challenges they face. Often, this is something that SMEs have never seriously considered – the big banks are so well established, it’s easy to forget that there are other options or assume banks are the better one.
Many SMEs don’t actually need to work with a bank and would be better off with an alternative financial provider. For instance, modern payment providers offer many of the same services as a bank, yet are far more responsive and deliver a higher quality of service. In fact, many providers connect SMEs with a dedicated account manager from day one, making the transition over as simple and hands off as possible.
For others, a more tech-savvy partner may act as a supplement to the bank, adding capacity rather than replacing it entirely. Many businesses use the bank to store funds while managing them through a tech platform for greater insight into their finances. Combining a core banking solution with specialised solutions for the financial processes a business regularly needs – such as managing employee expenses, international payments, and foreign exchange – is well worth considering for SMEs which aren’t ready to ditch their banks just yet.
The future of SME finances
There’s no doubt that the entry of fintech’s and alternative financial service providers has spurred banks to improve their offering, but they still lag far behind. It could be years until they implement the quality-of-life features that every smaller provider already has. For that reason, SMEs leveraging new providers – whether instead of or in addition to a bank – will have a competitive advantage.
About the author: Simon England is Managing Director at Equals Money.
Industrial And Business Needs
There are POS systems for all kinds of businesses in every industry. Therefore, business owners must know beforehand how the POS system they are getting will work accordingly for their business’s functions, services, and features. Different businesses need systems to manage operations, for example, hotels, restaurants, grocery stores, retail stores, and bars.
Nevertheless, each of these businesses caters to different needs. A hotel may need a system to manage reservations while a retail store will not. A business owner must know the POS system to choose depending on how well it is adapted for their business needs and industry.
Essential Integrations And Support
POS systems need different integrations for them to work efficiently. Business owners need to get POS systems that can sync business applications by allowing them to communicate directly. This saves the time required to accomplish tasks.
Today’s quality POS solutions can integrate cloud-based solutions, scan-and-go apps, and mobile systems. POS systems also need supportive hardware and software. It is best that business owners get systems that can integrate with terminal cash registers, receipt printers, barcode scanners, or credit card readers.
For the best credit card processing for small businesses, a business owner should get a POS system that integrates with the credit card terminal. In addition, the POS system should be purchased contingent on the business credit card usage. Business owners who already have existing hardware should always ask the POS provider if it can be integrated with the new system.
POS systems should offer efficient customer and employee support; otherwise, a business may miss out on revenue. They should be simple to use and set up with intuitive interfaces. Therefore, business owners should include these respective teams in the buying process to test the functionalities. In addition, they should look for vendors who have platforms for consultations, troubleshooting services, and multiple contact options for post-sales support.
Costs
POS systems vary in costs based on the solutions they are to provide. A quality POS system should be affordable but still, support enterprise functionality. Business owners should compare different price points for different systems.
Pricing varies, but POS providers must also be transparent about the same. As a business owner, look for straightforward and competitive prices and consider possible additional costs. Contracts can come with POS system provisions, but they should not be mandatory. If a provider says they do not have no-contract options, they should explain why satisfactorily.
Longevity And Scalability
It takes commitment for a business owner to get a POS system. Therefore, they must ensure that the system they want to get is robust, flexible, and scalable. It should be able to evolve with a business’s growth and keep up with industry trends.
Business owners should not buy a POS system to cater to immediate requirements only. They must account for how practical it will be in the future and the impacts it will bring forth.
When addressing the longevity question, business owners must think about the possible technological adoptions or supplementation and the need for training in the future. If a business owner is purchasing a POS system as an upgrade, they must analyse past scalability issues that a former system may have brought about.
POS Analytics And Reporting
POS systems are excellent for inventory and employee management, and they can drive business sales forward. However, beyond all that, they generate other reports too. For example, a quality system should generate reports for inventory reorders, busiest hours, top and lowest sellers, customer activity, online and in-store sales comparisons, and date range for inventory activities.
A POS system with quality reporting should allow a business owner to check sales progress anywhere anytime to see where they need improvement. It should also allow someone to see average sales, total customers, transaction quantities, and net sales with easy access.
If a business owner can understand the reports their POS system generates, they can match the system better for their business needs.
Final Thoughts
The right POS system for a business should efficiently merge business operations and customer engagement across various locations, terminals, and even franchises. The wrong system can bring forth detrimental consequences for a business. Due to that, business owners need to beware and analyse the key factors above when buying these systems.
As National Small Business Week (May 1-7) gets underway, GreenDayOnline, an online lending platform that offers same day $255 loans, presents three critical investing tips to assist small business owners in weathering the current economic storm.
1. Utilise technological advancements in order to reduce or completely remove the need for additional services
It is possible that using technology to lower fixed expenses will result in the generation of dividends in the medium to long term (for example, digital record keeping or automated revenue management systems to expedite data entry and billing).
2. Market to customers who are already loyal in order to keep them that way
Despite the fact that the cost of new customer acquisition is significant, it is necessary because loyal customers can be relied upon to keep revenue streams continuous and profitability stable throughout time, regardless of the state of the economy. When it comes to generating repeat business, establishing a client loyalty program is one of the most effective strategies available. The provision of discounts to repeat customers, reward programs for frequent customers, or any other sort of advantage in exchange for a membership fee are examples of how this can be accomplished. Customers that participate in these types of programs have a higher likelihood of remaining loyal to a company, which reduces the amount of money that firms would otherwise spend on advertising and recruiting new customers to their products and services.
3. Purchasing in large quantities in order to save money on per-unit prices 3
Whenever a firm operates in an inflationary environment, the expenditures made today by the business are worth more than the expenditures made tomorrow by the same business. This is feasible through the purchase of vast amounts of goods and services. Using this method is acceptable during years of low inflation, but it is extraordinary during periods of high inflation, as the following chart illustrates.
It may sound odd at first, but GreenDayOnline website president and co-founder Tarquin Nemec explained in a business press release that "spending more to save more" is a strategy that the company employs. "However, it is effective," he went on to say. Business owners who adopt a long-term perspective and make prudent investment decisions now to assist reduce long-term expenses will be the ones who gain in the long run, according to the authors.
Recently released economic numbers demonstrate that inflation is continuing to grow at an unprecedented rate, which is unprecedented in recent history. The Bureau of Labor Statistics reported an increase in consumer prices of 8.5% in April, bringing consumer prices to their highest level in 40 years at the time. Businesses and government entities are also experiencing the effects of the recession.
The National Federation of Independent Business (NFIB) conducted a poll last week in which it found that more than 90% of small businesses stated that inflation was having an impact on their operations in some form, with 62% reporting that it had a "significant impact." In addition, the poll indicated that 68% of those who replied stated that they "intend to raise average selling prices in the next three months," according to the findings.
A record-breaking 5.4 million new company applications were filed in 2018, according to the United States Census Bureau, shattering the previous year's prior high of 5.1 million applications filed the year before.
Small enterprises are the ones being affected the most by the current pandemic. While consumption habits have already changed, below are some available funding options and grants from the government and the private sector.
The Impact On Small Businesses
Thousands of small ventures have been negatively affected by the current pandemic. People are trying to lower their expenses so that entertainment, going out, and travelling costs aren’t on their spending list anymore.
While people are learning to become more frugal, it has impacted small business owners who don’t have profit now. Many businesses have already been closed but the majority of them are still trying to survive. Regular consumers have also lost their jobs with women being the most vulnerable stratum of the population.
It’s not easy to keep on paying salaries to your employees, pay the monthly bills, or cover the rent payments when you have no income. Many entrepreneurs need to renew their business model and rethink new ways of building their companies.
There are many grants available to consumers today which may assist your business and help it stay afloat until the situation becomes more stable again. There is a variety of grants, so you may have a closer look and select the most suitable option. We are going to tell you about the best offers and assistance programmes.
Interesting fact: Last year, the number of small businesses in the U.S. reached 31,7 million
American Rescue Plan Act
You can find information about COVID-19 relief options offered by the US Small Business Administration. There are several grants available for consumers and small business owners for the period of the pandemic. Also, you may look through the American Rescue plan Act signed into law by President Biden.
It was signed in March 2021 allowing entrepreneurs to obtain additional funds from the government including $7.25 billion for the Paycheck Protection Programme. Industry-oriented grants allow restaurant owners to qualify for $28.6 billion from the Restaurant Revitalization Fund. Such pandemic relief grants and assistance programmes are designed to help small business owners survive during the quarantine.
The only drawback of such government-issued programmes and grants is that they require lots of paperwork. So, they are quite time-consuming for the borrowers. If you value your time and don’t want to waste it on submitting multiple documents and applications, you may opt for alternative assistance programmes and small business loans from online creditors.
Alternative lending solutions are also popular today as they let common consumers and even unemployed people obtain urgent monetary aid. For instance, 2500 personal loan bad credit is widespread among those who have lost their jobs or simply need urgent money.
While entrepreneurs may apply for special grants and programmes from the government, unemployed mothers and parents may also qualify for financial assistance from alternative lending services. Such small loans are meant to support their needs during challenging times and help them fund their daily needs until they find a suitable job again.
Top Government Grants And Assistance Programmes
The above-mentioned government website offers a wide choice of grants and assistance programmes for small businesses in different industries. The money flows straight from the federal government to ventures.
Certain funding is divided between local and state governments, not-for-profit organisations, etc. So, you may choose between various options and apply on the state or local level. Here are some of the most popular grants available today:
- Small Business Innovation Research Programme (SBIR). If your venture is eager to take part in federal research and expand further in this sphere, you may qualify for this programme. This grant is very competitive and is designed to assist small businesses in reaching their research and scientific goals.
Make sure your venture is profitable and meets additional demands and requirements before you apply. There is some paperwork required to apply for this grant so you should learn about the necessary papers beforehand.
- USDA Rural Business Enterprise Grant Programme. This grant is available for those located in the rural areas of the country. It offers training and assistance to ventures with less than 50 employees and up to $1 million in gross revenue. This is a great support programme for projects in small towns, higher education institutions, nonprofits, etc.
- US Small Business Administration State Trade Expansion Programme (STEP). If you want to grow your company and export your goods abroad, it may be a great option for you. This grant allows small business owners to develop their ventures and export various products. The funding is divided between state entities.
You should ensure your business meets the demands and eligibility criteria to obtain extra cash. This way, you will be able to develop your company, enter foreign markets, take part in trade shows abroad, and create international campaigns.
- Women-Owned Small Business (WOSB) Federal Contracting Programme. This grant is available for women-owned small companies. You may obtain additional financial support through this programme and fund your business needs. This programme also offers funds for counselling, training, and access to extra capital so that women have equal opportunities in small businesses. So, if you’ve been laid off and seek extra financing, you may either obtain a small personal loan for the unemployed women mentioned above or qualify for this assistance programme.
All in all, there are many funding grants and assistance programmes available today for small business owners. Take some time to review the most popular funding options and select the one that meets your current financial needs.
Depending on several qualifying factors, you may either get approved for one of these government-issued grants or apply for a small business loan from alternative creditors. Such funding options are designed to help entrepreneurs support their business needs during an economic crisis.
While every option on this list is a great way to get the extra money you need, they won’t all work for your unique circumstances. It’s important to carefully research what each method of funding involves, who’s eligible and whether there are any consequences further down the line. For some startups, bank loans will be a perfect choice, but other entrepreneurs might be more interested in grants for UK small businesses. Take some time to explore the below before making your final decision:
Government Loans And Grants
The UK government has a range of different loans and grants on offer for small businesses and startups. It can take some time to sift through all the options available, but there are all kinds of funding available to suit individual circumstances. For example, if you’ve been rejected by the bank for a small business loan, you may be eligible for something like a BCRS Business Loan. While this particular option is limited to the West Midlands, it’s worth reaching out to your local council to find out what’s on offer closer to home.
If you’re more interested in applying for a grant, you might be able to make use of start-up and small business growth grants. These are again usually location-specific, so be sure to check if your postcode is eligible for funding. Alternatively, if you’re interested in making your business more energy-efficient, you can look into applying for an Energy Efficiency Grant to support your project.
Grants can be incredibly competitive, which is why it’s worth paying close attention to specific criteria that could apply to your venture. You’ll be able to find grants for things like tourism boosting initiatives and businesses that support local artists.
Bank Loans
If you’ve been unsuccessful in finding government funding in your area, traditional bank loans are always an option for startups in the UK. While many loans will require you to have a good credit rating, some lending schemes are specially geared up to support first-time business owners, which could make them more understanding in some circumstances.
Securing funding from a bank is typically an easier process than applying for a grant, but that doesn’t stop many entrepreneurs from being rejected. If your financial history is riddled with debt or missed payments on your mortgage, you can struggle to get the fresh start you want for your business. Consider taking out a secured loan if your bank doubts your ability to make payments on what you owe. This means that the bank will be able to claim your property or other assets as payment if you fail to uphold your end.
If you do want to pursue bank loans as an option, remember that there’s no one-size-fits-all solution. Before taking out a large, long-term loan, consider whether a bridging or short-term loan could suit your needs better.
Bad Credit Loans
If you’ve tried to secure funding from a High Street bank and aren’t eligible for government grants, there are alternative loans available for people with bad credit. Some of these providers will be available exclusively online, while others will have offices you can visit in person. Remember to be careful when taking out a bad credit loan, as interest can be much higher than on more traditional business loans. Companies like Capify have options available for entrepreneurs with a low credit score, while Liberis Finance may offer merchant cash advances to those in need of capital.
Non-Government Grants
If you had your heart set on a grant but the government couldn’t deliver, don’t lose hope just yet. There are many other organisations that help budding entrepreneurs to get their ideas off the ground if they meet certain requirements. For example, The National Lottery is committed to funding startups and voluntary organisations all across the country. Often designed to help businesses looking to improve their communities, their grants are always worth a look.
Aimed at young people, The Prince’s Trust can be particularly helpful if you’re aged between 18 to 30 and are trying to start your own business. Not only can they help you financially, but they also offer advice and mentoring to support you on your journey. This is particularly valuable for people who are new to business and don’t have any previous skills or experience in starting their own company.
Remember that while you won’t have to pay grants back, you should always ask for a realistic amount in your application. Organisations expect you to fully support your request for a grant with in-depth reasoning and possibly even a copy of your long-term strategy and goals. It’s best to work this out yourself before putting your business forwards for consideration, otherwise, you could be setting yourself up for failure.
How Long Does It Take To Secure Small Business Funding In The UK?
The process of getting the funds you need can vary and often depends on the kind of funding you’re looking for. Getting hold of a traditional bank loan will take considerably less time than applying for a specific grant from your local council. But the main thing that puts off entrepreneurs is getting rejected. It’s understandable to be disheartened after your applications aren’t accepted, but it’s important to keep going. Because there are so many options out there, eventually you’re bound to find something that works for you.
To increase your chances of getting accepted for a loan or grant, speak to an accountant or financial advisor. They can help you find the right opportunities and hone your application to perfection.
The problem is, it can be quite hard for small businesses to get external funds since most traditional lenders are reluctant to invest in them. Because, unlike large companies, they don’t have the equity and resources to compete in the market. But thanks to the emergence of fintech or financial technology in the last decade. With fintech developments, small businesses have more opportunities to scale up and thrive by making financing from lenders more available to them.
Trustworthy lenders can help you with this matter. To further understand its impact, find out below how it expands the financing options of small business owners.
Develop New Approaches For Credit Analysis
Most conventional lenders like banks and credit unions heavily rely on the old credit scoring system when making lending decisions. As a result, small businesses with a limited or no credit history find it too difficult to get loan approval. But fintech has made it possible to expand credit availability by developing new approaches in assessing creditworthiness.
Through machine learning technologies, lenders have a pool of data to support their decision-making. Factors like financial situation, spending habits, and professional background are analysed by the machine to come up with the applicant’s behavioural profile. This gives small business owners more chances to prove their creditworthiness towards the lender.
Simplify Loan Application Process
Small businesses are often viewed by banks and credit unions as risky borrowers. It’s one of the main reasons why they usually require multiple in-person interactions before approving their loan. Plus most of them used manual and paper-based loan approval that normally takes several weeks and even months.
On most occasions, such a lengthy process results in a low approval percentage for small business loan applications. Fortunately, fintech provides easy-to-use online applications, allowing small business owners to apply for loans at their convenience and get faster approval. With rapid loan underwriting, small businesses can navigate and understand their financing options much better.
Provide Credit Directly
Drawn-out application processes and high fees have held back many small businesses from securing short-term loans. Such limitations are impacting the cash flow of thousands of companies. But the need of small business owners to access fast credit is largely recognised by fintech.
With fintech’s advanced loan origination software, online lenders that offer quick cash loans, bad credit payday loans, emergency loans, etc. don't only improve their credit assessments but the process of their loan disbursal as well. They can already provide loans to small business owners using direct money transfers and enforce repayment terms through an online platform.
Create Alternative Forms Of Financing
The fintech industry has undoubtedly provided multiple ways for small business owners to grow and expand. With better automation, speed, precision, and the possibility of lower interest rates, it brings various lending solutions to small businesses and even startups. Below are some alternative forms of financing they have created.
Peer-To-Peer (P2P) Lending
P2P lending is a painless way to get financing with quick disbursals and easy repayment methods. Through automated algorithm-based pricing and underwriting, P2P lending platforms screen all types of borrowers more accurately and match them with the most suitable lender. So even with shorter credit histories and lower scores, small businesses can secure financing.
Invoice Factoring
With accrued late payments, the working capital of small businesses might take a hit. But fintech has made a way to invoice financing technologies to help increase the liquidity of companies suffering from late-payment problems. With a web-based portal, small business owners can get advances from an invoice finance company. They can upload their invoices in real-time and have the amount deposited in their bank account.
Merchant Cash Advance
Small businesses can also get an advanced lump sum of money based on their future credit card sales. They can repay the advance by taking a fixed percentage of those sales until the whole amount is paid back in full. With fintech streamlining the process of credit assessments and setting up dynamic repayment schedules, small businesses can keep their margins and profits still intact.
CrowdFunding
With fintech innovation, multiple crowdfunding platforms allow entrepreneurs to fund their small businesses through a variety of people who want to get involved with their business campaigns. Depending on the type of crowdfunding, small businesses may have to repay the fund or compensate in the form of equity. But besides raising funds, the best part about crowdfunding platforms is giving entrepreneurs opportunities to reach out to potential customers.
Leverage Fintech Innovation To Grow Your Business
Fintech development doesn’t solely make outside financing more accessible to small businesses. It can also help you manage all your financial needs and transactions more efficiently from online lending to accounting and invoicing. You can have an edge over your competitors by leveraging fintech innovation in your daily business transactions and operations.
Small business owners who have been able to survive the initial storm need to understand how the new trends are going to impact the financial structure of their companies. Here are six accounting trends every small business owner should know about in 2021.
1. AI and automation
Automation has been a familiar sight in various fields, and now it's set to improve the productivity of accountants. Artificial intelligence (AI) and automation can be used to learn case-specific tasks and automate resource-intensive, repetitive, and time-consuming tasks.
Automated tasks are streamlined for everyday interactions and it is a good way to prevent human error. A few areas that can be automated are bank reconciliations, workflow optimisation, and forecast generations. By leveraging the power of data-driven AI and robotic process automation (RPA), accountants can prioritise high-value projects, enabling firms to scale quickly.
2. Advanced accounting software
In 2021, accounting software can no longer function simply as an on-site asset. The improvement in cloud infrastructure has pushed companies to adopt flexible, cost-effective, and always-on cloud accounting solutions.
When you're working with a large amount of data and you need to constantly cross-reference them, you'd expect your numbers to be available instantly. Cloud hosting makes that happen, alongside offering you a seamless, real-time collaboration with different parties. The low cost of deployment is another advantage to hosting accounting software in the cloud. Major accounting platform QuickBooks has a host of options you can make cloud-first. Check out the best QuickBooks hosting providers to understand which one suits your business.
3. Big data
With the adoption of technology comes the ability to analyse a large volume of data. Cloud-based software and AI work with data to understand the relationship between variables, and it is up to the accountants to narrow them down to comprehensible metrics. Accountants must evolve into all-around financial advisors and help clients understand what a particular data set means for their business. Increased reliance on data analysis also puts the focus back on the need to secure internal resources and make the data cybercrime-proof.
4. Blockchain
Blockchain technology has gone from strength to strength, and in the future, it will play a pivotal role in accurate data tracking. Blockchain facilitates decentralised ledger for transparent tracking of financial data. It's still in the early stage of growth in the accounting world but financial auditors have started gaining from it. For instance, companies that use blockchain to record their transactions will be able to receive a far more accurate report from auditors than companies without it.
However, blockchain needs to be improved and regulated before its full potential can be enjoyed by accountants. As it becomes more streamlined, accountants will pivot towards validating system integrity and company policies.
5. Digital tax management
Small business owners have had to adapt to the rapid digitisation of tax filing. Accountants will assume a bigger role in guiding customers through COVID-specific policies and the impact of the revamped tax structure. Moreover, the rise of the gig economy and solopreneurs has created a further expansion of tax rules, so accountants will look for unified analytics platforms to update tax reports in a timely manner.
6. Outsourced accountancy
Going forward, companies will increasingly look to outsource a major portion of their accounting tasks to third-party vendors. Small businesses have already started outsourcing to save costs and increase efficiency, and the trend will only get bigger in the future.
The biggest push to managed accountancy services is the realisation that people can now work in remote settings and be equally, if not more effective, in terms of communication and productivity. Since cloud computing and big data will be able to handle most of the day-to-day tasks, small businesses will look to cut down on the labour costs and reinvest in core business operations. On top of that, outsourced accountancy gives business owners an opportunity to leverage industry experts at a fraction of cost.
When the world goes through major economic changes, businesses need to stay abreast of the latest trends to meet the new demands. Small businesses can avoid complacency by actively investing in the technologies that are impacting their business operations, including accountancy. Needless to say, customers will prefer doing business with the ones who have embraced change.
Most small business owners aren’t accounting experts and are happy to use whatever tools they are familiar with to track their expected payments. This might be a messy notebook with illegible handwriting where thousands could be lost just because someone couldn’t read a number correctly.
Many use spreadsheets, which is great for hypothetical planning but can only provide a snapshot of outstanding accounts receivable at a given moment. Maintaining control over all of the processes around collecting and recording payments quickly becomes an overwhelming task. There are many examples of a simple formula mistake leading to massive consequences – such as Reinhart and Rogoff’s, which ultimately changed policy around the world.
Hiring a dedicated resource is a luxury many solo upstarts cannot afford, so they muddle through it themselves and drain their motivation. The brainpower that should be used on growing their business is being wasted on formatting spreadsheets instead.
Many apps can help to streamline the process and reduce the headache for business owners though they may be reluctant to try. In the short term, it’s deceptively easier to stick with what you know even though better methods exist. This is why the apps you choose to help you accomplish anything in business must be simple, intuitive and integrated – otherwise, they just add to the challenge at hand.
One good example of a solution with a speciality in accounts receivable is vcita, a platform that’s been working with small businesses for over a decade and takes into account just how busy the owners are. And because vcita is a versatile business management platform that includes modules for client communications, appointment scheduling, lead nurture and document sharing, the accounts receivable functionalities are all the more useful.
When it comes to accounts receivable processes, growing small businesses need to issue invoices, collect payments, automate reminders and run reports. But these are just the basics. When everything is built to work together with your CRM, messaging engine and service booking system, the value is compounded, because there’s nothing you need to integrate yourself, and the information is all where it needs to be.
Here are three ways companies can use vcita’s platform to reduce friction in their accounts receivable processes.
Cash flow drill-downs to the individual customer level
Maintaining individual relationships once a company starts to scale can be a nightmare. Correspondence might be all over the place in emails, calls, texts, document comment threads and anywhere else. It’s hard for businesses to track the invoices they’ve sent and whether they’ve followed up. They might invent a manual process that only needs a small human mistake to ruin a client relationship.
It can lead to embarrassing situations where a client has been asked for money they say they’ve already paid but you can’t match the payment. A client might slip through the cracks where everyone thinks an invoice has been sent but no one is quite sure, and the company bleeds money silently.
Software providers like vcita make this whole process far simpler. Every transaction and interaction with every customer is displayed in one timeline thread where you can see exactly what services have been delivered, what appointments have taken place, what messages and files have been shared, whether invoices have been sent and whether corresponding payment has been received.
It means that when companies talk to customers, they can do so from an informed point of view rather than asking questions you should already know the answer to. Some companies will love the ability to set up automatic payment reminders, so you don’t have to ever personally bother customers for money.
Segmenting data to reveal what you need to know
Many DIY spreadsheets used by small business owners are a mess. They add columns and formulas as they need them, so it becomes more and more cluttered. As specific situations change throughout the day, keeping the data updated can quickly become unwieldy. What’s more, a simple formula mistake can cause huge relationship damage.
This makes it hard to get a good overall picture of how business is going. Business owners can’t be blamed for procrastinating decluttering until tax season arrives. Then it’s a mad scramble to make sure all the details are correct to avoid a hefty fine.
vcita makes this easy by providing beautiful displays in a way the average spreadsheet user just couldn’t do. Owners can have a dashboard where they can see payments at a glance and filter by status. They can see how much money they are awaiting at the click of a button rather than all the manual steps needed for whatever self-made system they are using.
Your dashboard is updated in real time which can be a life saver as potential problems can be identified early before they get out of control. It makes it far easier to manage the collection of money and stay afloat, and you can even export your data slices for sharing with accountants, financial advisors and other apps.
Auto-populating invoices with services rendered
Invoices are crucially important to the functioning of a small business. The later an invoice is sent, the later the money comes in and the harder it is to deal with all the expenses in the meantime. It’s an opportunity to show professionalism and create a longer-lasting relationship with a client. Something hacked up in Microsoft Word with poor formatting makes a company look amateur and makes clients take them less seriously.
Typing out an invoice by hand leaves so much room for human error and the reputational damage that follows. No one wants to receive a bill larger than they expected and it’s hard to overturn this negative feeling. When you build a new invoice draft with vcita, you can automatically pull in all of the services you’ve delivered since the previous invoice, which makes it easy to catch up on everything due.
It takes only a few clicks to create and send a monthly invoice to the client from within the app. Alternatively, you can set it up to invoice customers every time a service is booked or an appointment is scheduled, even making payment a required prerequisite to ordering these services. Customers can also choose to securely save their payment details in the system, where the merchant won’t have access to any of it, for faster subsequent payments.
This simplicity means business owners can send their Pro-forma invoices, payment requests and receipts faster rather than needing to dedicate time to go through a painful process of manually calculating the sums and formatting everything to look nice and tidy.
One of the more advanced features here is the ability to add a one-click payment button to email invoices. By making the task so easy for customers, it means there is less resistance to paying on time, leading to faster payments. You can also request payment by simply texting a link.
More time for the fun stuff
By speeding up the accounts receivable process, business owners can spend more time on what they really want to do, while tech handles the administrative-financial work.
Business owners can have peace of mind knowing their clients will have a professional perception without all the manual labour it would otherwise take. Accounts receivable is a critical part of any business, and it’s understandable to be hesitant about using unfamiliar software. Yet solutions like vcita are battle-tested and can make all the difference.
Three quarters (75%) of UK small businesses have been rejected by banks when trying to access funding, according to independent research commissioned by Capital on Tap.
The research discovered that access to funding was especially difficult among smaller and micro businesses. Over two fifths (43%) of sole traders have had funding requests rejected while 44% of organisations with 10-49 staff experienced the same fate.
The study also revealed that almost half (48%) of UK small businesses have been left waiting for more than two weeks to receive a funding decision from banks, while more than a quarter of firms (27%) have had funding requests rejected outright.
David Luck, CEO and founder at FinTech Capital on Tap, said: “It’s clear that banks are denying small businesses the chance to fulfil their growth opportunities. Typically, smaller businesses have limited access to credit so the importance of having a facility that can provide a quick cash injection to invest in equipment or make the most of a busy trading period is essential to stability and future growth.”
The research also revealed that there is a strong diversity in the types of credit that businesses are looking to secure. The most popular funding application was for term loans (51%) with overdrafts (28%) and business credit cards (19%) also being very popular options. Out of those companies that had sought funding in the past five years, the majority (35%) had been looking to secure relatively modest amounts of funding, generally under £5,000.
“What we see from the study is that businesses are generally looking for small, flexible credit facilities, whether at times of need or opportunity. This is exactly where banks struggle to service the millions of SMEs in the UK as they are geared for consumers or large corporate clients. The next generation of entrepreneurs expect the flexibility and quick service from banks that they can attain in their personal lives, which includes easy access to funding. We are seeing the success of alternative lenders in the UK because there is a clear demand for this type of fast, transparent service.”
(Source: Capital on Tap)
Xero today announced the integration of Apple Pay through Stripe, making it even faster and easier for customers to get paid. Xero’s 862,000 subscribers can now offer their customers the ability to view and pay an invoice using Apple Pay through Stripe. Invoices paid with a payment service get paid almost 80 per cent faster than invoices that don’t offer a payment service. This new feature is available automatically to everyone on Xero using Stripe where Apple Pay is available.
Small business owners consistently point to delays in getting paid as one of their biggest pain points, which puts a strain on cash flow. Xero customers sent 15 million invoices globally in the last 30 days alone. And based on our current data, over 60 percent of those invoices will be paid late. Xero’s connection to the payment services of Stripe and Apple Pay will help address this concern for small businesses owners and help businesses get paid faster.
“Mobile payments are the way of the future,” said Craig Walker, Xero Chief Technology Officer. “Attaching a payment option to online invoices helps Xero customers get paid almost 80% faster than invoices that don’t use a payment service - so they spend less time chasing unpaid invoices for a more productive and cash healthy business.”
“By enabling these connections with payment services, small businesses are able to offer multiple payment options on an invoice, giving them and their customers choice of payment and also the ability to pay the invoice as soon as it arrives, ensuring they get paid faster,” Walker said.
Currently businesses that want to pay an invoice via credit card need to enter their credit card details to complete the payment. Credit card payments via Stripe mean that customers can confirm payment with Apple Pay using their fingerprint ID on their Apple device to confirm the payment quickly. Businesses who take payments via Stripe and Apple Pay also have an extra level of security. All payments made require a fingerprint or passcode, decreasing fraud, and with it, chargebacks.
"Almost a fifth of online commerce in the United States now happens on mobile devices,” said Cristina Cordova, Head of Business Development at Stripe. “We’re excited to work closely with Xero to help hundreds of thousands of businesses use Apple Pay to get their invoices paid with little more than a fingerprint.”
By connecting Xero users with Apple Pay transactions will be automatically entered and matched against invoices in Xero. Automating the invoicing reconciliation process makes accounting easier for small businesses.
"I advise my clients on the amazing ability Xero has of linking to online payment providers like Paypal and Stripe,” said Brad Sewitz, Logicca Chartered Accountants. “These services have changed the way my clients operate their business, reducing the unnecessary burden of data capturing and positively impacting their cash flow, allowing them to focus solely on what they do best - running their business."
“The small businesses we work with get paid quicker and have greater visibility into their receivables by using Xero invoices with an online payment provider like Stripe and Paypal, Mike Castle at Bond, Andiola & Company.
“With Xero, my clients reduce their dependency on paper checks and, in some cases, save themselves fees associated with having check scanners.”
(Source: Xero)
