When we consider the future for small and medium-sized enterprises, we turn our attention to lots of things: working environments, team structures, shared parental leave, holiday pay and so on. But, what about their finances in particular? Here’s what the future of finance might look like for SMEs…
Ever more mobile payments
Mobile payments are on the rise in every sector imaginable: customers and suppliers alike expect to be able to make instant payments from their smartphones, and the rise of revolutionary technology such as ApplePay is likely to ensure that digital payments continue to take center stage. However, it’s likely that some fairly ‘old school’ methods of making payments will still be prevalent too. For example, some businesses will make and receive payments via check, which means secure and professional check window envelopes will be still be a necessity. Similarly, suppliers, customers and other parties will continue to make (or at least want to make) payments via check book, so businesses will still need to keep using fraud-proof checks with tamper-proof coatings.
Accounting will continue not only to be done online, but more specifically within cloud systems. Smart devices and apps will sync documents and pieces of software used for accounting to improve the efficiency, reliability and accuracy of a company’s accounts, which means businesses will continue to save ever more time and money. However, this also means that the risk of cyber attack is likely to continue to grow, so businesses will need to continue to improve and monitor their online security.
Easier to get business loans
If there’s one thing every SME is going to continue to need, it’s money. While it’s true that it’s difficult to secure a business loan for a startup, with SMEs being subject to rigorous interviews and credit testing, it might be easier for small businesses to secure business loans than it has been in the past in an increasingly digital world. The application process is smoother than ever given that applications can easily be completed online, credit scores and reviews can be easily checked by both parties, and there’s better access to information than ever thanks to the internet.
Alternative financing options become more common
Currently, bank lending is the most common source of finance for small businesses and entrepreneurs. However, business loans and investment from venture capitalists aren’t the only way a business can secure funding. That’s something that’s beginning to become apparent, and it’s likely that businesses will continue to seek alternative financing from methods such as crowdfunding.
According to Morgan Stanley, the ‘alternative finance’ market could be worth almost half a trillion dollars by 2020, and will continue to increase from there. And it’s easy to see why: peer to peer lending means that businesses can circumvent the constraints placed upon them by traditional lenders, provided they can make a good case for themselves, securing ‘buy in’ from the masses. And, as a bonus, they’ll have started making headway into their marketing efforts too, bringing their business concept to the attention of potential customers.
These are just a few ways the changing face of finance may look for SMEs in the future – who knows what else is around the corner?