26 November 2020

From Expense Management Software To Digital Banks: 5 Fintech Tools That Can Help Businesses

by Rachelle Lee

Ask any large legacy firms or small start-ups, and they would all agree: Digital and fintech tools are essential for any business operation. They have become essential for successful companies. From apps to online programs, they all serve to streamline the many operations in your business.

The best part? You can automate most processes or tasks nowadays with the uprise in digital transformation – this includes your financial services. Financial technology is tech-driven products and solutions aiming to improve and streamline monetary transactions.

For example, accounting and bookkeeping can take up a significant portion of time for businesses. Having these processes automated allows for greater efficiency and productivity.

As new tools develop, businesses will be exposed to more options for processing payments, conducting money transfers, and acquiring funding. You might wonder – what are the top solutions that prove helpful to any size business regardless of segment or application? Let’s explore tools that can assist any business with better financial management.

Whether it is managing corporate expenses or using cryptocurrency, here are 5 fintech tools that businesses should consider using:

  1. Digital banks
  2. Virtual payment cards
  3. Expense management software
  4. Blockchain technology
  5. Alternative financing

1. Digital banks

Large, well-established banks dominate the financial services sector, but digital banks are the next frontier. Operating online, digital banks allow users to open accounts and conduct monetary transactions without needing to step foot in a physical bank. This cuts the number of administrative tasks and frees up time that businesses can spend elsewhere.

2. Virtual payment cards

Many of us are familiar with the concept of the corporate credit card. That little piece of plastic allows employees to make purchases as they carry out their jobs in the company name.

The advances in fintech tools have brought us virtual cards. It works similarly to a Visa corporate prepaid card, but as the same suggests, it operates virtually. You have real-time control over how employees use the card and its balance level. 

Most businesses provide their employees with a single physical credit card. Employees use the card to cover any purchases online or offline such as meals, travel, supplies, subscriptions, or monthly recurring bills.

Stored via computer or smartphone (or other mobile devices), the virtual card is for online purchases. It offers more flexibility and greater security versus its physical counterpart.

Are virtual cards right for you?

Consider the following questions when deciding if a virtual card would make better sense than a physical card:

  • Does your firm book travel through a centralized booking system or use a particular airline or hotel chain? 
  • Do you have business subscriptions, or required to make monthly recurring vendor, utility, or advertising payments?
  • Is greater online purchasing protection against theft or fraud a concern or necessity for you, even if it’s just for peace of mind?

In most instances, a virtual card outperforms the physical version. You can set up multiple cards and assign them for use on specific platforms or for different categories. For example, one card for travel, one for supplies, one for subscriptions, etc.

In addition, virtual cards provide real-time insight into your company spending. You can monitor card balances, spot unauthorized purchases, and ensure compliance with company policies. This increases the financial security of your business.

Since it’s a prepaid card, you avoid the added headaches of late credit card settlements, overdrafts, or interest payments.

Recommended reading: Virtual Cards: Protection, Prevention and Payments

Expense Management System

3. Expense management software with fintech integration

Keeping track of business finances gets more complicated as businesses grow. For companies that want to stay on top of company spending, having an online spending management system is the way to go. Expense management software can cut time spent on processing claims, finding discrepancies, and ensure better compliance.

This software comes with automated expense reporting. This way businesses can review their expenses at the end of the fiscal year and make better financial decisions for the following year.

You might be thinking, “wait, isn’t this covered by my accounting software?” It is true that accounting and expense management software are related. Many people may see the latter as a sub-function of the other. But there are distinct differences.

Accounting software is an umbrella term. Expense management focuses on the finite task of processing and oversight of expenses initiated by a firm and its employees on its behalf. In its most simplistic form, think the tracking of travel, entertainment, supplies, or cyclical expenses such as wireless phone bills.

What to expect from your expense management system

The top expense management solutions assist your company with handling employee expenses, reimbursements, and travel requests. In addition, they address the minutiae of expenses – receipt tracking, enforcement of spend limits and policy adherence, and maintaining compliance (internal and external). Time-consuming tasks that required a full department of individuals to complete are mostly automated. 

How does expense management software fit into the category of fintech solutions? It’s all about the integration!

For a top to bottom expenses and reimbursement solution, you should choose expense management software that integrates not only with your accounting software. It should also have payments functionality. 

Payments integration, in particular, streamlines your expense cycle – from payment to reconciliation. It ensures unified reporting and visibility, and cuts time and, ahem, expenses.

Recommended reading: How to Future-proof Your Organisation Through Your Expense Management Software

4. Blockchain technology

Blockchain technology has the power to revolutionize a range of business sectors, though its impact has been mostly limited to financial institutions. The term blockchain refers to the technology involved in establishing a public ledger recording the online transactions across a peer-to-peer network.

You can do this without the need of validation by a central clearing authority. Blockchains are often decentralized, adding to their transparency and security (private, centralized blockchains are in use). It can not be edited or altered but only added to.

Blockchain sets the foundation for cryptocurrency, virtual currency intended to act as a medium of exchange. Encryption is utilized to verify transactions and monitor the development of new monetary units.

Business applications of blockchain technology

It is not only the underlying foundation for cryptocurrency that lends itself to creating transparent financial transactions. But blockchain has several business-related applications across various segments.  

At first sight, banking and financial institutions appear to gain the most immediate advantage from using this fintech tool. But one might view Blockchain less in terms of financial transactions and focus more on transactions of data.

In healthcare, you can apply Blockchain for storing patient records. Once placed in the chain, no one can alter the records. Only authorized individuals with an encryption or privacy key (patient and health care provider, for example) can access the information.

Other uses include monitoring supply chains (verifying the production line), smart contract applications, property transactions, and voting.

While the technology is evolving, Blockchain and cryptocurrency offer better transparency, accurate tracking, and a permanent ledger of all transfers. This has the potential to improve efficiency in financial transactions and reduce costly charges.

5. Alternative financing

Banks have been the go-to source of funding for many businesses. However, they have stringent requirements that small businesses might not be able to meet. Due to these strict terms, fledgling companies turn to alternate financing options made possible or more accessible by fintech.

These include pitching to venture capitalists, angel investors (the show Shark Tank isn’t popular by accident), starting a crowdfunding campaign, or using online peer-to-peer (P2P) lending networks! With fintech tools ramping up, monetary transactions have become much more simplified. Crowdfunding has become a pivotal source of funding for companies for several reasons.

First, it taps into the public’s need to be part of something. Many products get their development dollars thanks to public donations that buy into the process of creation. 

That evolves into the second reason crowdfunding works – the thought of buying access to something new and innovative. Many companies that employ crowdfunding do so with special access or rewards for those earliest contributors. The bigger the reward, the more funding might come your way. Finally, many individuals who pay into new ventures do so because it makes them feel good. 

Do you run a non-profit, where you focus on addressing and solving issues to make the world a better place? Crowdfunding is an ideal avenue for acquiring capital. The same goes if your business carries a specific purpose and a social message.

Not only will you gain the necessary funding to grow your business, but you’ll spread your goals and message at the same time.

Bonus fintech tools: Cloud-based accounting software

Accounting software is arguably the most fundamental business tool. Businesses employ accounting software to aid in the recording and tracking of all manner of financial transactions. 

Of course, accounting software is not a fintech tool in itself, but it is at the core of any business’s financial transactions. Therefore, it should work alongside these solutions.

The software allows you to trace your purchases and cash flow, monitor sales records, manage invoices, and keep tabs on all liabilities. This includes your accounts payable, investments, or funding. The most robust solutions feature modules for inventory management as well as tracing the financial relationship between a firm and its vendors.

Before businesses began the process of digital transformation, accounting applications ran as locally-managed hardware and networking programs. 

Currently, cloud-based applications help make accounting software easier to onboard and use. They can be integrated with other fintech tools – such as expense management software – to automate your company’s accounting. 

Recommended reading: 5 Costly Accounting Mistakes Made By Small Business Owners And How to Avoid Them

Conclusion

As fintech tools continue evolving, this list will very likely expand to include more tools. One of the biggest benefits is the ability to reduce barriers to entry for small businesses. No more long processing times for payments, expensive accounting services, or limited means of funding.

With new technology, businesses can increase their efficacy and continue finding better ways to serve their customers. Kick-start your business’s digital transformation with Volve! Contact us to find out how we can make your corporate expense management a breeze.

Rachelle Lee
Growth Hacker
Prior to scaling next-generation financial services, Rachelle lived out of a suitcase across Asia working on a 3-year research plan gathering customer insights and synthesising consumer decision journeys for global creative agencies, engaging with businesses on growth marketing, brand storytelling and customer engagement models for future business growth. She still drinks too much coffee, doing meaningful work with trailblazers and innovators to bring greater literacy to spend management solutions.

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