(This is a guest post from our friends over at Payability, a finance company that helps marketplace sellers take control of their cash flow issues and finally grow their businesses.)
Financial technology (commonly referred to as fintech) has transformed the way we transact and manage money, creating a wealth of opportunity for eCommerce sellers, other types of small business owners, and even consumers.
With better access to business banking, financing, global currency exchange, and more, you can leverage fintech to save money, maximize ROIs, and grow your eCommerce business for the long-term.
In this post, we’re going to show you how.
Traditionally, business banks charge fees and impose minimum deposit requirements. This is due in large part because traditional banks have physical branches and outdated infrastructures that increase their overhead costs (which are then passed on to you). Such fees and minimum deposits are less than ideal for businesses — but especially eCommerce sellers who often struggle with cash flow due to high demand, marketplace payout delays, and more.
Fortunately, businesses no longer have to rely on traditional banking institutions to manage their money. Online alternatives like Rho Business Banking offer checking and savings accounts with high yields, minimal to no fees, and no minimum deposit requirements. All in all, if you find that you never use your business bank for in-person banking, then you’re paying extra for services that are unnecessary for how you do business. With online banks, you stand to save a lot of money — and potentially make more in APY (annual percentage yield) on the deposits you already have anyway.
Alternative Financing Options for Businesses
The online financing landscape might be the biggest game changer for eCommerce sellers. After all, needs for financing can happen without warning — and with a sense of urgency.
For example, if you’re approaching a stockout during a busy time and want to restock to keep momentum going, you can get financing to invest in a resupply order from an online business funder before it’s too late. Going through a bank for financing could take weeks or months — and when you’re running low on inventory, you simply don’t have that kind of time.
The online and SMB funding landscape is vast. Luckily, there are fintech solutions designed specifically for the unique needs of eCommerce businesses. Take Payability, for example, which offers a variety of early payout and working capital solutions exclusively for eCommerce businesses. You could get your Amazon or marketplace payouts the next day every day with Payability’s Instant Access. Instant Access not only gets you paid in real time for your Amazon sales, it also protects you from the uncertainty of Amazon unavailable balances. You can also get a large lump sum of cash with Payability’s Instant Advance, and even access your income on the go with their Seller Card. They also offer Instant Advance for Shopify.
Unlike traditional banks that often don’t understand eCommerce businesses, Payability is different. Approval is based on account health and sales performance. So there are no credit checks, no complicated paperwork, no hidden fees, and no origination fees. Just a short online application and fast 24-hour approvals. If you already have a term loan or other traditional financing or even an alternative solution like Shopify Capital or an Amazon loan, fintech solutions like Payability work well alongside other products you may already have in place.
Just imagine what your business could do if you had reliable cash flow and the means to invest in growth opportunities as they happen. Learn more here.
Customer Financing Options
New and better financing options aren’t just available for your business reinvestment needs — they can also help boost sales. Companies like Affirm, Afterpay, and Klarna for business allow your customers to essentially buy now and pay later with point-of-sale loans. These are attractive payment options for buyers who want to avoid using a credit card, because many point-of-sale loans are interest-free and there’s no hard credit pull involved with setting up an account.
Point-of-sale lenders assume all credit and fraud risk and have seen that average order value increases for merchants that offer point-of-sale financing. Just keep in mind that the cost to use them might be more than what you’re currently paying for credit card transactions. Pricing is specific to the POS terms you choose to offer your customers, but generally speaking, it costs about 2-3% per transaction. To get a better cost estimate, set up a demo with your point-of-sale provider of choice and talk numbers.
Global Currency Exchange
Chances are, as an eCommerce seller, you work with overseas suppliers or maybe even sell to global markets. In either case, you have to deal with international money transfers and currency exchange, which can be costly if you use a bank or traditional payment processor (not so fun fact: some charge fees as high as 3%).
So if you need to pay a supplier in China $100,000, you’ll be charged $3,000 just for the transfer AND you’ll need to cover the exchange rate. What’s more, some providers try to hide their fees in the exchange rate, which means you should always do your due-diligence and compare a quoted exchange rate to what the market rate actually is.
Or you can save yourself the headache — and high costs — by using an online currency conversion company like OFX, which allows you to cover all your currency exchange needs for far less than a bank or traditional payment processor. Not only are there no hidden fees in your exchange rate, but you can secure an exchange rate for a fixed time period (thus avoiding the volatile currency market and allowing you to plan better for your costs). And if you do a lot of business overseas, you can use a company like OFX to set up a local bank account to manage payments in that area’s currency and avoid exchange rate fees altogether.
More FinTech Solutions
Banking, financing, and currency exchange aren’t the only financial services that have been transformed by technology. There are a plethora of other FinTech solutions that can help your eCommerce business, from payment processors, accounting apps, eCommerce platforms, and more.
At the end of the day, you should consider your business’s unique financial needs to determine which tech-based solution is right for you. Whether it’s an eCommerce-minded funding solution like Payability, an online bank or currency exchange company, or something else, you’ll reap the FinTech benefits — like more operational efficiency and faster, long-term growth — in no time.
About the Author
Victoria Sullivan is a Marketing Manager at Payability. She has over eight years of social media, copywriting and marketing experience. Prior to joining the Payability team, Victoria developed social media content and strategies for top technology brands such as Skype and Samsung. She holds a degree in Advertising from Syracuse University’s S.I. Newhouse School of Public Communications. She can often be found in a yoga class or working on her fashion blog.
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