Fintech and data synergy for advancing UK SMEs

In the modern business sphere, where the digital realm evolves continually, data is emerging as a key driver of transformation. This evolution is profoundly influential across numerous industries. For the UK’s small and medium-sized enterprises (SMEs), mastering the complex terrain of data represents both formidable challenges and exciting possibilities.

The British fintech Payrow provides specialised financial offerings to SMEs and burgeoning startups within the UK. Below, Payrow identifying essential data types for companies and explores how fintech facilitates small and medium-sized businesses in obtaining and interpreting this valuable information.

Importance of financial information for the prosperity of SMEs

Around 90% of all business enterprises globally are SMEs, contributing to more than half of the world’s employment, according to the World Bank. These small and medium-sized enterprises are vital engines driving the worldwide economy, serving as epicentres of innovation, development, and job creation.

Nonetheless, these entities are commonly faced with several obstacles during their development stages. Challenges include limited access to capital and funding, lack of financial know-how, difficulties in managing cash flows and budgeting, and issues in utilising data effectively owing to the high costs of technological infrastructure and the need for specialised data analysis skills.

The range of data encountered by businesses can be vast. It may include transaction specifics, insights from product metrics like inventory levels and sales figures, fluctuations in the pricing of components and services from contractors, details of employee remunerations, and records of a firm’s revenues and outgoings.

By leveraging data, SMEs can uncover latent trends and market shifts, empowering them to make well-informed strategic decisions. This capability can lead to gaining a competitive edge, enhancing profitability, lowering costs, and reshaping business alliances. Possessing the financial savvy and the tools to develop systems for forecasting and tracking cash flow can provide enterprises with a robust mechanism for early alerts.

The fintech era

For small and medium-sized enterprises, harnessing the power of advanced data analytics tools for insights, decision-making, and enhancing performance is increasingly essential.

While established banking institutions acknowledge data’s value, they often fall short in utilising it effectively. Thefinancialbrand.com reports that while 65% of traditional banks consider data a critical asset, many admit to losing clients due to their inability to translate this data into practical insights for SMBs. Moreover, just 20% of the investment in business banking is directed towards SMEs.

According to an EY survey, SMBs are leaning more towards digital solutions in their banking preferences. The survey found that 46% have shown dissatisfaction with the outdated, paper-heavy onboarding processes of conventional banks.

Offering greater agility, technological sophistication, and cost efficiency compared to traditional banks, fintech solutions are becoming an appealing choice for SMEs. In the marketplace for small and medium businesses, the handling of data has become a key battleground, with mainstream banks competing against FinTech firms.

Fintech entities are enabling businesses to access digital financial services, thus refining their financial management. The adoption of digital tools in these enterprises facilitates data-driven decision-making, with analytics providing deeper insights into their fiscal operations.

Charting growth through effective data utilisation

Accumulating data is one thing, but the prowess lies in its skilful analysis and application, an area where fintech solutions truly excel.

In the modern, disjointed digital environment, companies grapple with numerous data sources, highlighting the urgent need for systems capable of consolidating, simplifying, and interpreting vast data sets. Fintech services, equipped with tools for centralising and refining financial management, provide enterprises with an integrated overview of their financial landscapes. This comprehensive understanding is crucial for crafting astute strategic choices.

Payrow suggests that for emerging businesses, navigating these data complexities is not just about surviving but laying the groundwork for enduring expansion. Certain key factors are essential for every startup and SME to understand:

Recurrent and one-time expenditures: Keeping a close eye on these expenses is vital for the financial well-being of SMEs and startups. Tools that offer an elaborate breakdown are highly valuable.
Equity structures in startups: Modern startups often feature intricate equity structures with multiple stakeholders. In these scenarios, maintaining fiscal clarity and accountability requires sophisticated financial solutions.
Handling ongoing payments: Regular business expenses need careful monitoring to avoid unnecessary financial strains.
Analysis of conversion rates: These rates provide insights into customer behaviour, helping businesses monitor current performance and review past achievements. Understanding popular payment methods can help firms refine their transaction processes.
Identifying decline causes: Understanding why transactions are declined reveals customer-related and internal operational issues. Addressing these can boost transaction success rates and reduce shopping cart abandonment.
Monitoring authorisation rates: This information assists businesses in choosing the most suitable payment provider for certain transactions, a crucial aspect for global businesses.
Payment reconciliation: Imagine a world without the need for reconciling transactions. Technological advancements have revolutionised this area, introducing automated reconciliations to increase accuracy and eliminate errors. Reconciliation involves comparing a company’s financial records against statements from banks or payment providers to ensure accounting correctness. This vital process detects discrepancies, mistakes, or anomalies, safeguarding the integrity of financial records – essential for wise decision-making in business.

Leveraging tech: Empowering SMEs financially

To maintain a competitive edge, SMEs need to stay up to date with the latest technological advancements within their industries. Advances in technology can improve productivity and efficiency, utilise data for smarter decision-making, boost communication and teamwork, broaden access to international markets, and improve customer engagement.

Financial knowledge plays a crucial role in enhancing sound financial management through the use of modern accounting software, cutting-edge payment gateways, and contemporary online transaction technologies.

Sponsored by Payrow.