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Embedded Finance Tools for Cash Flow: A Guide for Financial Organizations

By   ·  3 minute read

In today's competitive and complex landscape, small businesses are constantly on the hunt for financial tools that can help them get back to what they love – serving their customers, not the cumbersome requirement that is run of business. Identifying areas of improvement or growth are difficult for even the most seasoned small business owner, where roughly 40% of businesses that have been operational for more than 20 years still face loan denials from banks and 70% of SMBs have less than four months of cash to cover operating expenses. This clear disconnect in finding signal in the noise between the financial intelligence and cash management tasks has created a need for insightful financial partners who can help them navigate the complexities of cash flow management. Banks and fintechs have a golden opportunity to differentiate themselves by offering robust cash flow features within their financial services to fill the gaps to better understand SMB financial positions. 

The Cash Flow Challenge: A Sea of Data, Lacking Direction 

Small business owners are often overwhelmed by a constant flow of financial data in multiple platforms. They struggle to translate data from their banking accounts and general ledger tools into actionable insights that can optimize their cash flow and fuel growth. In the UK, small businesses are currently waiting on £7.4 billion in overdue invoices due to lack of oversight and available time to chase money owed more than eight times a month. Financial service providers can bridge this by providing tools with: 

  • Automated Cash Flow Insights: Leverage AI and machine learning to analyze transaction data and generate real-time reports on trends, forecasts, and potential shortfalls. This empowers businesses to make data-driven decisions and avoid financial surprises. Evaluating cash flow with small business owners allows for relevant and fruitful conversations around cash management, growth opportunities, or advice on how to weather potential downturns. 
  • Configurable Dashboards: Allow businesses to configure their dashboards with relevant metrics and visualizations and the ability to review or manage line-item transactions for duplicates or errors. This ensures they can focus on the cash flow aspects most critical to their specific operations before meeting with their relationship manager or creating a budget. 
  • Pre-Built Reports for Informed Planning: Offer pre-built reports like cash balances, projected money in/out, cash flow statements, and scenario planning. This equips businesses with the information they need to plan for future expenses, manage outstanding invoices, and optimize their spending. 

Maximizing Internal Efficiencies with Simplified Solutions 

By incorporating these advanced cash flow features, financial service providers can demonstrate their continued commitment to small business success without heavy overhaul to their current systems. Identify a partner that will work with teams on strategic corporate initiatives as well as provide immediate value through their tool with: 

  • White-Labeled Innovation: Offering a cutting-edge cash flow tool under your trusted brand, enhancing SMB loyalty and positioning your organization as a leader in financial innovation and support. This not only strengthens your brand but also deepens customer trust and engagement. 
  •  Automated Insights: Utilizing machine-learning algorithms to provide SMBs with accurate, predictive cash flow forecasts and visualizations. This reduces manual effort, improves financial decision-making, and helps SMBs navigate financial uncertainties with greater confidence.​ 
  •  Pre-Built and Configurable: Deliver a ready-to-use, flexible solution that reduces time to delivery and value for SMBs. Selecting a configurable yet holistic platform or tool that ensures a quick and seamless integration into existing systems that simply meets the unique needs of each SMB without the additional hassle. 
  •  Comprehensive Financial Overview: Provide SMBs with a holistic view of their financial health by aggregating data from all financial-relevant accounts. This enables better cash flow management and strategic planning, allowing SMBs to optimize their financial operations and make more strategic decisions. 

The Future of Cash Flow Management: Collaboration is Key 

The future of cash flow management lies in the collaboration of aggregating open banking and embedded finance technologies into a simple, yet intuitive platform. Banks and fintechs should work together to offer a comprehensive suite of tools that seamlessly integrate with existing accounting software and business applications. Financial service providers should seek a cash flow solution partner that has robust forecast automation, requires a minimum of 90 days of transaction details, consistently monitor for any data modeling errors that may confuse small business owners, all while helping innovate quickly with legacy infrastructure. Creating this holistic financial management ecosystem for small businesses will empower them to make informed decisions and achieve long-term financial stability within one trusted provider rather than multiple. 

By embracing these trends and investing in advanced cash flow features, financial service providers can solidify their positions as valuable partners in the small business journey. In the ever-evolving financial landscape, it's about empowering small businesses to navigate the complexities of cash flow and unlock their full potential for success to create growth for all.