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Smart Tech Partnerships are Vital in Driving Better Access to SMB Finance

Small and medium-sized business (SMBs) are often cited as a major economic driver and force for job creation, and it’s for good reason; with SMBs making up over 90 percent of all US businesses, while also employing 47.5 percent of the country’s entire workforce. But, despite their significant impact on the economy, many still encounter difficulties in securing the financing they need to be successful. 

While challenges in accessing and securing finance for SMBs have always existed, the Global Financial Crisis (GFC) of 2007/2008 caused lenders to take stock of their lending practices and implement higher capital costs and tighter regulation around SMB funding, making the challenges for SMBs in accessing finance more cogent. But, in the same way the phoenix rises from the ashes, the GFC ushered in a new era of disruptors, birthing multiple FinTech platforms with a simple aim: to find innovative ways to originate, assess credit risks, and ultimately reduce barriers to the way businesses access finance.

It’s for this reason that smart FinTech partnerships are vital to an SMBs longevity, and considering half of all business fail within their first five years - despite the rise of FinTech platforms - it’s important to understand why not all Fintech platforms are suitable for an SMBs needs. A key consideration in understanding this is: SMBs have different financing needs than their larger counterparts. 

Think about it: while financing is a key component of every business, both large and small, the impacts of low cash flow affect large companies and SMBs differently. How? It’s simple: large companies often have sufficient capital to cover essential business operations when waiting for a loan approval or invoice payment, while cash-strapped SMBs do not. Because of this, the same FinTech platforms that are useful for large companies, may not be as beneficial for SMBs. 

As such, there are some crucial considerations for SMBs when deciding which FinTech platforms are worth partnering with. These include:

1. A Fully-Integrated Suite of Tools
Sure, an SMB can use multiple platforms to manage their finances, and there are a lot of platforms out there; some invoice-specific, some accounting-specific, and some dedicated to invoice financing. The problem, however, with using multiple platforms is that these tools aren’t quite as effective as when they’re working together, resulting in lost invoices, delayed payments, and poorly-kept records.

Because of this, SMBs should source fully-integrated platforms that integrate multiple financial aspects into a single platform: from invoicing and reconciliation, to cash transfers and accounts payable, everything is tied together.

2. Platforms with Accountability
When talking about blockchain, most people think about bitcoin and other associated cryptocurrencies. But blockchain is about so much more than just cryptocurrency - in fact, it’s the next revolution in when it comes to record-keeping systems. Why? Blockchain enables businesses and tech platforms to generate trusted data in a perimeter-less security infrastructure, creating a single source of truth.

In other words, blockchain fosters strict accountability, and it’s for this reason that when sourcing a financing platform or partner, SMBs should look towards those who utilize blockchain for record keeping.

3. The Ability to Improve Cash Flow Through Invoice Financing
Late or unpaid invoices cost SMBs as much as $3 trillion globally, with one in ten invoices failing to be paid on time. As such, SMBs should partner with FinTech platforms who can improve cash flow through invoice financing.

For the uninitiated, invoice financing enables SMEs to improve their cash flow through advancing the cash value of unpaid invoices, which is deposited immediately into a businesses bank account at an affordable interest rate. Because of this, a key consideration is sourcing the right platform with the most competitive rates.

While it’s clear that FinTech platforms have helped fill the void banks have left through their barriers to accessing finance, SMBs still need to be smart in deciding which platforms to partner with. By applying the above considerations when making these decisions, SMBs can enjoy easier access to financing, clearly kept records, and, through simplifying all aspects of finance via a single fully-integrated platform, a dramatically decreased workload. 

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Payson Johnton

Payson Johnton

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This post is from a series of posts in the group:

Fintech innovation and startups

Disruption, destruction, harmony and creation; Fintech’s new frontier – a place to discuss the cutting edge of innovation.


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