Article | August 18, 2021
Treasury management or more generally Supply Chain Finance management is still a neglected topic at many SMEs.
While large international corporations make the investment into expensive treasury management solutions (often part of their ERP solution) and even setup their own In-House Banks, this is considerably more difficult for the mid-corp segment and even more so for the smaller segment of the SMEs. Often SMEs lack the funding, time and expertise to deploy those platforms and often those platforms lack the flexibility required by an SME.
Nonetheless in this globalized competitive market with fast moving cash, even SMEs are in need of an effective treasury management. Every SME has its own specific challenges, due to its specific payment cycles and cash reserves. Nonetheless most SMEs (estimated to about three-quarters) still do their treasury management via (complex) Excel sheets, requiring a lot of manual effort. This gap forms a big opportunity (in Europe SMEs account for more than half of all gross value added) for incumbent banks and Fintechs to offer easy and user-friendly tooling for this. In recent years, more and more Fintech players try indeed to provide an answer to this gap, often via SaaS platforms, which connect easily to the customer’s banks (via Open Banking APIs) and for which the setup cost is limited.
The gains for an SME in optimizing their treasury processes can be very substantial. A good treasury management can reduce costs in multiple ways:
Reduce working capital by reducing the time to collect money from customers, by reducing inventory and/or by paying suppliers only at the payment due dates.
Reduce unpaid invoices by a better follow-up and good debt collection techniques
Reduce penalties (such as administration costs or late-payment interests) due to late payments and indirectly also improve the relationship with suppliers.
Reduce effort (resource workload) for financial management, like the follow-up of payments of incoming and outgoing invoices, automated generation of payment instructions for incoming invoices…
Optimized cash management allowing to keep on your current account only the required cash amount to run your business, thus allowing to invest excess cash, but also to avoid requiring short-term debt when too much cash is invested (and blocked in medium- to long-term assets)
Reduce foreign currency costs and exposure risks by keeping the right reserves of foreign currencies, applying hedging (like swaps or options) techniques, correctly taking forex rate fluctuations into account in future cash flow predictions…
Reduce transaction commissions for bank transactions, by selecting the right banking products, but also by using the right banking partner(s) (especially for international foreign currency payments big price differences exist between different banking parties)
Reduce cost of fraud by improving control, transparency and accountability via a pro-active, automated monitoring of all cash flows, allowing to detect anomalies as soon as possible
This can be achieved in multiple ways:
Setup and optimize the processes and tooling with the help of specialized services companies (like e.g. the offering of BelPay)
Setup or acquire software solutions (often in the form of SaaS offerings, i.e. Treasury in a Box) for cash & liquidity management, like invoice generation and follow-up (including invoice and payment matching), debt collection, incoming invoice processing (including payment), cash pooling, cash forecasting/capital planning… These software tools allow a more pro-active treasury management and reduce manual effort by automating certain steps in these processes. Examples of such platforms are HighRadius, Gtreasury, CashForce, Kyriba, Nomentia, Monite, Pair Finance, AiVidens… But there are also more specialized tools, offering only a specific service, like debt collection (e.g. Virteo, recovr, Pair Finance, TrueAccord, CollectAI, CollectionHub, inDebted, Attunely…), digitalization (through OCR) of paper invoices (e.g. Tangentia, Contract.fit, Metamaze, Klippa, SimpleOCR…), expense management (e.g. Payhawk, Rydoo, Expensify, Spendesk, Pleo, Circula…), account aggregation and payment initiation (e.g. Isabel 6/Ponto)…
Capture revenue by allowing customers to pay for products or services in a way that is most efficient for them and for the SME, allowing to increase sales, but also to ensure the best possible payment ratio. This includes solutions like digital onboarding and management of Direct Debits (e.g. via Twikey or DigiTeal), including a Pay button (e.g. via Twikey or POM) in invoices which allows to pay the invoice with a pre-filled credit transfer, card payment or other payment option, integration with PSPs (like Adyen, Mollie, MultiSafePay, Ingenico, Stripe…) for online payments, digital invoicing allowing to combine invoicing and payment (e.g. PEPPOL platform or offering invoices with immediate payment option via UnifiedPost, ZoomIt or Doccle), "Buy Now, Pay Later" solutions (like Klarna or AfterPay) or new solutions like PSD2 Payment Initiation or the upcoming new scheme of SEPA Request to Pay (SRTP).
Improve integration between accountancy software (and/or accountant) and the cash management solutions and associated bank accounts. Solutions like Silverfin, TOCO, Yuki, OkiOki, Billit, Furoo, Clearfacts, Billtobox, sevDesk, Candis… can provide (a part of) a solution to this.
Usage of solutions for cash management (e.g. international cashpooling, sweep accounts…) and more general treasury management services offered by banks to their customers. These can be incumbent banks or new Fintechs, which specialize in the niche of serving SME customers. Examples are Tide, Qonto, Azlo, Arival, Fyrst…
Reducing costs of international payments and forex transactions via new Fintech offers, like XE.com, TransferWise, CurrencyTransfer.com, WorldFirst, iBanFirst, Ebury…, but also via specialized software tools, like Kantox, FiREapps, Money Mover, Acumatica…
Get cheaper financing via specialized credit institutions and banks (e.g. OakNorth, CapitalBox…), by issuing commercial paper (short-term paper) or long-term debt, via crowdfunding and peer-to-peer lending (e.g. Funding Circle, Auxmoney, LendingCrowd, Iwoca, Look&Fin, Crowdcube…), via Credit Lombard loans or inventory-based loans (e.g. Finventory) or via invoice factoring (e.g. Edebex, Previse, Optimum Finance, GapCap, BlueVine, BillFront, Crowdz…). There are also more and more marketplaces and comparators assisting SMEs to find the best financing option, e.g. Funding Options, BusinessComparison, Crowdz…
Improve risk management (like currency risk, interest-rate risk, market risk, credit risk, counterparty risk…) via trade finance, like bank guarantees (cfr. Ebury), via better authorization and fraud detection mechanisms (detecting patterns and anomalies) or by better assessing counterparty risk (e.g. DueDil, InsideView, PitchBook…)
Apply tax optimizations, by optimizing for different tax regimes worldwide and also optimizing for tax deductions (like e.g. generate revenue on entities which have collected losses in the past)
Clearly the Fintech market for SMEs is in full evolution, but still quite immature. As a result dozens of offers exist, making it very difficult for SMEs (which was one of the reasons in the first place they work with Excel) to select the best and right offering(s) for their company. As such there is a big market for consultancy and other services firms, specialized in helping SMEs to improve their treasury management processes.
Article | July 15, 2021
Last year was challenging for marketers as well as all business owners due to the global pandemic. As a result, it gave rise to every organization's digitalization, and recognized the extensive benefits of cloud computing technology. Any sized organization can take advantage of the effectiveness of cloud computing, and in the case of small businesses, it can be overwhelming. Henceforth, business owners acknowledge the comprehensive and extensive benefits of cloud computing for small businesses to drive tremendous business growth. Integrating cloud computing technology is a new norm of today’s digital world and is not just a catchphrase anymore.
The market for cloud computing is vast. In 2020, the global cloud computing market valued at $371.4 billion, and estimates stated that by 2025 it would rise to a staggering $832.1 billion. According to Statista, Amazon Web Services has a 32% market share in cloud computing.
This blog will elaborate on the benefits of cloud computing for small businesses. But, before we cover up the core aspect of this blog, let us know what exactly cloud computing is and why it is ideal for small businesses.
What is cloud computing?
Cloud computing has been around us for two decades, and we have been using it in day-to-day activities without our knowledge but has gained popularity in just over the past five years. The popularity is basically due to the increased reliance on handling and storing big data.
What exactly is cloud computing? Cloud computing provides end-users (or business owners) to access their data, programs, and applications stored on a remote server anywhere, at any time, on any mobile device via the internet.
There are three different ways to deploy cloud services: on a public cloud, private cloud, or hybrid cloud. In addition, cloud computing provides various cloud services such as cloud storage, cloud backup, and cloud hosting.
Cloud computing services classified into four types:
Infrastructure as a service (IaaS): It is the most basic cloud computing service. You can rent IT infrastructure servers and virtual machines (VMs), networks, storage, and operating systems from a cloud provider on a pay-as-you-go basis using IaaS.
Platform as a service (PaaS): It provides an environment for developing, testing, delivering, and managing software applications on demand.
Serverless computing: Serverless computing, which overlaps with PaaS, focuses on developing app functionality without constantly managing the servers and infrastructure required to do so.
Software as a service (SaaS): Software as a service (SaaS) delivers software applications over the Internet on demand and typically through a subscription. Cloud providers host and manage the software application and underlying infrastructure and any maintenance in the case of SaaS.
Why is cloud computing ideal for small businesses?
Cloud computing has made doing business much easier for all businesses, especially for small businesses. As a business owner, you can gain tremendously by incorporating cloud-based computing into your workflow. The popularity and importance of cloud computing applications for small companies is very clear. It enables increased efficiency, cost-effectiveness, reduces operational costs, access anywhere, reduced risk during the crisis, and improved cash flow helps solve many business challenges.
Cloud technology makes mobile access to data easy for small businesses, thus aids them to be more competitive on a global scale. Companies can reduce IT costs by utilizing innovative products that provide storage, software, and infrastructure via the cloud. Furthermore, cloud service providers' monthly or yearly billing rates can help you avoid unexpected costs such as emergency server repairs.
Cloud computing application has a few setbacks to be considered as well.
Drawbacks of cloud computing are:
• For starters, implementing any new technology necessitates personal training and a practical troubleshooting system both before and after the launch.
• Another issue to consider is security. In general, no business is immune to cyberattacks. The trick is to find a reliable cloud service provider, understand its backup plans in the event of a security breach, and take your security precautions.
Now let us know the distinctive benefits of cloud computing for small businesses in precise.
Benefits of cloud computing for small businesses
More flexibility and scalability
The most significant benefits of cloud computing for small businesses are increased flexibility and scalability in the workplace. Companies with on-premises systems used to and have to purchase server and workstation upgrades to accommodate new users. The importance of cloud computing stems from the fact that it allows you to work from any location and at any time. In addition, employees have more flexibility in and out of the workplace, thanks to cloud computing. Because data is stored in the cloud and web-based applications, you can run your business in the cloud and give your employees access to it at any time and from any location.
Cloud computing applications can be scaled up and down quickly and cheaply. Everything from bandwidth to processing power can be scaled in the cloud. When peak demand has passed, you can reduce your service plan to save money.
Easy data recovery
Data loss can be devastating to any business, especially a small business. Data loss results in wasted money, loss of time, and lost productivity; besides, downtime is never good for business. According to CloudRadar, network downtime costs more than $10,000 per hour.
In-house data backup system setup is out of reach for most small businesses, but cloud computing makes backups and disaster recovery simple for SMBs. The scale and expertise of cloud-based services make data recovery quick and even remotely extracting data from a lost laptop possible. Easy backups are one of the most significant benefits of cloud computing for small businesses.
Improved data security
When a cloud solution is integrated into a business, data is maintained in a centralized location, making it far more convenient to secure centralized data from cyber-attacks than stored on various devices. In the wake of COVID-19, cybersecurity threats have increased phenomenally. Therefore, data security with cloud computing is highly beneficial for small businesses.
Another advantage of cloud computing for data protection is that even if a single device is lost, the data will be safe from unauthorized access. Cloud computing can be used for data protection in authentication and identity, access control, encryption, secure deletion, integrity checking, and data masking. Therefore, it is exceptionally advantageous to rely on cloud computing for data protection for small businesses.
The cost of cloud computing varies greatly depending on the type of cloud service you choose. Cloud computing for small businesses, on the other hand, is highly recommended because it requires far less maintenance. You will not need any other physical IT resources, software, in-house computer equipment, or anything else, which means you will save a lot of money. One of the most significant benefits of cloud computing for small businesses is reducing IT operational costs.
Since cloud-based services are significantly less expensive to use, small and medium-sized businesses recognize the benefits of cloud computing applications appropriate for their limited budget. If small business owners are interested in the efficiency and cost-effectiveness of cloud computing, they must incorporate it into their business workflow.
One of the primary benefits of cloud computing is easy remote access, which can be seen clearly in the pandemic. The most basic example of cloud computing is your email account, which can be accessed from any computer using only your login credentials and an internet connection.
Cloud-based services are now available on mobile apps, so you are no longer limited to devices. Cost efficiency of cloud computing is essential for small businesses, and cloud-based applications can result in cost savings. The benefits of cloud computing for small businesses are endless, but remote access has an edge.
Frequently Asked Question:
How do small businesses use cloud computing?
Small businesses use cloud computing services via broadband internet and smart mobile technology. Cloud computing enables small business owners to store and back up their expanded company data. In addition, this technology is used by small businesses for accessible operations and applications.
What is the best cloud computing solution for a small business?
Popular cloud computing solutions for a small business include Microsoft Azure, IDrive, Microsoft365, Google Drive, Dropbox, Shopify, Mailchimp, and SpiderOak.
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"text": "Small businesses use cloud computing services via broadband internet and smart mobile technology. Cloud computing enables small business owners to store and back up their expanded company data. In addition, this technology is used by small businesses for accessible operations and applications."
"name": "What is the best cloud computing solution for a small business?",
"text": "Popular cloud computing solutions for a small business include Microsoft Azure, IDrive, Microsoft365, Google Drive, Dropbox, Shopify, Mailchimp, and SpiderOak."
Article | June 2, 2021
LinkedIn recently published a pocket guide on the LinkedIn tools to help build brand awareness for your company on its platform. The guide includes 5 separate tools you can use to assist you in building your company’s brand awareness. But LinkedIn is quick to point out that the tools are not a magic potion – you still must do the work to understand your audience and target the right content toward them. Here are the top 5 tools for brand-building on LinkedIn
Article | April 15, 2020
Accounting professionals throughout the Americas are operating in unprecedented times with the impacts of COVID-19. With information changing daily on government stimulus packages, many of our accounting and bookkeeping partners are quickly adapting and helping their clients navigate through these tough times. Technology (especially the cloud) has enabled firms to seamlessly work-from-home and collaborate across the country. As well as find new ways to help their clients. Here are three reasons why moving your practice online allows you to better operate and support your small business clients during this time.