The Impact of Technology on Finance for Small Businesses
This is a guest post from Jori Hamilton (see bio at the end). Thanks Jori…!
Tech is advancing all the time, and with it, small businesses are gaining all-new abilities when it comes to managing their finances. New software and systems allow for greater automation and quality assurance, but what exactly will this mean for small businesses?
As the potential of financial technology (fintech) grows, so too do the effects that this technology has on small business processes. Explore the developments in modern fintech, then learn what these systems can do for your ventures.
When it comes to the modern world of fintech, the innovations to keep in mind all revolve around big data, artificial intelligence, and the tools that stem from them.
Big Data and AI
Data collection powers just about every industry these days, and finances are no different. For small businesses, the ability to host information and seamlessly coordinate data in one comprehensive platform can make all the difference in terms of clarity and transparency.
Then there’s AI. Artificial intelligence represents any process that would typically involve human-level intelligence. Only the beauty of AI technology is that it can handle data with scale and precision that no human being can match. Applied to fintech platforms, AI can analyze data, make predictions, and catch human errors with ease and success.
Big data and AI in combination improve upon one another to create seamless financial technology. In short, these tools equate to less time spent on administrative and accounting tasks through integrated payment and billing information across accounting platforms, as well as the potential to automate invoices and bill pay.
This kind of software is an example of technology that uses both big data and artificial intelligence to streamline the process of accounting for anyone in the industry. While every software comes with its own challenges, these platforms can help you coordinate tax laws, data protection regulations, and specific employee payment information to build a more efficient financial system.
Tech Made Possible by Big Data and AI
Now, technological trends like the 5G wireless networks and blockchain data communication lend even more potential to these automated systems.
Blockchain, for instance, is the technology that makes cryptocurrencies possible and it offers data security and transparency to any accounting system. Because blockchain immutably stores transaction data on a decentralized database, accountants are using this technology for triple-entry methods that streamline the auditing process.
These tools act to mitigate the risks of human error that can get small businesses into trouble. Considering that 27.5% of accounting professionals report such errors in their enterprise systems, this tech is invaluable.
But error correction is not all new financial technology is doing for small business finance.
Advancing fintech in small businesses makes for all kinds of possibilities. On the one hand, you have the automation potential which saves time and reduces human error. On the other, you have methods for improving the quality and accuracy of your financial data through software-as-a-service and cloud data platforms. In essence, these tools are democratizing fintech to make high-value solutions available to just about everyone.
Here’s what you should know about these invaluable benefits.
Automation without Job Displacement
One of your main concerns with integrating new technology into your accounting department may be that automation will drive away your accounting professionals. This, however, is not the case.
In fact, the demand for accountants is set to grow 6% by 2028. This is because a set of human eyes will always be needed to ensure proper coordination with fintech systems and audit the results for guaranteed success. In turn, the additional time that automation lends to financial professionals allows them to explore greater solutions for the businesses they serve, thereby increasing the value of accounting professionals.
With more time and potential, accountants are helping businesses grow.
Efficiency and Scalability
As a result of these improvements, businesses are saving time and money while developing the strategies they need to stay ahead in a complex economy. Estimates show that with a highly automated payroll system, accountants are given back an estimated three to five hours of work per day. This is all time that can be spent developing plans for greater business growth.
For a business to not just survive but to thrive, its professionals need time to thoroughly analyze the data they collect and create plans for the future. When Covid-19 hit, we all wished we had made better preparations for inevitabilities like a global pandemic. With more time, your accountants can make financial plans aided by AI-predictive technology to grow no matter economic changes.
These efficiency benefits mean accountants can competitively adjust pricing, pay rates, vendor options, and any other financial data to help you make the best business decisions.
In short, financial technology makes growth easier.
Ways to Streamline your Finances through Tech
It might all sound good on paper, but applying new tech in a small business can be challenging. Adopting new software to meet your business needs can be frustrating for employees and customers alike. So how do you streamline your finances with technology in a way that works for everyone?
Here are a few tips and suggestions you can use to make the process easier:
- Invite feedback and suggestions from workers across departments.
- Make a list of your financial goals and explore tech platforms that will help you fulfill these goals.
- Invest in employee education to ensure adequate use of new systems.
- Sharpen your cybersecurity efforts, including employee best practices for data hygiene.
- Hold an open-door policy to help employees through the integration of new systems.
By following these strategies, you can develop a plan to streamline your financial system and revolutionize your small business. An effective payroll and invoicing strategy alone can save you countless hours. Meanwhile, integration with modern cloud systems allows for more effective cybersecurity practices all with the competitive edge that comes from comprehensive data applications.
As technology advances, the impact on small business finance will be overwhelmingly positive. After all, this technology can be an accessible way to expand your market and grow your business until you’re no longer small.
Jori Hamilton is an experienced writer residing in the Northwestern U.S. She covers a wide range of subjects but takes a particular interest in covering topics related to business productivity, marketing strategies, and HR solutions. To learn more about Jori, you can follow her on Twitter and LinkedIn.
Shawn Kinkade Kansas City Business Coach