The winners in the digital transformation race are likely to be those companies that discover how selling or incorporating financial services can work in their favor.
Whether you are a real estate company, a chain of hardware stores or supermarkets, a restaurant supplier, or any other type of business, hear me out: integrating layers of financial services through technology in different areas of your business can make it grow simply by existing.
Incorporating financial services into your business can solve very different needs. Does your inventory cycle limit the sales you could be making? Do you struggle to build customer loyalty? Do the logistics of having to collect payments in person with a POS terminal make you waste time and money? Do you struggle to get short-term credit for your business? Do you need to reduce the administrative burden of collecting from customers and paying suppliers?
After reading this article, you will realize all the opportunities your business is missing every day that could allow your company to streamline operations and increase revenue. Integrating layers of financial services into your business is one of the simplest yet most radical ways to digitally transform your business, and you can do it without taking on the risk of operating in the financial industry.
Receiving your future sales in advance is a solution if you need to manage cash flow problems or cover short-term expenses. You can get online financing with your recurring sales as collateral, and pay it back as funds come into your account. The fintechs that offer this credit require you to connect your bank account for a credit evaluation. And in many cases, they even offer you information about your company’s financial health and automatically collect payments for you.
Another tool that allows you to solve the above and also avoid getting into debt with banks is factoring, or another similar resource which is invoice financing. Both solve the same problem from different angles: you have invoices that you have not yet been able to collect, but you need the money.
Invoice financing involves a contract where you receive a portion of the payment in advance. A term is established in which the client will deliver the payment, and once received, you return the credit with the corresponding interest. In factoring, the company that grants you the credit is in charge of collecting the invoice from the client, who in a sense “buys” your invoice. In the same way, it gives you a portion of the payment in advance, and when the client finally pays, it returns the difference minus interest.
Several startups are dedicated to offering this type of service, and even use technologies such as AI to calculate the risk and interest rate in a personalized way. In addition, applying for this type of loan on online platforms instead of traditional banks saves you a lot of time because they deposit the loan quickly and, in general, ask for fewer requirements to access. And most importantly, you do it without compromising your earnings.
On the other hand, Embedded Finance is the integration of financial tools into your own services, no matter what industry you are in. An example of what this looks like in practice is the payment processor used by Uber, which allows for an unparalleled, zero-friction user experience where the customer only has to enter their bank details once to pay hundreds of times. Then there are the famous “buy now and pay later” retail stores, or the travel insurance they offer you while you buy a plane ticket. Startups that operate in the “Banking as a Service” sector even allow you to build your own digital bank, with your own credit cards. This can serve you well especially if you’re looking to attract and retain customers.
Finally, another tool worth mentioning is the automation of collections and/or payments. There are fintechs that reduce the administrative burden involved, since they centralize, manage and automate all these processes. Other examples of similar functions that you can integrate are the automatic issuance of invoices and sending of payment links, visibility of the status of your invoices, and notifications of those that are about to expire.
As you can see, each of the processes that make up an operation chain, from beginning to end, can be more profitable and more efficient with the use of financial tools. These are just some of the possibilities.
Fintechs in Mexico will continue to multiply because the opportunities for innovation in this sector are also multiplying. It is no longer just a matter of updating your company’s technology. For businesses of virtually all sizes, it is a strategy that will be central in the coming years to define who wins and who loses.
