FinTech: opportunities for SMEs

FinTech is a portmanteau for ‘financial technology’. FinTech companies combine financial services and products with innovative technologies. Which FinTech applications are right for your business? 

Start using cloud services 

Cloud services, which are accessible 24/7 (you only need an internet connection), enable business owners to enjoy the benefits of user-friendly software at a relatively low cost.   This software is accessible to the public at large, and creates economies of scale. Cloud services, in turn, benefit from integrating the data they collect, which provides opportunities for detailed analyses of, and insights into, companies. Popular cloud applications include those for billing, admin/accounts, and data back-up. 

Benefits of online accounting applications 

You must back up your data regularly to ensure all your accounts are stored in the cloud in time. You can then create links to other systems and applications, which will save you time. Integrated applications will filter out any errors for you, and you will receive remote assistance. Many accounting software applications are linked to your bank’s online banking platform and automatically check whether a specific invoice has been paid. If it turns out the invoice is still outstanding, the application can send your client a payment reminder. 

Crowdfunding: the power of the crowd 

Crowdfunding has become a popular way to raise money to fund companies, particularly in the early stages. Entrepreneurs can use crowdfunding platforms to receive funding from a large number of informal investors. In the Netherlands in 2022, around €1.08 billion in loans were provided through crowdfunding platforms: this is 48% more than in 2021, when a total of €730 million was raised. In 2022, companies raised a total of €972 million through crowdfunding, with the average amount successfully raised being €350,000. The most popular form of crowdfunding is a loan (source: crowdfundingcijfers.nl, in Dutch). 

You no longer need to wait for payment 

Defaulting customers can cause a lot of stress and financial problems. If your customers default on their payments, this constitutes a significant risk for your business continuity. There are several organisations that provide solutions for cash prepayments to companies that cannot afford to wait until the end of the payment term. These services make it easier for you to maintain your working capital. 

Quick and flexible loans 

FinTech also plays a role in loan applications. While traditional paperwork can be very time-consuming, the standardisation of loan applications reduces the application process. Lending platforms use smart data analysis to estimate your credit rating and risk profile – this process is often conducted with bank statements for your business account. You can use digital tools to send this information directly to multiple providers of flash credit. 

Online payment is the future 

With online retail continuing to gain in popularity, traditional cash payments and in-store POS transactions by consumers are in decline. There are numerous FinTech companies that provide digital payment services to small businesses, including iDEAL, PayPal, Adyen, Molly, and Transferwise. This saves time on paperwork, increases conversion rates, is user-friendly for customers, and generates useful data. 

Paying with cryptocurrencies 

Companies that accept online cryptocurrencies, including bitcoin, use payment processing companies such as Coinbase or Bitpay. They receive the cryptocurrencies in their wallets, which they then convert into regular currencies, such as the euro. You can also convert payments with cryptocurrencies directly into euros and have them automatically transferred to your business account, so as to avoid foreign-exchange risk.