We spoke to Chris Skinner, author, commentator, and Fintech expert, to get his advice on the common challenges and exciting new opportunities in finance.
Manage your cashflow and expect the unexpected
Cash is crucial for growth. But, says Skinner, small businesses can be guilty of overestimating what they can achieve and how long it will take to get there, meaning cash is often in short supply. It's common to rely too much on a single client and expand too fast, too soon, without the funding or resources to support growth, he says.
Here to help are a growing breed of financial technology startups using software to support companies in areas that banks couldn't deal with, such as small business lending, support, and analytics, says Skinner.
Maintaining a healthy cashflow is crucial for protecting your company through hard times. "Never let your bank balance go below a level you're comfortable with for 90 days," says Skinner, as there are always unexpected events. This includes those inevitable "desert months" when business development slows, or when you have a client with unusually long payment terms. According to Skinner, some organisations take as long as 120 days to pay suppliers. This can be problematic if you're relying on this income to pay upcoming bills.
Future proof your skills
Technology opens doors, but walking through them means taking ownership of your career and embracing change. "Many finance professionals aren't well-versed in digital technology, such as reading code or using HTML," says Skinner. This means they often delegate or assign projects to others, he says, when instead the whole organisation needs a cultural shift. Skinner also noted, "This is a fundamental flaw in the financial industry, and it's endemic."
Acquiring digital expertise is an opportunity for finance professionals to learn new skills. While getting to grips with technology takes time, it's becoming an increasingly prized and sought after skill set. "There's plenty of experience and knowledge that can be developed into new functions," says Skinner. And organisations are increasingly recognising this, by providing staff with opportunities to up-skill and put their new skills to work across other parts of the business.
Understand international payments
Global expansion can be as challenging as it is exciting. "Most of the time, when I deal with international payments, there is no big issue if it can be done with a wire transfer or an online provider," Skinner says, suggesting international payments are managed electronically where possible. But for larger sums, such as those over $10,000, more analysis goes into where it's come from and where it's going, and this can delay payments.
Most countries allow wire transfers, yet some North American businesses use cheques, says Skinner. These can take at least 20 working days to process and cost 'three figures' in charges. Skinner noted, "It's the only country I know that actively uses cheques." Some countries are viewed as 'financially difficult' by payment services providers, which can also delay payments, says Skinner. This makes understanding local payment systems crucial for avoiding delays and maintaining a smooth cashflow.
Sustainability in finance
Innovations are embedding finance into the core of business performance. This, in turn, is shifting the role of the finance professional. Instead of performing traditional accounting tasks, finance functions are increasingly requiring a more strategic approach that requires an understanding of wider market trends.
Sustainability is one such emerging trend that particularly interests Skinner, who believes that banks have a key role to play in the transition towards a more sustainable world. The trend is gathering pace as customers and stakeholders increasingly expect financial institutions to be 'part of the solution.'
In the decade since the global financial crisis, the focus on banking has been around regulation and stabilising capital says Skinner in his blog thefinanser.com. Now it's time to focus on how the global banking sector can proactively give back to the 'real economy' and 'real needs,' and this includes moving towards a sustainable and inclusive economy, he says.
The good news is that research shows giving back is great for both business and society. According to this global study, nearly 64% of consumers around the world consider themselves to be "belief-driven" buyers in 2018. This exposes a fruitful opportunity to explore how good deeds can be woven into finance to showcase your company's softer side.
How American Express can help
Understanding the importance of cash to growing companies, American Express Business Cards offer you up to 54 days1 to pay your balance and have no pre-set spending limit. This gives you greater purchasing power and more control in managing your incomings and outgoings. What's more, Membership Rewards® points2 allow you to earn on every purchase and can be converted into charity donations, helping to boost your brand's ethical credentials as you grow.
Expanding overseas presents its own challenges and American Express has a range of payment solutions to make this as easy as possible for you. This includes the Foreign Exchange payments platform. Available in more than 80 currencies, the platform allows you to send or receive overseas payments, access competitive foreign exchange rates and deliver same-day payments. You also have access to your own account manager who can answer any questions or concerns you may have.
American Express payment solutions are designed to support you and your business as you grow.
1. Cashflow: The full 54 days to pay is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date.
2. Membership Rewards points are earned on every full £1 spent and charged, per transaction. Terms apply.