How Fintech Helps Business Advisors Deliver Better Outcomes for Their Clients
Tucker Mathis — December 10, 2019 It’s never been easier to pay bills, stay on top of accounts and even get access to credit.
Innovations in financial services applications are not only making transactions faster and more transparent, they also make it possible for users to organize and view data from various types of accounts, providing valuable insights about what an individual, or business, does with their money.
The growth of Fintech is driving this trend. The nexus of technology and financial services can be a game-changer for business advisers. These new and powerful tools can deliver an accurate, comprehensive, real-time view of a client’s financial health, and give them the means to glean valuable insights that can help them save money and chart a more profitable course.
Beyond Accounting Software
Businesses typically rely on off-the-shelf accounting software that churns out a fairly limited, if useful, set of details about their books.
Their bookkeeper or other accounting professional will generate month-end snapshots such as an income statement and balance sheet. This is essentially a backward-looking snapshot of a business, offering a limited path toward a more forward-looking, strategic outlook.
Business advisors generally work with this baseline to provide counsel on how their client can better manage their finances. Here’s where the new class of Fintech solutions can make a big difference.
When businesses use integrated, cloud-based software to manage all of their finances, they open the door to proactive work such as mapping out a big-picture strategy, an area where a business advisor can really add value.
The key is in linking the digital platforms used to handle everything from making payments and processing payroll, to automating invoicing and tracking employee work hours. This integration makes it possible to analyze data from the various components of the business in a way that yields more thorough, intelligent business forecasting.
Consider the task of cash flow analysis. A business advisor can more easily and accurately forecast a business’ cash flow when the firm uses integrated financial software.
This type of approach provides an up-to-the-moment view of a company’s payables including payroll and receivables, and can be used to automate tasks like invoicing and bill payments in order to maximize available cash ahead of expenses, such as payroll or an essential purchase of supplies.
The result is something every business can use more of: strategic flexibility.
Valuable Insights, Better Outcomes
Armed with more useful accounting data, business advisors are likely to offer more valuable insights, such as identifying whether a marketing campaign is justifying its cost, or which products or services the company should focus on to maximize sales in the next year.
Business advisors can also glean valuable insights when a small business client connects their payroll system with project profitability software. This enables them to offer clients both short-term advice and long-term advice, such as “you’re overbudget on phase 1 of your project,” or “you’re not adequately covering the cost of your transportation needs.”
Not Just for Clients
An integrated system connects a business’ financial transactions in one place automatically, which can help business advisors build projections that translate into more profitable decisions for their clients.
Fintech software can also help business advisors manage their own business, while handling their client-facing tasks more quickly and efficiently. A recent study by Schwab Advisory Services found that nearly 60% of independent financial advisory firms planned to invest in new technology this year.
Digitized, cloud-based software connects advisors to their clients easily, making it a snap to share charts and other presentation elements remotely. There’s also little to no need for manual data entry. Spending less time on tasks that can be automated means more time available for business development activity.
As we close in on the start of a new decade, the wave of Fintech innovations that’s transforming business is expected to continue growing. Last year alone, global, venture capital-backed Fintech funding jumped more than twofold to $ 40.3 billion, from $ 18.3 billion a year earlier, according to CB Insights.
The trend increases the likelihood that an integrated, software-led approach to managing finances will be more widely adopted by small businesses eager to remain competitive and save money — and that’s good news for business advisors tasked with the job of guiding them to a brighter future.
This article was originally published on the author’s blog and reprinted with permission.
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