Published : 6 years ago, on 22/09/2018

The most prevalent challenge facing SMEs and Startups is having to juggle all aspects of business without necessarily having the internal resource to do so. The balance between outsourcing critical tasks to professionals or take them on themselves can often mean the difference between achieving sustainable business growth, or not. Consequently, FDs within SMEs and Startups often have an all-encompassing role, which includes strategy, governance and employment, in addition to number crunching.

With data predicted to benefit the UK economy by up to £241 billion between 2015 and 2020, utilising financial technology is an integral step to take to ensure company growth and prosperity.

Managing Director of The Numbercrunchers, Howard Smith, advises on how to face up to initial business cash-flow challenges: “The first is very manual – agree terms from the onset and talk to your suppliers. When a business is cash-flow challenged it can feel like everyone is against you but in reality everyone wants you to succeed so talk with them and explain. Also, make sure it is clear and easy for your customers to pay you. Do not create barriers to receiving money. Finally control unnecessary costs. Have a look through your direct debits – do you have any subscriptions you are paying for but are not using?”

Financial Manager of The Accountancy Cloud, Laura Beales suggests the key areas a company will benefit from tackling first when it comes to FinTech: “It really depends on the company and the stage they are at. For a fast growing business I think big savings can be made as companies grow by reducing the core costs spent on admin around expenses etc. But for smaller businesses with cash flow issues automated debt chasing and cash-flow management tools can make a huge difference. But I would also recommend that they invest the time and resource in understanding the product and getting the processes right to support proper use of the product – people often see FinTech solutions as a shiny box that will answer all of their problems but I often see companies using a small proportion of the capabilities of the FinTech they are using.”

The Numbercrunchers is a specialised small business accountant for accounts, tax, bookkeeping, VAT and payroll, and investigates the inner workings of businesses as a whole to find the best matched cloud solutions to enhance performance. Award-winning accounting and finance solutions, The Accountancy Cloud, help build the tech startup community, solving real life challenges with industry expertise and technology.

Both leading accountancy firms have revealed their ‘Top 5 Tips’ for Startups and SMEs to consider when overcoming financial obstacles using FinTech:

1. Powerful Spend Automation Tools

“It is amazing how many companies do not do cash-flow forecasting before they have any issues. It is important to do a cashflow forecast from the outset. Cash is king when doing accounting. You need to monitor all costs closely and really challenge yourself and your team on which of these costs is actually contributing to business growth. Hold staff accountable for what they budgeted and get them involved in the conversation as required.” — Laura Beales, Financial Manager of The Accountancy Cloud

London FinTech Soldo was specifically created by entrepreneurs and banking experts united by the search for a simple and effective way to manage the flow of money inside organisations of any size. The company recently commissioned YouGov to speak with 4,000 companies to identify the trouble points in the cash flow cycle across business functions. The research revealed that the most important concern for FDs in 2018 was managing their company spend. It also revealed the headache of unreconciled and badly reported company spending – 36% of Financial Directors said they spent unnecessary time every month doing financial detective work to find out who spent what.

“The FD is the glue between the workshop floor and the boardroom. You can make a real difference. Companies now have the power to use FinTech to maintain control and increase visibility on their expenses whilst also retaining productivity. For instance, companies like Soldo that offer smart company payment cards, can provide a straightforward means of automating the expense management process. Also put in protection levels. Define who can sign off what spending, have dual signatories, and make sure you can fulfil all credit which you extend to employees. There is a lot that can be done to help your business these days, and so you are obligated to do it.” — Howard Smith, Managing Director of The Numbercrunchers

2. Payment Solutions

Utilising fully integrated global payment platforms provides a simple solution to cash-flow problems every business encounters. Stripe, Paypal, or GapCap (if running a larger enterprise business) can streamline the process of invoicing and receiving customer payments, enabling the use of developer-centric technology to optimize and grow revenue.

3. Customer Relationship Management

According to recent Salesforce research, 39% of growing SMEs would rather sleep on a bed of nails or walk across hot coals then give up their current Customer Relationship Management (CRM) system. The software allows business to better understand both their current and prospect customer bases. Sales CRMs such as Pipedrive and Freshsales were built for minimum input and maximum output, helping accelerate sales and deliver projects with ease.

4. Human Resources Management

As a result of exponential growth, key areas of the business become more industry specific and staff recruitment increases to accommodate. The next logical step in this venture would of course be to invest in Human Resources (HR) management, to ensure all internal operations are running as smoothly as they are externally. Software solutions like CascadeGo (formerly known as Octopus) not only have the capacity to keep an employee directory but also build detailed reports, monitor internal operations such as holiday requests, sickness and employee engagement, manage specific development programs, and vastly improve employee accountability by keeping a robust record of critical communications.

5. Accounting

Grappling with various accounts can be not only overwhelming but also time consuming. Accounting software such as Xero, Quickbooks and Sage offer cloud-based accounting software with a variety of features including automatic bank and credit card account feeds, invoicing, accounts payable, expense claims, fixed asset depreciation, purchase orders, and standard business and management reporting. All financial data is stored in the cloud on a single unified ledger, allowing users to work in the same set of books regardless of location or operating system.

Beales adds further insight to how financial departments can keep control and visibility on company expenses, whilst continuing to retain productivity: “Have appropriate controls in place to encourage staff to behave. For example, spend limits for staff and ad-hoc claims audits. Also make expense claim submission as easy as possible for staff – I used to work at a large company and the system was so archaic it would literally take hours to complete a claim if you had been away with work for a couple of weeks. As a result people just didn’t bother adding VAT etc. which must have cost the business a fortune. Moreover, try to get people into the habit of submitting expenses on the go. It will mean you have real time information but it also makes them much less likely to lose a receipt.”