What fintech services do businesses need and why?

Nowadays more and more people tend to create their own businesses in order not to depend on someone, to be their own bosses. It’s true that your own company could bring you a good income. However, you may come across various difficulties in managing and financing. 

For this purpose, we have made for you a list of services that could come in handy and facilitate your work. Read on to discover them all!

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What is fintech?

According to the online dictionary, the term “fintech” refers to new digital and online technologies used in banking and financial services. The term is quite broad. From cashless payments to crowdfunding platforms to robo-advisers to virtual currencies and more, it covers all of this. For your business, this means a rapidly growing market that gives you options. What kind of services are considered fintech and could come in handy with your business?

Management services

Small businesses usually struggle with cash flow. Statistics from the U.S. Census Bureau Small Business Pulse Survey show that just 28% of the businesses surveyed had enough cash to function for three months. Among the 66% of companies with 150 or fewer employees who took part in Brainyard’s Fall 2020 State of CFO Role survey, cash flow remains a top challenge.

Owners of small businesses often depend on their own resources to cover shortfalls. According to the Federal Reserve Small Business Credit Survey, more than half of respondents used personal savings or funds from family and friends to fund their businesses within the last five years.

Some 88% of those who have sought outside financing—their reported next step—have used their personal credit scores for this purpose.

Small businesses struggle with cash flow due to variable revenue patterns for seasonal enterprises, a lack of accounts receivable systems, and difficulty estimating expenses and deciding where to allocate funds.

It is important to tightly control inventory during a downturn to ensure that money is not tied up in unused goods or raw materials. Inventory management benefits include improved cash flow and the ability to fill customer orders quickly and reduce the amount of unsold stock.

Make sure your cash flow analysis is current, as well as projecting out three months.

In addition to providing several payment options, cash flow management best practices include upselling and cross-selling related and higher-margin products and services to increase revenue per customer.

Using an automated accounting process can facilitate accurate projections and make invoicing more timely, and accurate-thereby increasing cash flow and accounts receivable collections. Using automation also enables businesses to benefit from early payment discounts and negotiate with suppliers for better payment terms so that more cash is available to use.

Insurance services

Would you be covered if a client were injured at your business, given that the estimated average claim may reach $30,000?

As a small business owner, you should weigh the following forms of insurance, depending on the nature of your business: general liability, product liability, professional liability, commercial property, and home-based business insurance, which are all bundled into a business owner’s policy.

For companies that have employees, it is a requirement that they have commercial auto insurance and workers’ compensation insurance. Small businesses can save on workers’ compensation insurance, as 75% of them overpay for the coverage.

If a cash crunch arises, being aware of every option you have is vital. Ensure the business is protected from risk by monitoring cash flow, keeping up-to-date on alternative funding options, leasing assets, and managing taxes.

Funding services

A Hartford study found that small businesses typically seek funding from banks as their first source of external funding. The owners are more open to alternative lenders than traditional lenders: 42% of owners under 34 are open to alternatives to traditional lenders. 

The pandemic may have given fintech companies a boost because many of them were approved to accept PPP applications.

Creating a financial statement is a critical first step, as it provides a formal record of your company’s financial activities and current status, as well as a snapshot of how you expect the company to perform in the future. Audits, financing, and investment activities require the use of financial statements.

Alternative services consist of crowdfunding and crypto platforms.


Crowdfunding

It appears to be the most popular type of alternative financing. Kickstarter and Indiegogo are two examples of reward-based crowdsourcing popular among small businesses. Investing in these platforms offers “investors” presales or other rewards in exchange for donations. 

Despite the fact that the U.S. Chamber of commerce claims the average campaign raises a modest $7,500, some campaigns do particularly well. For instance, the game “Exploding Kittens” eventually raised approximately $8 million on Kickstarter.

Additionally, small businesses can raise funds through crowdfunding.

Peer-to-peer loans constitute debt-based crowdfunding. You can get loans or promissory notes from P2P lenders like Kiva, and Lending Club to raise capital for your small business at a fixed interest rate.

In response to regulation crowdfunding, private companies can raise large amounts of capital by offering and selling securities-currently a maximum of $1,070,000 in a year. In this form of crowdfunding, businesses must provide information to the SEC, investors, and broker-dealers. Additionally, SEC regulations require all transactions to be made online via an SEC-registered broker-dealer or funding portal.

What is the potential of this route? The SEC estimates that 539 offerings have raised the minimum amount of funding requested between 2016 and 2018. The median amount raised was about $107,367.

Crypto loans

Digital currency platforms, which have become more and more popular worldwide, offer a wide range of services. Thus, you can not only buy crypto but also borrow it. 

For example, the CEX.IO crypto exchange has a wide range of services to offer: Instant buy/sell, spot and margin trading, loans, etc. 

Loans at CEX.IO

If you need cash urgently, using your digital assets as collateral for loans can be a reasonable solution. Unless the current price of Bitcoin is high, selling Bitcoin to pay expenses will result in potential losses. Nevertheless, you can borrow against your Bitcoin holdings and keep the potential of your crypto investments. 

CEX.IO Loans allow you to monetize your digital assets by borrowing fiat currencies. The loans range in price from $500 to $500,000, and the repayment terms vary from a week to a year. 

Furthermore, crypto loans are an excellent option for business, trading, and investment strategies. An operating and growth loan can cover the costs associated with the growth and operation of startups and self-employed individuals. A crypto-backed lender can improve the liquidity inflow to the platform. So traders and investors can increase their prolonged market activity. 

CEX.IO Loans is not the only option useful for business. Namely, you can set a cryptocurrency price widget for website to allow your visitors to monitor BTC prices without switching to another tab. 

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