Fintech is simply a term that refers to advances in financial technology. This technology helps with banking, lending, payments and much more. Fintech is meant to make financial services more efficient, and it also makes them much more useful and more accessible to startups.
5 ways fintech benefits small businesses
Consider some of the ways this technology provides easier access to financial solutions for startups:
- Fintech lending platforms
Not so long ago, getting a business loan almost always meant visiting a bank. This process required complex applications, lots of documentation and usually, a long wait. In addition, traditional banks tended to look for established business credit reports and owner equity. Startup companies usually couldn’t satisfy these banks requirements, so they had to do without the traditional bank loans.
Some emerging Fintech solutions allow business owners to get easier access to business funding. For example, some lenders allow applicants to complete the loan process online. Business owners don’t need to gather documentation because they can simply link online accounts to their application.
In addition, these new lenders have the ability to judge applications by using different kinds of information, so they don’t always need to look at just credit scores or owner stakes. Best of all, many of these loans can get approved right away so small businesses can get funded within days, or even hours.
- Online purchase processors
In the past, taking credit cards may have required a merchant account and expensive credit card machines. Companies like PayPal and Stripe now allow entrepreneurs to accept payments, send invoices and even pay creditors and employees via a computer. Merchants can therefore accept money by transferring from one account to another and these technologies also allow them to accept credit and debit cards without a merchant account.
This new wave of online payment processors doesn’t just make it easier to accept payments online; they also allow businesses to accept money and make payments with mobile phones. Even the smallest startup can accept payments with one of these payment processors, the right app and a smart phone. As another example, a company called Square sends out free credit card readers that work with mobile phones for businesses that plan to use them.
- Mass payment technology
These days, many advertising networks, affiliate networks and other internet businesses rely upon partners and affiliates. In turn, these companies need to send out mass payments, which can be a very complex task. It is made especially complex because many of these companies do business all over the world, so they have to conform to regulations in different regions and countries.
A company called Tipalti has emerged with a SaaS solution that simplifies this whole process. It allows companies to make payments to many different individuals who live all over the world. Meanwhile, the service keeps the payers in compliance with anti-terrorist, banking and other payment regulations.
- Fintech for check payments
Some small businesses have a hard time managing their cash flow because they have to wait for checks to arrive and then to clear. These days, the process of writing checks can be done entirely online, and this makes it much faster for companies to access their funds. In many cases, it is also more convenient for customers, so it truly is a win-win situation.
For example, new technology from Zipmark allows customers to pay online. The service processes the payments overnight, so the business has money in its accounts by the next day. This kind of technology is particularly useful for landlords and other real estate companies that accept monthly rental payments. Businesses can therefore offer online payments and then get paid quickly.
- Bill-paying tech
Some startups may have trouble managing their own routine bills. A small business owner might hope to delay payment until the due date to help manage operating cash, but at the same time, these businesses don’t want to pay too late because they may incur late fees, damage their credit and get a bad reputation.
A service called Check can help with this process. Check gives business owners a place to consolidate all of their bills in one place. The service also helps manage these payments to ensure they get paid in time. Even better, it can pay the bills online, so nobody has to worry about stuffing checks into envelopes and looking for stamps.
How can fintech help your startup grow?
Every new company needs to accept payments, pay bills and learn to use financial services to their advantage. Fintech solutions allow business owners to conveniently manage their finances from their computer or smart phone. They may also make these services more accessible to very new or very small companies.
As a startup founder, all you need to do is find the fintech companies that suit the needs of your unique company. If you have a financial issue you need to solve, it’s very likely that you can find a fintech solution to help.