The financial technology (FinTech) field grew and developed rapidly as a response to the financial problems we face, from making financial information more accessible to addressing the lack of financial inclusion in various countries. Small and medium-sized enterprises (SMEs), in particular, can benefit from the digital solutions offered by FinTech. For instance, FinTech offers e-payment and bookkeeping services that SMEs can take advantage of.
But most of all, FinTech can provide business financing solutions for SMEs. The growth of any small and medium-sized enterprises (SMEs) is dependent on the health of their finances, especially on having the appropriate funding. Certain business models within FinTech, such as peer-to-peer (P2P) lending, can be an alternative source for SME working capital loans.
FinTech as an online financing platform
To grow, SMEs need working capital. SMEs often choose to apply for loans to finance their business development. However, traditional financing products can have regulations, criteria, and processing time that are incompatible with SME needs. Often, requirements for collateral can stop a promising SMEs from getting the financing they need.
FinTech models such as peer-to-peer lending offers a solution: by building an online financing platform for SMEs. Since it is online, the application process tends to be faster and simpler. Certain P2P platforms also have apps and a small business owner can easily apply for financing through the app. The loan product also keeps SMEs in mind, with no required collateral.
FinTech as an accounting and bookkeeping service
Small businesses sometimes neglect the importance of accounting, even though it is crucial for any company to stay aware of their financial condition. Well-managed financial statements will help SMEs identify problems they are currently facing and how to bring the company to a better, more profitable place. Sometimes, small businesses simply lack the capital to hire an accountant.
These days, some FinTech platforms provide accounting technology to help manage SME financial statements. The platform also allows SMEs to have an easier invoice and payment process. Many of these accounting services are based on cloud servers so business owners can access their data anywhere, anytime.
If you do use cloud-based service providers, remember to implement the appropriate safeguards. Read more on “How to Protect Your SME from Cybercrime”
Fintech provides electronic and digital payments
FinTech digital payment solutions, such as online and mobile payment options, along with multination and multicurrency options will help businesses gain a simpler way to manage financial transactions. The electronic and digital payments solutions will especially help small businesses sell their products and services to a wider audience than if they were only dependent on cash.
Digital solutions and innovations pioneered by FinTech bring great impact for SMEs. By utilizing FinTech innovations, SMEs will more easily adapt to the digital age and grow their operations.