We spoke with Bernadine Geary, Director, Cashflow Finance at Fundamental Business Finance, who provided some insights to the...
Why SMEs embrace the “Cloud” for business loan approvals
Understanding modern working capital optionsTeam Waddle
How you apply and get approved for a business loan has radically changed, here’s why:
If cloud accounting growth is correct, 2018 will mark the year entrepreneurs take to cloud storage, inventory, finance, time-sheeting and other types of hosted solutions to run their businesses.
SEE ALSO: The Tech Savvy Entrepreneurs Roadmap to Working Capital
The major theme here is to increase efficiencies without outlaying large costs to implement new technology once you’ve made the move online. It’s simply not acceptable to have any offline systems operating in 2018’s modern supply chain. Read about GE’s Brilliant Factory to see how it’s done.
We understand that for established businesses changing over to cloud accounting services such as Xero, MYOB or QuickBooks Online may at first seem to add additional costs. This couldn’t be further from the reality.
One you have your data online you’re free to:
- Add-on new services with ease (like lending)
- Change providers within moments (instead of costly migrations)
- Provide access to third parties for reporting
- Allow employees to work remotely
- Save endless hours, double handing and admin
Having systems online can allow you to test/implement new services such as inventory with little to no investment that integrates across your entire supply chain.
You should do your research when deciding on which cloud accounting provide to go with. You’ll need to decide which add-ons you will use and whether they work with your cloud accounting provider first. Try this: Top 5 Things To Consider When Choosing Accounting Software
Luckily, you can trial them before committing to one and they do suit the majority of operators big and small.
Business lending has moved online
There’s an online business lending surge taking hold across the world which is now establishing itself in Australia.
Finance options have been isolated to fixed term unsecured lenders and modern invoice financiers such as Waddle however; you will see even more providers popping up within the next eighteen months.
With the growing popularity for cloud service providers across the globe, more and more businesses are opting to run their accounting online. This has opened up new methods for lenders to access business data quickly and efficiently for loan seekers willing allow access.
Lenders automate the loan application and risk processes, resulting in extremely fast loan approvals compared to traditional lenders. Check out this report from KPMG – Asia Pacific Alternative Finance Industry Report.
The types of loans being offered are evolving quickly, with most loan types still more expensive than traditional business banking loans however, when compared, banks secure loans by fixed asset such as real estate and online lenders provide credit on an unsecured basis or against the receivables of a business.
Will the Banks be able to adapt?
Banks offer all encompassing services for businesses such as traditional established loan products and a vast amount of transactional services. Huge infrastructures have been developed over enormous periods of time that benefit SMEs greatly.
Online lenders cannot compete with these value added services, however they do provide quicker, least resistant paths to working capital.
New lenders are steaming ahead, accessing up-to-date real-time financial information. This is part of the reason banks are looking to partner or invest in new lenders that asses lending approvals through complex algorithms, purpose built for one sole purpose.
To compete with a bank (or partner), online lenders should be solving critical issues:
- Innovative signup processes
- Real-time applications
- Data integrations
- Customer API’s
- Novel or evolutionary product
- Exceptional customer experience (CX)
Customers are exceptionally informed, well researched and expect transparency. If you’re producing anything less, you’ll need to re-think the strategy and expect the customer will always win.
Can online lenders compete with Banks?
There is no doubt that online lenders are here to stay in Australia, but are they providing serious alternatives to banking products?
The answer is yes and no. The challenge that technology entrepreneurs should be tackling is creating real bank alternative-lending products, instead of expensive “me too replicas” that are not sustainable for business owners as long-term debt.
There will always be a need for quick short-term business loans and borrowers will always be willing to pay a premium for the service.
If you decide that switching to the cloud isn’t for you then you’ll certainly be paying a higher price now and in the future. Slower loan approvals and increased times to funding is the traditional method compared to lenders that can integrate with your existing systems to automate lending.
With automation comes efficiencies, both for the borrower and the lender, driving down overall costs.
Key point before you leave us: With increased options comes the increased chance of choosing the incorrect loan option. Each product varies in costs, mechanics, contract terms and should be matched correctly by a professional.
Consult your advisor or reach out to firstname.lastname@example.org for one our preferred network partners.
Find out more about Waddle advisors here.
Inside Waddle regularly shares growth stories, thoughts on #Fintech, lending, company culture, product strategy and design.
Waddle gives small businesses the tools to accelerate cash flow & grow without growing pains. Works effortlessly with Xero, MYOB & QuickBooks.