How Modern Technology Can Improve Business Finances
Modern technology has changed the financial landscape.
From fintech apps to robo-advisors, crowdfunding platforms, and other digital tools. Tech is disrupting the financial sector and the economy as a whole.
When else have entrepreneurs and just everyday people been able to access financing opportunities without taking out crushing loans? Thanks, peer-to-peer lending platforms!
But all of these cutting-edge developments aren’t just for consumers. As a business owner, you too can leverage financial technology.
Whether you’re looking to forecast revenue, budget smarter, or mitigate credit risk — with the right tools, you’ll have better control of your finances and be able to grow faster.
Want to see all the ways investing (pun intended) in fintech can help you improve all those important financial business metrics? Let’s dive in.
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7 Ways Modern Tech Impacts Business Financials
Financial technology, or fintech, has applications in nearly every industry.
Take digital invoicing, for example. Not only can this technology help almost any business ensure faster payments, but it also reduces the risk of entry errors. Other financial tools, like smart contracts, can help automate and secure transactions. Over time, tech like this may improve cash flow and customer satisfaction.
Whether you run a law firm, a flower shop, or a marketing agency, you can make use of these modern financial solutions as well as…
- Automated accounting software
- Budgeting apps
- Financial planning and analysis (FP&A) tools
- Mobile payment solutions
Here are seven ways modern tech like the above can help you improve your company’s finances.
Get Paid Faster with Seamless Payment Tooling
In a 2023 survey conducted on 1,230 consumers, 73% said they prefer digital payments. Their go-to payment apps were PayPal (60%), Venmo (43%), and Apple Pay (32%).
By offering multiple payment options, you can improve the customer experience and reach a wider audience. This can reduce cart abandonment and increase profits, among other perks.
Look beyond credit and debit card payments. Consider the following options, too:
- Mobile payment apps
- Mobile wallets (e.g., Google Pay, Apple Pay)
- Contactless payments
- Cryptocurrencies
Around 40% of consumers aged 18 to 35 are interested in paying with crypto, according to a recent survey. What’s more, 76% of businesses say cryptocurrency payments can increase transparency, making back-office accounting easier.
These payment solutions are powered by modern technologies, such as magnetic secure transmission (MST), near-field communication (NFC), and blockchain.
For example, NFC enables contactless transactions, allowing consumers to pay with their smartphones or other devices. MST does the same thing, but it’s compatible with a wider range of terminals than NFC.
Sell More with Buy Now, Pay Later (BNPL)
Speaking of payment solutions, consider offering Buy Now, Pay Later financing to your customers. With this option, shoppers can pay for their purchases in three or more installments or at a later date, depending on the service provider.
BNPL usually doesn’t involve a credit check, making it accessible to a wide range of consumers. Moreover, buyers don’t have to pay interest.
The Motley Fool surveyed 2,000 U.S. consumers in 2023. More than one-third said they used BNPL at some point, and only 26% of those who chose this option have missed or made a late payment.
Klarna, Afterpay, Sezzle, and other fintech companies all provide BNPL solutions.
By partnering with them, retailers can expand their reach and improve customer satisfaction. This can also be an effective way to boost conversions and average order value.
Note that you’ll receive the full amount upfront, whether or not the buyer keeps up with their payments.
Automate Invoice Processing
Many companies, especially those in the eCommerce space, use automated invoice processing software. This technology can reduce or eliminate human error, decrease operational costs, and
improve cash flow.
Invoice automation can also streamline data governance and compliance processes. These software programs ensure consistent and accurate data entry while providing a clear audit trail for financial transactions.
In some cases, they may also result in faster payments. For example, your invoices could include a payment link or button that allows customers to pay with just one click.
This type of accounting software can also handle a large number of invoices, making it ideal for online vendors. Think about how long it would take you to manually fill in and issue hundreds of invoices each month.
Making the switch could mean you don’t have to worry about miscalculations, incorrect invoice numbers, or missing data.
Mitigate Credit Risk with BI
Companies can also use technology to assess the creditworthiness of their clients, suppliers, and other parties.
For example, major retailers like Costco and Walmart offer store credit cards. When someone applies for a card, they use credit risk management software to determine the customer’s eligibility.
Banks, insurance companies, and leasing firms screen their clients, too. For instance, car dealerships evaluate the credit risk of lessees to ensure they can pay on time.
Let’s assume you’re ready to partner with a new supplier. Before taking this step, assess their creditworthiness to ensure they can fulfill their obligations. Otherwise, you may end up dealing with supply chain delays, inventory shortages, and, ultimately, dissatisfied customers.
What you can do is use specialized software to check and monitor their financial health. Or reach out to a company that provides such services, like Allianz Trade or Dun & Bradstreet.
Make More Accurate Revenue Forecasts
Revenue forecasting enables better financial planning, helping companies manage their expenses effectively. It provides the data you need to allocate resources, optimize your inventory, and make decisions about product development.
A 2024 survey conducted on over 2,000 business leaders found that 84% had missed their revenue forecasts over the past two years. More than one-third of U.S. respondents cited outdated technology as the culprit.
Given these aspects, you’ll want to invest in modern technology that can automate revenue forecasting. Consider the following options:
- Financial forecasting software (e.g., Anaplan or Planful)
- Supply and demand planning software (e.g., Netstock, Avercast, or Algo)
- Sales forecasting tools (e.g., Zendesk, Pipedrive)
These tools collect, process, and analyze historical data, financial patterns, and trends to generate revenue forecasts. Through automation, they minimize human error and biases, ensuring more accurate results.
For example, sales forecasting tools can estimate profits or losses. This data enables businesses to plan their production activities and avoid common issues like overstocking or understocking. It also allows them to make strategic decisions on product launches, market expansion, and acquisitions.
Automate Accounting Processes
According to a Microsoft report, generative AI can automate 36% of accounting tasks. These
include, but are not limited to:
- Expenses management
- Accounts payable and receivable
- Financial reporting
- Data entry
- Invoicing
- Bank reconciliation
- Tax compliance
- Payroll processing
By automating these processes, you’ll save time and cut operational costs. You’ll also deal with fewer errors and a lower risk of data loss.
For instance, reconciliation software can automatically match your payments and other bank transactions with your financial records. Therefore, it allows you to close the books faster and spot fraudulent activities that may otherwise go unnoticed.
Similarly, payroll automation can reduce human error, increase transparency, and improve data security. On top of that, it simplifies tax filing and record keeping.
This type of software may also support employee self-service, allowing your staff to get the information they need without reaching out to the payroll team. Employees can view and print their pay stubs, update their personal details, adjust pre-tax deductions, and more.
If you do your accounting in-house, start by automating basic tasks like payroll processing and expense management. Choose a user-friendly accounting software program, explore its features, and fine-tune your workflows over time.
Minimize Errors with Smart Contracts
Smart contracts are digital agreements stored on a blockchain. They’re self-executing, meaning that they automate the actions between buyers and sellers (or other parties) when their terms and conditions are met.
Let’s say you provide marketing services, and you have just gotten a new client.
A smart contract could stipulate that once the client has approved your work, the payment is automatically transferred from their cryptocurrency wallet to yours. It could also include milestones and release partial payments as each phase of the project is completed and approved.
This technology ensures timely payments while minimizing errors. It also eliminates middle people (e.g., lawyers), resulting in lower costs. Moreover, it increases transparency and helps prevent fraud.
Forbes suggests using smart contracts to automate business processes, including payroll. You can also resort to this option to speed up mergers, incentivize employees, or raise capital.
Power Up Your Finances with the Latest Technology
Modern technology is transforming the business landscape, opening up new opportunities. Contactless payments and other fintech solutions that were once sci-fi are now mainstream.
However, such technologies involve a learning curve and have their share of challenges. One solution is to implement sprint planning to set your team up for success.
With this approach, your staff members will work in sprints of one to four weeks. Each sprint will revolve around specific tasks and goals, such as automating a process or creating a workflow.
Moving forward, go ahead and embrace change to stay at the forefront of innovation. Experiment with different tools, upskill your team, and keep up with the latest fintech trends. Your competitors are already doing it.
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