Why Adopting Fintech Solution A Good Idea For SME?

Small businesses or SMEs are essential to any economy as they create job opportunities and innovations, thereby directly influencing the economy.Both small businesses and big corporates should co-exist in a healthy economy. SME's are closer to consumers than their corporate counterparts and, unfortunately, are the most vulnerable to market fluctuations, as we saw when the pandemic hit.

Statistics About Small Businesses

According to the SBA report of March 2021, there are over 32.5 million SMEs in the United States.

SMEs employ 47% of the United States' total workforce, numbering a total of 59.9 million people. Almost 90% of SME businesses operate with less than 20 employees and directly contribute to about 50% of America's annual GDP. The report also showed a decreased growth rate of SMEs during the pandemic.

Small Businesses During Pandemic

Most small business industries shut down during pandemics like food, pts terbaik sumatera education, and accommodations. As the latest NFIB report suggests, the U.S. Small Business Optimism Index decreased by 9.3 points from 104.3 in January 2020 to 95.0 in January 2021.The main reason behind this includes

  • The change in business attitude due to physical distancing.
  • The operational restrictions to work with covid mandates.

Some SMEs are on the verge of collapse as they were already at risk financially before the crisis.The recent SME survey by Federal Reserve finds that 90% of SMEs thought they could not survive and applied for government aids provided during 2021.

Post-pandemic Small Business Challenges

From the beginning of pandemics, SMEs faced many issues and continued when the delta variant hit.Now that the omicron variant is in action, it is forecasted to increase only. 95% of SME firms continue to face post-pandemic challenges, according to the SBC Survey of 2021, which includes

  • Weak demand for products/services
  • Government-mandated restrictions
  • Supply chain disruptions
  • Labor shortages
  • The Omicron Challenge

According to the White House, President Joe Biden announced a plan to help America protect against the Delta and Omicron variants and emphasize SMEs to keep businesses open and quickly respond to surges if needed during the colder months.This also suggests the need and importance of SMEs to be ready and fully functional for economic growth.

The Rising Inflation

U.S. Inflation rate is increasing rapidly and reached 6.8% last November 2021, as measured by the CPI.Experts suggest this inflation is temporary due to the stimulus reforms and forecasted to subside only in the middle of 2022. Still, this rising inflation can create quick price hikes making the market unstable.

With rising inflation, the purchasing cost of raw materials also increases, increasing the business expenses.SMEs are most vulnerable due to the low capital behavior of their business.

How To Face These Challenges?

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SMEs need to closely analyze their business and make timely decisions according to market fluctuations and government mandates.For that, SMEs require efficient systems and processes to watch their business closely and make timely decisions

  • In cutting down unnecessary costs to maintain profit.
  • In pricing on products according to market fluctuations.
  • To avoid supply chain issues due to price hikes.
  • To manage inventory according to market fluctuations.

Understanding Fintech Solutions

Financial technology refers to innovations that enhance financial transactions, from digital money to double-entry bookkeeping.Fintech solutions outran banks in 2020 and became popular when the first wave of COVID hit. Fintechs and traditional banks are racing to keep customers with innovative and customer-oriented financial services.

The advantage of the fintech solution over the traditional bank is that Fintech's are already in the digital world and can readily provide innovations compared to conventional banks, which are still in the transformation phase, reluctant to accept new age innovations.

Why Should SMEs Adopt Fintech Solutions?

Most SMEs employ fewer employees; as the SBCS report of 2021 suggests, 65% of Small businesses employ less than four people. Fewer people mean fewer people to manage their business.

SMEs need specialists to take care of the accounting and bookkeeping functions to get a closer view of their business.Hiring a new employee will be a burden for the budget-constrained SMEs. Signing up for all-in-one cloud-based fintech solutions like OnlineCheckWriter.com can benefit greatly. Many of the Fintech's provide digital solutions for their customers.

Features like central accounting and central reporting provided by fintech solutions like OnlineCheckWriter.com can directly improve businesses.

By analyzing these reports, SMEs can identify unnecessary business expenses and avoid them. This centralized reporting feature can aggregate transactions from multiple areas like checks created, deposits made, drafts accepted, and logged cash transactions. The daily, weekly, and monthly reports and various other intelligent reports enable SMEs to closely understand the business expenses and price hikes in raw materials and decide their product pricing by maintaining a profit.

Wrapping Up

SMEs will take little time to adapt to the challenges posed by the pandemics. The government's aid in fighting pandemics, including stimulus checks, seems beneficial to people and small businesses. It also created temporary inflation, leaving the market unstable and adversely affecting small businesses.

SMEs need to be more flexible and fast-acting to the fluctuating market for survival. Adopting new-age cloud-based fintech solutions can significantly benefit small businesses as it can help them closely understand market trends and adapt accordingly.

Fintech solutions provide features like central accounting and categorized reporting, which can help small businesses to act fast according to market fluctuations. Fintech's also needed to understand small business challenges and provide flexible solutions to survive and continue its popularity in the financial sector.

John Smith Ven is a blogger, financial enthusiast, interested in writing and researching about latest trends in finance and technology.If you are an SME just check out

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