26 November 2020

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

by Rachelle Lee

Few businesses today, including both large legacy firms and small startups, would argue against the necessity for fintech and digital tools. They have become essential for successful companies. It doesn’t hurt that no matter the process or task, there’s a good chance there’s a digital tool to help you out. A piece of software, an app, an online program all serve to streamline the steps involved in running a business. They improve a business’ overall operations and an organization’s financial needs are no different.

With ‘digital transformation’ impacting all aspects of business, financial services are one of the latest to undergo digitalization. Financial technology, also known as fintech, are tech-driven products and solutions. They aim improve the way monetary transactions are carried out. For many businesses, accounting and bookkeeping can take up a significant portion of their time. Having these processes automated allows for greater efficiency and productivity.

Financial technology is particularly helpful for smaller businesses and startups that operate on razor-thin margins. Most have limited capital to invest in large scale solutions. Some top systems are affordable, accessible, and easily deployed. And they scale as your business grows.

As new tools are constantly being developed, businesses will be exposed to more options for processing payments, conducting money transfers, and acquiring funding. What are the top solutions that prove helpful to any size business regardless of segment or application? Let’s explore fintech 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 can better be spent elsewhere.

2. Virtual payment cards

Of course, we are all familiar with the concept of the corporate credit card. That little piece of plastic that allows employees to make purchases as they carry out their jobs in the company name.

Virtual cards, such as a Visa corporate prepaid card, follow a similar concept but do so, yep, you guessed it, virtually. But you also have real-time control over how the card is used, and its individual balance level. 

Most businesses, provide their employees with a single physical credit card. The card is used to cover any purchases an employee might make. These can be online or offline, for meals and travel, for 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 considering if a virtual card would make better sense than the 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.

And because 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 spend management system is the way to go. Such software can cut time spent on processing claims, finding discrepancies, and ensure better compliance. This software also 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 now 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 seamlessly with your accounting software. It should also have payments functionality. 

Payments integration, in particular, dramatically 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.

This is done without the need of validation by a central clearing authority. Blockchains are often decentralized, adding to their transparency and security (private, centralized blockchains are also 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.

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

At first sight, banking and financial institutions appear to gain the most immediate advantage from using the technology. 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, the records themselves cannot be altered. They are only accessible via those with an encryption or privacy key (patient and health care provider, for example).

Other uses include monitoring supply chains (verifying where products originated or how they were produced), 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 as well.

5. Alternative financing

Banks have always been the go-to source of funding for many businesses. However, they often have stringent requirements that small businesses might not be able to meet. With traditional funding mechanisms more stringent than ever, fledgling companies turn to alternate financing options made possible or more accessible by fintech. These include pitching to venture capitalists, angel investors (the show SharkTank isn’t popular by accident), starting a crowdfunding campaign, or even using online peer-to-peer (P2P) lending networks! With technology, monetary transactions have become much more simplified.

Crowdfunding has become a serious 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 the carrot of 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 simply do so because it makes them feel good. 

Is your business a non-profit, with a focus on addressing problems encountered by underprivileged segments of the population? Then crowdfunding is an ideal avenue for acquiring capital. The same is true 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: 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 financial technology tool in itself, but it is at the core of any business’ financial transactions. Therefore, it should integrate with these solutions.

The software allows you to trace your purchases and income, monitor sales records, manage invoices and keep tabs on any and all liabilities. This includes your accounts payable, investments, or funding. The most robust solutions also 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 were often run as locally-managed hardware and networking programs. 

Now, however, cloud-based applications help make accounting software easier to onboard and to use. They are capable of integrating with a multitude of tools – such as expense management software – to fully automate a company’s accounting processes.

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

Conclusion

As technology continues evolving, this list will very likely expand to include more fintech 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 fintech tools, businesses can increase their efficacy and continue finding better ways to serve their customers.

Kickstart your business’ 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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