Recent Banking Technology
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Recent Banking Technology
We have seen a significant increase over the last couple of years in technology firms providing financial services to small businesses. This has led to some helpful products being launched in the last 6 months that business owners should be aware of. Some of the financial products that we recommend to many of our clients are the “Budgeting via Banking” offerings. Let’s explore the concept behind what makes this so beneficial to small business owners.
Most small businesses struggle with cash flow, and owners often “pay themselves last”. The traditional focus of accounting and financial reporting basically reinforces the concept that the profit calculation is Revenue – Expenses = Profit. This implies that the profit of the business is going to be what is “left over” after everything else is taken care of. However, most of the time there is not that much left over. Once a business owner starts to view their business operations from the standpoint of Revenue – Profit = Expenses, they will get creative and figure out how to run the business on the cash that they must work with to manage expenses and daily operations. With this mindset shift, the business owner purposely sets aside a percent of revenue from each sale into a separate savings account to ensure they have a profit at quarter or year-end as well as have funds for other known expenses like taxes. This shift in mindset can really revolutionize the business.
Easy Money Transfers
What Fintech (technology companies that also offer banking/financial services) has done recently is dramatically improve their platforms to help business owners easily implement the “Budgeting by Banking” concept. Two examples of firms that recently launched good tools are QuickBooks Checking and Relay Bank. These platforms allow the business bank account to have separate accounts set up that are used to easily (even automatically in Relay) move funds based on a % or fixed $ amount from the main revenue account into the subaccounts. This approach allows the business to have funds available for large known expenses such as real estate and property taxes, and most importantly, sets aside money for the owner’s profit. After all, most businesses will not continue if they are not able to consistently generate a profit.
Employee Debit Cards
Another example of Fintech developing products targeted specifically for small businesses is company debit cards. For businesses with employees that need to make purchases on behalf of the business, Relay has developed a simple easy-to-use platform so owners can manage and control employee debit cards in almost real time. These debit cards have fraud protection like credit cards but allow the business owner to turn the cards on and off via an easy-to-use online platform with preset spending limits for each individual card – all of which is controlled through the online banking platform.
For business owners that are struggling to make a profit and would like some assistance in benefiting and implementing these new products coming to market, please reach out to us. P&L Business Solutions is here to help.
Please reach out to us if you would like more information on any of these topics. You can call us at (888) 20-BOOKS or (804) 561-1600. Our email address is AGarcia@PandLBusiness.com.
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