Technology is the driving force behind productivity growth, allowing companies to leverage limited financial and employee capital in more efficient and effective ways. Every sector has seen major upheavals in recent years as new technologies have been developed to streamline processes and reduce costs, but few have had an impact wider than “fintech” revolution we have seen over the last decade.
For years businesses have been reliant on expensive accountancy services to help them keep track of their finances. Offices were filled with file cabinets filled with bills, invoices, and other paperwork that had been diligently filed away for the accountant to analyse and turn into financial statements to be shown to investors and end-of-year figures to be provided to HMRC.
Today, billing and invoicing has moved to the cloud. Quickbooks, Xero, FreeAgent and other services give company founders a simple and low cost way to manage their company’s income and outgoings within a single interface that will also automatically create reports and help them submit the relevant information to HMRC. These services let business owners monitor their company’s financial situation in near real-time from their laptop or smartphone, giving them the opportunity to spot cashflow issues and other problems sooner and the chance to mitigate them before disaster strikes.
On their own, the cloud-based accountancy and bookkeeping services have saved business owners countless hours of works and many sleepless nights. However, thanks to recent Open Banking innovations, they have now evolved into platforms that integrate with bank accounts, payment processors, email providers, insurance brokers, and other services. With the right combination of tools, it is now possible to issue invoices, take payments, and track financial transfers with a just few clicks.
Some financial apps can monitor email accounts and automatically import digital receipts as purchases into the company books or let you take a photograph of a physical receipt and using optical character recognition (OCR) that too can be automatically added to the books. No longer do business owners need to spend hours manually entering the details of each sale or purchase into their books, it is all done with the click of a button or a tap on an iPhone screen.
Expenses have always been difficult to track for businesses. Some companies asked employees to spend on their own cards and invoice the company for what they spend, whilst others issued certain employees with company cards, trusting them to keep the card safe and only spend limited amounts. These options created either an administrative or a security headache, but by creating virtual company cards that are separate companies now have a better option. The transactions on these cards can be monitored and automatically imported into a company’s accountancy platform, but critically they are prepaid cards so a company’s total financial exposure can be limited to the figure they set.
Bank accounts have changed too. Internet banking has become standard today for both consumer and business accounts, and challenger banks like Tide, Starling, and Monzo have re-imagined what banks can be. They will integrate with cloud-based accountancy platforms, but they are able to innovate without the huge technological dead-weight of traditional banks, which means lower monthly fees or sometimes none at all. They will let company founders track spending, automatically dividing expenditure into categories, and let them move their money around into pots so that there will always be enough left over to pay bills or the tax man.
Embracing these new technologies can be daunting for established firms with complex workflows already in place, but those that do will reap the rewards. Not only have these new technologies brought down costs but also significantly reduced the administrative burden of running a company, freeing founders up to spend more time doing what they love – growing their business.