How Digital Lending Platforms Help Small Businesses Manage Their Cash Flow Challenge?


This content is authored by Mr. Praveen Paulose, MD and CEO of Celusion Technologies

Micro-entrepreneurs often face cash flow problems when starting and running their business. A myriad of factors could lead to cash flow issues, including mismanagement of expenses to drive expansion without adequate funding. However, in response to these hurdles, digital lending platforms have created digital tools and technology that can help identify, regulate, and forecast cash flow, making it easier to resolve hurdles.

In financial services, many of these solutions are developed using disruptive technologies such as artificial intelligence, blockchain and deep learning that enable companies to collect rich sets of data about their customers, identify patterns of consumption and even remove human involvement where possible. Consequently, the MSME lending landscape is transforming as small business owners embark on a new phase of growth that encompasses efficiency, transparency and accessibility, due to the integration of finance and technology, leading to higher expectations and higher customer satisfaction.

Here are five ways digital lending platforms are redefining the way small business owners deal with cash flow issues:

1. Business loans made easy

Small businesses are often overlooked by traditional lenders because their loan amounts are considered insufficient and their income is considered unstable, which poses a risk. Digital lending platforms make it easier for SMEs to avoid conventional lending techniques and grow their businesses faster through easier and simpler business lending.‍ For example, in Peer-to -Peer (P2P), borrowers are directly connected to lenders. Advanced technology has made the application process faster, faster and more efficient, encouraging more business owners to use the financing to expand or inject working capital into their operations.

2. Tools for effective account management

With the advent of digital lending platforms, MSMEs/SMEs now have access to a wide range of affordable management tools for everything from customer profiles to accounts that were once expensive. They can track their cash flow in real time while keeping their business running smoothly using online accounting solutions. These accounting solutions, for example, come with business credit integrations that automatically repay loan, line of credit, or credit card cash from customer receipts without requiring human intervention. Digital lending platforms offer expense and invoicing tools, allowing business owners to focus on development and growth rather than minor concerns, helping the business run more smoothly.

3. Transparency in the transfer of funds

In recent years, the widespread reach of the internet and mobile devices has enabled digital lending platforms to create digital banking solutions that reduce the costs of remittances and the need for banknotes for any transaction. As a result, the financial system has become more transparent and less prone to tax evasion or other unethical practices, resulting in a competitive and robust business ecosystem.

4. Security

Data breaches are a major challenge in any business and are not entirely preventable. Small businesses often lack the resources and know-how to secure their data – and that of their customers, suppliers and contacts. However, the availability of digital finance platforms has made cybersecurity an affordable alternative that helps companies to strengthen their security measures, due to the availability of many software packages, for example, multi-factor authentication, electronic signatures, etc. . In addition to ensuring that privacy and cybersecurity requirements are met, digital lending platforms also provide accessibility and quick support.

5. Digital billing

Since payments are an integral part of any business, digital lending platforms help small businesses reduce cash flow problems by automating payments. The convenience of digital invoicing for small businesses allows them to add their signature effortlessly, send instantly, and receive payments almost instantly. By eliminating human interactions, the use of technology reduces the need for cash, and by reducing cash outlays, cash flow improves.

Each of these has contributed to the growth of digital lending and enabled it to provide financial goods to sectors that previously lacked access to conventional banking products. In turn, digital lending platforms have enabled small and medium enterprises and startups to create, innovate, scale and grow, changing the business landscape around the world. A plethora of promising regulatory steps have also been implemented, with regulatory agencies legitimizing the video customer identification procedure to verify new customers and enable onboarding via video KYC verification. A transition to digital lending through the use of innovative technologies has the potential to revolutionize the lending industry, making cash flow smooth and efficient, thereby positively impacting millions of lives.


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