Integrating SME’s cash flow and accounting management – Fintech shows the way for Banks

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When it comes to maintaining accounts, only a small segment of owners of micro and small businesses actually understand the intricacies of cash flow management.

Figures reveal that a growing number of enterprises in the micro sector do not graduate to become SMEs due to insufficient financial  and accounting management and its resultant downside on the performance balance sheet.

According to an industry watcher, there is a growing trend amongst micro small business entrepreneurs to remain small, partly because they find it easier to handle the accounts of a micro or small industry based operation than grow bigger and face the challenge of managing larger number of personnel and accounting figures.

They are simply inept at managing their accounts.

Yes, some of them do hire freelance or part-time accountants to handle the tasks, but such ‘quick-fix’ methods do not deliver the goods in full, it has been noted.

Though 95% of most of the businesses handled by banks come from the micro/small scale sector, and even if that percentage make up for a huge portion of the GDP, managers in the banking circles admit that it is pretty tough to service this sector.

Several business units are fraught with the continuous problem of hirin g an accountant at the year-end, and with the pressure of financial year-end closing etc., the consultant accounts person is forever on a mad scramble to put the records together and tabulated in a hurry. This often leads to unnecessary information gaps and errors in calculations and similar weaknesses in the final picture.

The good news is that slowly but steadily the scenario appears to be changing.

With Fintech applications entering the scene, also with Small and Medium Business based fintech operations now possible, several SME banners are resorting to their banks and financial institutions to access the banking industry’s digital tools via the Fintech mode.

This improves their services quality, with the banks supporting their baseline with service offerings that are more innovative in the digital quality for functions like invoicing, accounts receivable, reconciliation etc.

From the bank’s point of view, involvement of Fintech in the process renders them a competitive advantage in this sector.

As the Fintech units engaged by the banks sign up the clientele from this sector, it can serve the bank managers serve their customers better by the integrated measures. – offering the SME sector a one-stop shop to do all their financial and cash management.

This unified platform keeps all of the data across these metrics in a single place, making it easier part time accountant or bookkeeper come tax time.

Cash-flow predictability becomes much closer to reality and easier to handle for the small business clientele.

What’s more, today, with Fintech worlds offering diverse integration possibilities, cross-country exchange of data, aggregation of scrap information, and inter-department billing, cash management and accounting abilities – all, can be manoeuvred easily, efficiently with a single Fintech platform.

As for SMEs struggling to stay afloat due to cash flow management inabilities, this and similar Fintech experiences certainly have come as life-saving measures, and a great way to step into the future with new confidence.

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