Top Secrets For Using Fintech To Manage Small Business Cash Flow Challenges

Creation of a complex network of business activities with multiple payment channels, poor time management, the magnitude of payments to be collected and matched to funding mechanisms as necessitated, throws most businesses into a conundrum

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It is no secret that cash flow management is at the core of every business, and particularly so when we talk about SMEs, wherein it can result in business failure. A variety of reasons can contribute to cash flow challenges, ranging from mismanagement of expenses to encouraging growth without the appropriate funding. The obvious solution to the problem, of course, is proper finance management. Having said that, the creation of a complex network of business activities with multiple payment channels, poor time management, the magnitude of payments to be collected and matched to funding mechanisms as necessitated, throws most businesses into the conundrum, in the first place.


As a solution to this quagmire, fintechs have developed digital tools and technologies that can offer assistance for the diagnosis, management as well as prediction of cash flow, which can help in overcoming the aforementioned challenges.

In order to understand the solutions that fintechs provide, let us first assess, the need for them at the first place.

Why Do You Need Fintech For Cash Flow Management?

To manage receivables: Inefficient receivables can end up in the breakdown of communication between a business and its customers, which leads to significant delays in payment and eventually turn into liquidity issues. With fintech solutions, offering electronic invoicing and automation of the process, efficiency and scalability can be achieved for better cash flow management.

To manage payments: For any business to survive the market and thrive, it needs to have an efficient money management system. The system should be capable of collecting payments on its invoices; failure to do so would end up accumulating bad debt, and eventually, make the firms' operations unsustainable. Fintech has now enabled online and mobile compatible payment systems that can help businesses in collecting payments for services rendered, as well as services, received, irrespective of the currency or location.

To manage employees: Payroll management is a significant upgrade that is provided by fintechs to help companies in the elimination of any manual errors while ensuring proper distribution of paycheques. Such services also help saving up on resources that would’ve been otherwise allocated to the task. Helping your company save two of the most important resources, namely time and money, fintech innovations for payroll management can help in better cash flow management as well.

To gain capital: Proper utilization of short-term business loans can help in better cash flow management. A common way to access adequate financing is via alternate lenders that provide various kinds of working capital loans for short-term needs. Alternative financial institutions are now leading the race for working capital loans that can cater to the needs of SMEs in a shorter amount of time compared with traditional financing institutions.

Secrets To Use Fintech To Manage Cash Flows

Electronic invoicing systems: It is no secret that getting paid by customers is crucial for any business and to make this easier, fintech can grant you the ability to automate these payments, which further helps in the reduction of cash flow challenges. With global payment systems, irrespective of where the money is coming from, getting paid has become simple and instant. The intervention of technology reduces the need for human interaction, which means that the lesser the number of people required to get the job done, the lesser cash to be paid, which means better cash flow.

Lending platforms: Fintech has made it possible for businesses to get access to the funding required by them. Earlier, small businesses had no option but to work with small local banks, but with the advent of fintech, online lending has become simpler and faster. The option of alternate lending has become extremely popular for SMEs, which grants them the working capital needed, speedily.

Privacy and cyber security: Data leaks form a very imminent threat, and unfortunately they are not completely avoidable. Irrespective of the size of your business or the type of business, data needs to be secured, be it personal or of customers and vendors. Fintech has made cyber security an accessible option that can help businesses in improving their security measures. The best thing about this is that you do not need to be technologically savvy to make sure that your privacy and cyber security requirements are being met well, with accessibility and timely assistance being the hallmarks of fintech services.

Discounted instant payments: Gone are the days when 90 days for the payment clearance was the standard time. We all know that small businesses and startups generally do not have that luxury, and the lack of cash ends up causing businesses to miss opportunities. There now exist a lot of resources that can offer a range of options and permit businesses to have access to money much sooner than they would in the past.

Automated payment systems: While the facility of direct debit is not something new, fintechs now have enhanced the ability to leverage it considerably. By automating the process of receiving variable payments, one-off payments, subscription and membership payments, there is less scope of human errors, which used to delay the payments earlier.

Rental management: The fintech revolution is now being leveraged by almost every industry, and everyone wants to be on board, including property managers and landlords. Fintech tools now make it possible for them to manage their tenants as well as their properties remotely. From sending rent notices to accepting payment digitally, fintech solutions boost productivity and ease of conducting transactions.

Granting businesses the ability to serve the customers in real-time irrespective of the location, fintech has now become intertwined with business operations. Providing innovative solutions that can help SMEs in managing and controlling their payments and other transactions, fintech is changing the way the world does business, and granting small businesses the opportunity to thrive, by being able to manage their cash flow efficiently.