Small Business Financial Consultants

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Let the process of lending easy by using Financial Data APIs

The lending process comprises various phases between consumers and lenders or credit unions. These range from an application for credit/loan to loan repayment. One of the most difficult challenges for credit unions or lenders is to ensure an equilibrium between their service to customers and their risks.

The steps outlined below are part of the process of lending:

The initial and primary step is to establish credit.

Credit Application: Credit unions and lenders evaluate the possibility of business transactions with customers.

Credit/Loan Processing: Credit unions and lenders examine the potential of customers' credit histories.

The Underwriting Procedure: Analyzing the financial position of a potential customer.

Loan Decisioning: Assessment of loan repayment by the customer guarantee.

Quality Check & Credit Funding

What Financial Data APIs can do to help make the lending process more efficient

Keep an equilibrium between Service to Customers and Credit Repayment Risk

A manual process could take a long time to analyze acustomer’s finances, credit reports, and repayment capability, in addition to having constraints that also create the likelihood of not finishing the lending process on time. Recent research suggests that between 35-38 percent of companies within the United Kingdom have abandoned banking services applications "due to the inefficiency of the diligence process”..

A cash flow issue is regarded as a major issue that affects nearly 3 out of 5 SMEs.

Through the use of APIs for financial data, lenders and credit unions can streamline their lending and financial processes and analyze the potential of the borrowers’ business information to help them make credit decisions quicker and open the liquidity of their customers.

Credit Unions &Lenders can speed up their services by using APIs

Financial APIs for data allow credit unions and financial institutions to access financial data quickly and quickly. Financial data APIs fill in the gaps between applications and allow for the sharing of data between apps for auditors, lenders, investors, consumers, and other financial service providers.

These APIs for Financial Data utilize advanced technologies like ML(Machine Learning) and AI(Artificial Intelligence) to collect business data from various third-party sources. Then, they transform that data into valuable insights that can be shared with users.

The data from the financial institutions API market is expanding quickly in the digital lending market. A lot of credit unions and financial institutions are already using financial data APIs that permit them to access their customers’ most accurate business information.

APIs are key to gaining a greater understanding of small businesses’ financial information in addition to improving the efficiency and accuracy of your credit applications and credit scoring techniques. Small business lenders can utilize financial data APIs to spot fraud, reduce risks by automating processes, assess customers’ creditworthiness, enhance customer experience, preserve data integrity, standardize and analyze raw data, and much more.

If you’re a financial institution, bank, or an institution like a credit union or non-banking financial institution, APIs for data are the newest technology you should embrace to keep ahead of your competition, and become a financial expert of the future and help your financial institution move forward.

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Here are 4 best practices to manage credit risk in small business lending

Small businesses are subject to high credit risk because of their low credit score, lack of business history, inadequate cash flow, and other factors. It is imperative to examine the measures your financial institution has taken to reduce this risk, especially given the current economic and employment uncertainty caused by the pandemic.

Credit risk is the possibility that a borrower will not make their repayments (principal and interest) on time. Credit risk management, which is the process of making sure that small business borrowers are financially healthy to minimize the risk of non-payment or late payments is a difficult task for small business lenders.

These are some of the best ways to manage credit risk in small-business lending.

Know your customers

Understanding your customers and borrowers is crucial because it will help you to understand their financial needs. Listen to your customers and borrowers and then use that information to determine what needs they have for your financial institutions. It is crucial to gather the right information and establish a trusting relationship with your clients to be competitive and position yourself as a financial expert.

Face-to-face conversations are a great way to meet and understand your customers' tastes and needs. Another great way to get to know your customers is by gathering financial data from multiple sources. To gain deep insight into the health of borrowers, you can integrate with their multiple financial systems, such as banking, financial accounting, and cash flow. FinTechs are now offering financial data APIs to help lenders access, analyze, and use the most current financial data of their borrowers. This allows them to determine creditworthiness and manage credit risks.

Predictive Data for Cash Flow Leverage

You shouldn't just rely on FICO scores and 5Cs to determine the creditworthiness of your customer. Small business lenders still use historical data such as credit scores and annual revenue to determine if a borrower can repay the loan. These old-fashioned credit scoring methods do not provide sufficient information to help lenders make better decisions and lower credit risk.

Cash flow predictive data can be used to predict the financial future of small businesses faster. It is possible to see how money flows into and out of a company and how much cash flow it is expected to generate in the future. Cash flow predictive data can also be used by lenders to assess the creditworthiness and creditworthiness of business owners with limited credit histories. Cash flow predictive data gives you a complete picture of a company's finances, past, present, and future. It allows you to see where your business stands in terms of financing, how it manages its existing repayments and how much financing it can afford. It will eventually help you make better lending decisions, offer quick loans, and reduce credit risk.

The Loans should be priced appropriately

You can accurately price small business loans when you are more data-driven. For high-risk borrowers, you can offer lower interest rates and shorter repayment terms.

You can offer your borrowers a more competitive deal and maximize ROI on small business loans.

Monitor the Relationship

The quality of your products and services is critical in today's small-business lending environment. This is because it is crucial to building customer loyalty and trust. To retain customers and increase revenue, you need to enhance customer service and monitor the relationship. As your customers/borrowers change, you need to listen to them.

Your priority should be loan repayments, but your borrower might not feel well or their business has been temporarily closed. You must monitor your relationship with your borrower and be alert for potential problems.

These are the top tips to manage credit risk in small-business lending. These tips are essential for small business lenders. They will help you to understand your borrowers better, meet their needs, assess creditworthiness, reduce credit risk, and make smarter lending decisions.

[henrysmith81]

Guide to Cash Flow Forecasting For Small Business Owners

Did you know that checking your bank account can help you make sure your next paycheck arrives before your rent due date? Perhaps you have an installment plan that allows you to spread your payments across multiple credit card statements, which can be a good way to save money.

You're likely to have participated in cash flow forecasting.

Cash flow forecasting in accounting is a tool that helps companies estimate their net income over a while. It allows business owners to plan for growth, meet their obligations, and monitor expenses.

What's cash flow forecasting?

Cash flow forecasting is a process that estimates the cash that will enter or leave a business during a specific period.

Let's suppose that an interior design company wants to forecast its cash flow for the next 12 months. This company can project a net cash flow of $50,000 if it anticipates an inflow (or net income)of $80,000 over the next 12 months.

Direct vs. indirect cash flow forecasting

There is a direct and indirect method of cash flow forecasting. This involves estimating income and expenses.

●     Forecasting direct cash flow. Direct forecasting works with known costs. This method is usually suitable for short-term forecasting. Direct cash flow forecasting is used by businesses to ensure that they have sufficient working capital to pay their end-of-the-month bills.

●     Indirect cash flow forecasting. This is the long-term forecasting method that uses projected balance sheets (also called pro forma balance sheets) as well as projected income statements. Indirect methods account for factors that impact profitability, but not the cash balance. This includes the depreciation of buildings and equipment.

In 4 steps, forecast cash flow, It is a repeatable process to forecast cash flow.

Step 1: Set a forecasting period

The first step in cash flow forecasting is to choose a forecasting period. A short-term cash flow forecast might focus on a period of 30 or more days, while a longer-term forecast might consider a quarter, a whole year, or multiple years.

Step 2: Choose a forecasting method

Next, choose a forecasting technique. If you have a short forecasting period (say 30 days), the direct method can be used. This involves consulting your income and expenses to determine how much cash you will have at the end. The indirect method, however, will allow you to make projections for a longer time frame than the one you have.

Step 3 - Calculate cash outflows and inflows

Next, calculate the estimated cash outflows and cash balances.

Add up the expected gains during your forecasting period to calculate inflows. This could include the anticipated sales revenue, anticipated investments revenue, or interest earned, as well as the disbursement and repayment of loan funds that the company has previously secured.

Next, calculate outflows. Include anticipated expenses like vendor expenses and loan payments.

Determine your starting cash balance, or the cash available in your bank accounts at the start of the forecasting period.

Step 4 - Calculate net cash flow and closing cash balance

After you have calculated your inflows and outflows, as well as the starting cash balance, it's time to build your cash flow forecast.

To calculate net cash flow, subtract outflows from inflows. This formula is inflows minus outflows = net Cash flow. Negative cash flows are a loss.

Next, calculate the closing cash balance. This is the amount of cash that your business should have in its bank accounts by the end of the forecasting period. This number can be calculated by using the formula: starting balance + inflows - closing cash balance

Software that automates cash flow forecasting can improve the accuracy and speed of this process. It also makes it easy to check updated cash flow projections.

The advantages of cash flow forecasting

Cash Flow forecasting offers many strategic benefits, including helping companies pay off debt and maximizing returns on assets.

●     It will help businesses make informed cash flow decisions. Potential investments are a top priority for business owners. You can use net cash flow forecasting to help you plan your expenditures, whether you are targeting a new employee, marketing expenses, or investments in facilities.

●     It helps businesses to identify cash flow patterns. Cash flow forecasting, which tracks outflows and helps you to identify opportunities to reduce unnecessary expenses, can be used by businesses. This can help you avoid having too many bills due at once, which could lead to you carrying unneeded cash.

●     It can be used by businesses to project growth and manage debt repayments. Businesses can plan for the future by being able to predict profits and losses for a quarter, a whole year, or longer. Cash flow projections are useful for helping you plan your repayment schedule if your company took out a start-up loan. Also, reviewing your monthly cash flows can help determine if you are on track to reach that goal. Accrued profits are the same. Even though you might not be able to make a hire right away, cash flow forecasting can help you determine when it is advisable to increase your team.

●     This can allow you to put your money to work. Companies should have enough working capital to cover all expenses. Many businesses also have some cash in reserve. It is not a good idea to let cash accumulate in your bank account. It is best to invest your cash in markets and the growth of your company. You can free up cash for income-generating activities by using cash flow forecasting.

Drawbacks of cash flow forecasting

These are some important points to remember when creating cash flow forecasts.

●     It can be inaccurate--particularly under an indirect method. Just like a weather forecast, a cash flow forecast represents a best guess at what future conditions are likely to look like based on current conditions and existing models. Cash flow forecasts, like weather forecasts, can also be incorrect. This is especially true when seasonal forecasts are made using the indirect method. However, even direct cash flow forecasting can be inaccurate. This method assumes your debtors will pay their bills in due time and that there won't be any unexpected expenses.

●     It doesn't take into account unexpected events. Cash flow forecasting does not account for the possibility of a tree falling on your workshop, or your cat spilling glass water onto your keyboard. These unexpected expenses are often covered by extra cash that businesses tend to have in reserve.

●     This can be time-consuming. Before you start your calculations, you will need to look at your accounts receivable and accounts payable.

Final thoughts

Cash flow forecasting can be a useful tool in your strategic business development arsenal. It allows you to plan for future events and assess your performance against those predictions.

It is a smart decision to invest in an accounting system or software that generates cash flow projections. Don't mistake predictions for certainty. Keep a little cash on hand for those (proverbial!) rainy days.

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Top 5 Challenges To Foresee During Forecasting Cash Flow

Although cash flow forecasting is a necessity, it doesn't mean that you won't encounter challenges. Potential problems are everywhere, from data overload to inaccuracies to the need to bring together many departments.

Cash flow forecasting problems are not uncommon. However, this doesn't mean that you should give up and expect the best. You can fight back by understanding these challenges--including why they occur--and potential solutions for addressing them.

No Dedicated Team

To make it easier for senior employees to concentrate on more important tasks, you can delegate cash flow forecasting work to a junior member of the team.

As easy as it is to overwhelm senior employees with cash flow forecasting-related tasks, This path can lead to you falling short in other areas.

You now need to decide who should be in charge of the cash flow. While it varies from one company to another, the best way to handle all cash flow responsibilities is to select a few people. You should choose people who are familiar with your financial history and finances. You can also choose employees who have done cash flow forecasting work in the past.

Over-scheduling the project, especially if there are too many people involved, can lead to roadblocks. Selecting a dedicated team is the best way to avoid this issue early.

Non-Participation in Departments

Cash flow forecasting success is dependent on open, honest, and accurate communication. It can be detrimental to the whole process if one person or one department fails to participate, or takes a lackadaisical approach.

Full participation has many benefits:

More accurate forecasting

Time savings

Financial understanding of the company

While data from multiple departments is necessary for accurate cash flow forecasting, one leader is essential.

Using Inaccurate Data

Inaccurate data can quickly slow down cash flow forecasting. You can't make accurate projections if you don’t have exact numbers. There are many ways to prevent this.

A weekly, or monthly, review of numbers with an eye toward accuracy

Keeping in tune with cash flow patterns with an emphasis on unexpected changes

One point of contact for all departments

Review sessions will allow you to compare your numbers with your projections so that you can adjust accordingly. To reduce friction, you can implement cash flow forecasting software that automates this process in your company.

Ignoring Historical Data

Cash flow forecasts that are not supported by historical data are nothing more than a shot in the dark. Looking back can help you see the future.

You're more likely to make accurate projections if you combine in-depth research with them. For example, a sales projection that is too ambitious. It's fine to set lofty goals if you have strong reasons to believe that you can achieve your projection. This should include historical data as well as information from your sales team. If your projection is too ambitious, it could lead to cash shortages and other negative effects on the entire business.

Historical data is useful for scenario planning because it allows you to test variables that could have an impact on your business's short- and long-term future.

Ignoring Tax Liability

Your tax liabilities change with sales, revenue, and cash flow. Your business could be responsible for additional taxes if your revenue rises. Your tax liability could decrease if your revenue is declining.

You should also consider the constantly changing tax system. There are changes at both the local and federal levels.

Avoiding tax liability when cash flow forecasting is done will backfire on you, probably sooner than expected. Your cash flow forecast will be more efficient if you understand your tax liabilities and what they could change.

[henrysmith81]

Accounting and Financial Data API for Lending: Analyzing the Trends

Financial institutions allocate a significant portion of their operating expenses to software and services. These costs tend to increase over time as lenders become more dependent on digital solutions to streamline operations and generate value for their organization. Financial data APIs are an essential tool for fintech companies that need to implement fast, scalable, and cost-effective solutions for accountancy and financial reporting. They enable third-party vendors to access financial records from the lender’s back-office systems, automate manual processes, and manage user permissions. Once you understand the benefits of using accounting APIs in your lending business, you can choose the best solution for your company. Let’s explore some recent trends within the accounting and financial data API space.

Fraud Detection

Fraud detection represents one of the most popular use cases for financial data APIs. Fraudsters can pose a serious threat to lending organizations and their investors. The Financial Times reported that lenders lose up to $50 billion each year due to fraudulent activities. When you use financial data APIs to integrate your lending operations with other systems that already parse financial data, you can streamline the loan approval process and identify potential red flags in real-time. Lenders can use APIs to integrate services that detect duplicate identities, IP addresses, and address information. Such services can also identify potential discrepancies in employment history and other loan information. If your organization uses financial data API services that detect fraud in real-time, you can make adjustments to the loan approval process and prevent fraudulent accounts from receiving financing.

Consolidation and Integration

Financial data API tools are commonly used for loan portfolio management and consolidation. These tools enable lenders to integrate different financial systems and centralize data from multiple accounts. This can help to reduce manual processes and improve overall efficiency. Lenders can leverage API tools to integrate with accounting software such as Oracle or SAP. This enables you to synchronize your data and eliminate redundant manual processes. You can also use APIs to integrate other services, such as payment processing, debt collection, and accounting software. Some financial data API services include integrations for popular accounting software, allowing you to select a solution that meets your organization’s specific requirements. At the same time, you can also use API tools to integrate with other business systems, such as customer relationship management, marketing automation, or supply chain management. This can help you to consolidate different data sources and create a unified view of your business.

Continuous Auditing

Financial data APIs also support continuous auditing and fraud detection through continuous auditing. The added layer of security this feature provides can help to protect your organization against fraudulent activities. Continuous auditing enables you to keep a close eye on large transactions, detect irregularities in real-time, and take immediate action. Some API services enable you to monitor account balances, transaction history, and payment schedules. You can use this information to identify issues and take the necessary steps to correct them. This functionality can help you to prevent potential loss by identifying risk factors and taking immediate action. Continuous auditing can help you to identify fraud by tracking large transactions and flagging any unusual activity. You can use this information to initiate an investigation and take appropriate steps to mitigate the risk.

Data Cleansing and Matching

Financial data APIs can help lenders to cleanse and match their data with other financial institutions. These tools provide added value by connecting you to a larger network of potential lenders. You can also use APIs to connect with data-driven financial institutions that can generate analytical insights based on your data. These tools can help you to access your data from other lenders, allowing you to create a more accurate and complete picture of your customers’ financial status. In addition to cleaning and matching data, financial data APIs can also help you to identify and correct data inaccuracies. This can help to reduce your overall risk and improve the accuracy of your financial reporting.

Summary

The benefits of using accounting APIs are apparent — they enable lenders to streamline operations and generate value for their organization. These financial data API tools can help you to eliminate redundant manual processes, increase data accuracy, and provide real-time insights. When selecting a financial data API solution for your business, it is important to consider your specific requirements. Check how many users will be accessing the solution and the scalability of the service. Make sure that the solution supports the data structure of your financial data and integrates seamlessly with your existing systems.

[henrysmith81]

Open Accounting Data What is it that matters to SMEs

Although based upon well-established accounting principles, the data isn't generic.

Every company sets up its management accounting accounts in its manner. Businesses operating in the same industry with a similar audience and business models often use completely different terms and concepts to define their performance. Accounting data gives insight into how an organization views its internal processes. It's a living record made over a long period and must closely reflect management's plans and effectiveness.

Exchange of data with banks

Financial institutions and lenders who offer small-scale business loans depended for years upon MI (management details), which is an image of the company's accounting information, typically accompanied by a few explanatory notes. Although having a copy of accounting information can be beneficial, it's similar to taking a store picture for security instead of a live CCTV feed.

1) It's impossible to tell the real picture of what's happening

2) There's a delay in the manual procedure of receiving the information and then reviewing, approving, and submitting it. In the case of a small lender, this may be as little as a few weeks, but more reputable lenders' processes take longer, up to six months in some instances. Fortunes can change in the time between, and a borrower's creditworthiness, which was once a good one, could deteriorate significantly.

Persistent access offers an actionable view

There's no better option than having accounts for SMEs built over time, and accounting platform APIs facilitate precisely this. Companies can now grant continuous access to account information for service companies.

A company can gain access to credit and investments faster and more quickly than ever. The company may also consent when applying for a loan that will permit monitoring throughout the loan.

The permission may be revoked when the loan is not granted or if the circumstances change to the point that it's not required anymore. People who borrow appreciate this exactly as LinkedIn currently has comprehensive privacy guidelines, and, as is the case under GDPR, users want greater control over their data. The ability for users to make contributions and use their data is the easiest and most effective method to take advantage of this control.

Ongoing data synchronization has several advantages

First, the company has no way to modify the accounts before sharing a photo of the most favorable picture, also known as window dressing. Open accounting data records every transaction and provides an accurate and reliable record of ongoing performance.

This allows service providers to identify the risks inherent to a business model and to ensure that they can be dealt with quickly, to make sure the loan is more likely to not default.

Second A snapshot of the possibility of continuous accounting data. It is the closest an outsider can have to understanding how money is made and spent in a business without having to supervise managers constantly.

Automating data input

Alongside extracting performance data from accounting APIs, they can also facilitate the push of data into the accounting software. This could include anything from banking transactions to invoicing.

Smaller businesses are likely to have multiple transactional and accounting software. Accounting software is increasingly the only source of information for small-scale business owners, and capturing the truth is best achieved by directly integrating it.

The result is that open accounting data boosts efficiency because it makes the writing and reading of accounting programs more efficient. This allows the business owner and service provider to create the most value for their customers.

[henrysmith81]

The Advantages of Forecasting Cash Flow for Businesses

Forecasting cash flow is the prediction of cash inflows or outflows for a company. Forecasts can be made for the near future, medium-term, or long-term. Forecasting allows companies to predict how much money they will have at a given time to invest and pay down debt. Forecasting also gives an estimate of the time it may take to pay for expenses such as payrolls.

Cash flow forecasting is a key part of financial planning. It provides information on the resources available at any time. This includes both anticipated income and planned expenses. It allows you to project your liquidity position for several months.

No matter how you do it, you need a plan to manage your finances. This will ensure that you don't run into unexpected problems or have cash flow issues. BrooksCity says that forecasting your cash flow has many benefits. Continue reading to learn more.

Forecasting cash flow is an important tool for all businesses

Cash flow forecasts may vary from one business to another depending on the industry. This tool is useful for companies that need current information about their financial position and future growth plans. This allows you to navigate the current industry climate and prepare for future events that may impact a company's bottom line, such as holidays and vacation periods where they might not have enough cash flow (including allocating funds towards those costs). This helps managers track how much money they have spent and received, so there are no surprises.

Forecasting is a way to spot potential problems before they occur

It is possible to predict cash flow problems and identify them before they occur. This can help you to stay ahead of your cash flows by helping you identify when additional capital is required to pay expenses and meet payroll obligations. You won't be caught unaware of unexpected costs that could cause bankruptcy or require emergency funding. Cash flow forecasting is a way to monitor all aspects of your company's finances and keep you informed about what's going on. It includes looking at the amount of money coming in from revenue streams, how it's being used on operating expenses, and the remaining funds after these obligations have been paid. This also includes future expenditures like payroll commitments or long-term projects.

This is an important tool to manage company assets and financial planning

After the products and services you provide, finances are the most important aspect of a business. If you don't have a system, it can be difficult to manage your income and expenses.

Budgeting is an important aspect of business management that you shouldn't ignore. Budgeting will allow you to see what income and expenses you can expect, and what you may need to reduce.

This is possible because cash flow forecasting will give you an estimate of the future of your company. This allows you to plan your business expenses in advance and create an ongoing budget that will assist you.

Forecasting lets you see your company's strengths

Knowledge is power! Forecasting cash flow is vital because it helps you see your company's strengths as well as weaknesses. Cash flow problems can be a major problem for businesses, so it helps to avoid cash flow problems. If you pay upfront for inventory but don't sell it, the money will remain in your hands for a while. The best way to avoid these situations is to use the correct cash flow, and forecast model. This will allow a company to identify what it needs to grow and maximize the cash-flow forecasting benefits. They can make financial decisions that are sound financially and allow for improvement.

[henrysmith81]

API To Get Financial Data: What You Need to Know

Financial data is essential for so many businesses. If your business is in the services industry, it’ll be even more important to you than other businesses. Knowing where you stand as a business in terms of revenue, expenses and financial standing is essential for knowing how to proceed with your business strategy and operations going forward.

If your company deals with finances on a regular basis, you’ll need access to financial data about your customers, suppliers, or other parties involved in transactions with your company.

Financial Data APIs can help you get that information from third-party services like banks, accounting software providers, and other sources of financial information.

Financial Data APIs are Application Programming Interfaces that allow applications and programs to connect with each other easily by establishing common code between them. There are financial APIs available from several different services that can give you access to financial data while keeping your user login secure. Here’s what you need to know about these APIs if your company needs access to financial data as part of its operations:

What Can Financial Data APIs Do?

Financial Data APIs allow you to safely create apps and services that are based on various types of financial account data such as account routing numbers, account balances and transactions data, investment holdings, and others.

How to Pick the Right API for Your Business

Tips to Find the Best Financial Data API :

Look for real-time data - This gives you clear insight into your customers' financial health, cash flow, assets, and revenue.

Examine current customers - Determine their needs and pain points.

Explore the Company's Past

Search for Competitors

Check out Reviews

Explore All Your Options

Bottom line

Even with the recent proliferation of fintech, many small businesses still struggle to gain access to financial data. Many banks and lenders still require business owners to have an account with them or a minimum credit score before granting loans or enabling accounts. 

Financial Data such as credit scores, revenue, cash flow, and other aspects of a company’s financial health is important for any business. To give your company a competitive edge in the marketplace, you need access to the financial information you need to make informed decisions about day-to-day operations and strategic long-term planning. Fortunately, there are several APIs that can help you get financial data. 

[henrysmith81]

3 Reasons Why Every Fintech Lender Should Have An API

The future of banking is here, and it's called Fintech. The world of online banking and even mobile banking are all things we take for granted today. But imagine if you didn’t have the internet and you couldn’t access your money from your phone? It’s a scary thought, but for generations ahead of us, that would have been the norm. Now imagine if you didn’t have an app for that. The world of Fintech is constantly changing, and while the name might be new and unfamiliar, the concept is anything but. It’s banking reinvented, and the future of banking is right here, right now.

What is Fintech? 

Fintech is short for financial technology. The term refers to the use of technology in a financial institution or industry. It encompasses anything from using an ATM to transfer money to using your phone to pay for something at a store with PayPal.

Why Every Lender Should Have An API 

An API (Application Programming Interface) is a way for two systems to communicate. For example, your bank might want to communicate with another company, like Google Sheets. The API would allow your bank and Google Sheets to be able to communicate with each other by speaking the same language. This means that you’ll be able to use Google Sheets to manage your bank account or import data from your bank account into an accounting program.

APIs are important because they make it easier for apps and banking institutions to work together. They power the future of banking, and we’re excited about what they have to offer us in the coming years!

3 Reasons Why Every Fintech Lender Should Have An API 

An API is a set of instructions that governs how an application can interact with other systems. In this case, it's an online banking application interacting with another system like your bank. APIs are used to give your customers the ability to deposit checks from their phones, transfer money between accounts, and more.

The three main reasons why every Fintech lender should have an API are:

1) Faster transactions: When you use an API, you add speed to your transactions. Imagine if you had to enter all of your account information each time you wanted to transfer money? By using an API, you can just input the new details once and make transfers in mere minutes.

2) Increased security measures: Customers want increased security when it comes to their Fintech accounts, and that’s what APIs offer them. With APIs, users have the option of adding two-factor authentication before logging in or making any changes to their account. This ensures that no one who should not have access will get it and hackers will be locked out more easily.

3) Increased customer satisfaction: When customers trust your company with their financial information and know they're protected by increased security measures, they'll be happy customers for life!

Conclusion

With so many new fintech options, the industry has never been more competitive. But with the right API, you can do what your competitors can't: create your own customer experience.

To make sure your customer never has to wait to get their data, an API will ensure the data they need is always streaming to them. By simply giving customers the data they need when they need it, you are taking the stress off of them and giving them what they want. And when they know you are supporting their needs, customers are happy to do business with you and refer you to their friends and colleagues.

[henrysmith81]

Five Reasons Why APIs Are The Future of Fintech Innovations

APIs are enabling fintech companies to exponentially innovate. APIs allow banks to provide an improved customer experience, to automate business processes, and even to use data for research. Let's find out why APIs are the future of fintech innovation.

Why APIs are important to fintech innovation

APIs have become an essential need of fintechs to swift-to-market products these days. Fintech innovation can be a challenge without APIs because they provide a way to access and share data. APIs make it easier for developers to build apps with banking data, which can lead to new opportunities for banks. For example, with the API, developers could develop an app that provides customers with real-time insights on their finances or offers personalized recommendations based on their spending habits.

Additionally, APIs allow banks to automate business processes with third-party vendors and partners. This makes it easier for banks to provide innovative customer service within the digital space.

Lastly, APIs help research teams across any industry unlock new possibilities in data analysis. With more data available than ever before, APIs are enabling researchers in the financial sector to uncover new insights into markets that were previously unavailable. These insights will be valuable in identifying new trends in the market and informing business strategies.

How APIs help banks provide an improved customer experience

APIs are allowing banks to provide an improved customer experience by leveraging data. For example, APIs are helping banks generate customer-specific offers, personalized service experiences, and tailored product recommendations. This has led to increased customer retention rates for banks.

How APIs help banks automate business processes

One of the ways APIs are helping fintech companies innovate is by enabling banks to automate business processes. This can be done in many ways. For instance, an API could be used to automatically create new accounts for customers with their consent. Or it could be used to automate loan approvals based on customer data. Automating routine tasks not only saves time but it also saves money because they're run without having to employ humans.

How APIs can improve customer service

By 2020, customer experience will be the top concern for any business. By 2025, it'll be the only thing that matters. The best way for banks to improve customer service is by implementing an API strategy. APIs can increase efficiency and reduce costs, since they allow banks to automate certain tasks. For example, say you want to send a letter to your new client's address with an offer on new products and services. Using an API would allow you to put in your company's information once and then automatically send out letters to all of your clients. It saves time and improves efficiency without sacrificing quality of service.

How APIs can enable banks to use data for research

One way that APIs are changing the game for banks is by enabling them to use data for research. Banks are under tremendous pressure to find new ways to innovate and stay competitive in the digital era. One of the best ways they can do this is by leveraging data sets for customer insights.

APIs make it possible for banks to securely connect their systems with third-party applications like analytics software. This allows any company, including banks, to use data sets, analyze them, and learn from them as necessary.

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How An Alternative Data API Can Empower Lending Ecosystem

Alternative data sources are a vital element in the fintech sector. Using alternative data, fintech and money lenders can open new possibilities for them and the underserved industry they serve. Alternative data also helps SMBs gain better access to credit, while fintech players and lenders can make better credit decisions. Ultimately, integrating an alternative financial data API can help lenders and fintech enhance their risk decisioning capabilities in today’s skeptical time. 

Describing a better and extensive story about customers’ credit histories 

Accessing SMBs capacity and ability to pay is more exact when you have more bits of the riddle. An alternative financial data API can provide better insights into SMB's business and financial data. Whereas, traditional sources can not provide lenders and fintech the data they need to make better credit decisioning. 

Alternative data sources gather more financial data from multiple third-party accounting sources and more into the mix to improve credit risk decisioning. So that they can have a better picture of their SMB credit history.

Integrating alternative data API is no longer merely an alternative 

Not only does employing an alternative data API deliver a more thorough check of SMB financial behavior, but it is also more facilitative to present and for future fintech innovations.

Pandemic has forced lenders and fintech players to tighten their grip as a traditional gathering of data has become less reliable. Whereas alternative data can provide greater clarity and efficiency to risk decisioning and enable fintech players and lenders to continue serving more SMBs. 

Empower your lending ecosystem with reliable alternative data API

Different choices exist for acquiring alternative data APIs, as the accessibility of modern information is developing across the fintech sector for banking and lending.

Alternative data API helps gather financial data directly from client third-party accounting software and other resources. It seamlessly integrates the data into your lending ecosystem in meaningful insights, giving you a clear picture of your client to make more informed credit decisions. 

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How Emerging Technologies Are Improving Lending Process And Mitigating Risks

Due to the rise in emerging technologies, innovations are taking place in the fintech industry at a rapid pace to make things easier. So, many fintech enthusiasts are looking for new technologies to improve their lending process and exhibit how technologies are mitigating risks to make better financial decisions.

Financing has always been an important factor in the success of businesses. Unfortunately, these businesses most likely lack to meet the ever-growing expectations of customers. It can be because of the lack of customer financial data, historical cash flow data, manual lengthy underwriting process, etc.

Lenders and credit unions do necessary verifications before giving credits to their potential customers. To give away credits, financial institutions need to make sure that the potential customers don't have any fraudulent transactions in the past or any upcoming cash gaps. For this, they would verify customer authenticity by manually going through their business financial accounts and third-party accounting tools to get data on customers' financial health.

Now, with the help of financial data APIs, things have been made simple and can be done digitally. Verifying and examining customers' previous financial activities is as simple as doing a Search engines search. Credit unions and lenders can look for the information of potential clients and save whatever required data they need to save.

Typically, the cycle of lending is differentiated into four different steps and begins when the customer expresses his requirement for credit as a financing request. The lender or credit union will verify the borrower’s credibility by looking into his business financial data. Then they validate the data obtained from different sources. And lastly, they maintain the records for data processing purposes, following the authorization or rejection process.

Onboarding APIs are employed in lending to onboard the debtors. The practice of traditional onboarding requires a lot of documents, tiresome, time-consuming, and full of errors. The firm character of the traditional onboarding process has opened the way for the digital onboarding of borrowers. Digital onboarding gets completed in a couple of minutes when compared to the traditional onboarding process.

Credit underwriting APIs provide lenders the relevant and accurate information to set up ideal financial loans for the debtors. The aggregate customer credit data from various third-party resources and sends it through the algorithm to enable financial institutions to make better financial decisions.

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Efficiency For Fintech Firms Though Access To Financial Data Securely

Traditional banks and lenders are looking for ways to bolster productivity and improve their flow of daily work. These fintech firms crave to assure more time can be spent in nourishing customer relationships and earning a share of the wallet. A very effective and yet extremely under-utilized way to improve operational efficiency is to create processes that allow your firm to securely manage your customer financial data with ease and in an efficient manner. As business financial data gets shared among customers and fintech firms, the data needs to be secure.

Credit underwriting advisors at fintech firms are overwhelmed by the quantity of financial data they deal with — from new credit applications — a time-consuming process that often means credit underwriters spend most of their time getting bogged down by the manual process.

Let’s glance at the below stats to brush some brightness to this subject:

●    46% of employees of credit underwriters still spend time on inefficient, manual underwriting daily.

●    Experts spend almost 50% of their time searching for data and take an aggregate of 18 minutes to find numerous financial data.

●    Data problems account for more than 21% of everyday loss of productivity.

The stats and figures related to financial data integration go on and on. To say the least, there is a genuine concern here at hand for fintech firms that are seeking to improve their productivity. Having admittance to normalized financial data allows fintech firms to make right and solid financial decisions for their customers.

Having secure admittance to customer financial data with financial data APIs has made the lending process simple and efficient. The financial reverberations and business associations around noncompliance cost your firm not only a notable sum of money, but it also hinders your workflow.

Not only does having secure access to customer financial data help fintech firms in the credit decisioning process, but it also directly improves the creditworthiness of their customers.

Having secure admittance to customers' financial data significantly decreases overhead expenses and backend processing expenses associated with the manual process, paper-driven processes into automated, secure, digital processes of the future. Beyond that, accessing accurate and secure financial data from your customers allows fintech firms to make better financial decisions for your customers.

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How Fintech Technologies Help Tackle Data Sharing & Security Concerns

In this new and quickly expanding universe of open banking, it's an ideal opportunity to show that data sharing and security is not something to fear of. 

The new time of open banking is without a doubt developing at a rapid pace, with research anticipating more than 64% of UK grown-ups will be adopters by 2022, alongside 71% of SMEs. This is a genuinely encouraging marker for the fate of more extensive drives like open financing and open data sharing – however, there is as yet one obstacle to overcome. 

Research demonstrates that a few buyers and organizations are as yet watchful or ignorant with regard to open banking. 51% of respondents guarantee to have never known about open banking and 61% case to have never utilized it, regardless of 80% conceding to presently utilizing at least one versatile finance application. ING recognized this pattern as the 'demeanor conduct hole' by which what respondents guarantee and how they act with regards to their accounts "doesn't really adjust."

Many SME customers don’t fully disclose their business financial data with SMEs because of data security concerns. What should be instructed is that security, assent, and control are at the actual heart of digital data sharing and security. The most common way of utilizing Financial Data APIs to associate financial platforms is altogether safer than sharing financial data through email, with 95% of IT pioneers expressing that customer and business financial data is in danger on email, as per an Egress report. 

As recorded by The Coalition for a Digital Economy (Coadec), "APIs are right now best practice for data sharing and security. They are far better than the past method for data sharing and security, screen-scratching" – a strategy for catching information by putting away clients' accreditations.

[henrysmith81]

How Emerging Technologies Are Improving Lending Process And Mitigating Risks

Due to the rise in emerging technologies, innovations are taking place in the fintech industry at a rapid pace to make things easier. So, many fintech enthusiasts are looking for new technologies to improve their lending process and exhibit how new technologies can help in making better & faster financial decisions by mitigating the risks.

Financing not only has always been an important factor in the success of businesses but it is also a lifeblood of small businesses. Unfortunately, these businesses most likely lack to meet the ever-growing expectations of customers. Lack of customers' financials and historical cash flow data, and a lengthy and complicated underwriting process, have been the reasons possibly behind this.

Lenders and credit unions do necessary verifications before giving credits to their potential customers. To give away credits, financial institutions need to make sure that the potential customers don't have any fraudulent transactions in the past or any upcoming cash gaps. For this, they would verify customer authenticity by manually going through their business financial accounts and third-party accounting tools to get data on customers' financial health and prepare underwriting.

Typically, the cycle of lending is differentiated into four different steps and begins when the customer expresses his requirement for credit as a financing request. The lender or credit union will verify the borrower’s credibility by looking into his business financial data. Then they validate the data obtained from different sources. And lastly, they maintain the records for data processing purposes, following the authorization or rejection process.

Onboarding APIs are employed in lending to onboard the debtors. The practice of traditional onboarding requires a lot of documents, is tiresome, time-consuming, and full of errors. The firm character of the traditional onboarding process has opened the way for the digital onboarding of borrowers. Digital onboarding gets completed in a couple of minutes when compared to the traditional onboarding process.

Now, with the help of financial data APIs, things have been made simple and can be done digitally. Verifying and examining customers' previous financial activities is as simple as doing a Search engines search. Credit unions and lenders can look for the information of potential clients and save whatever required data they need to save. Credit underwriting APIs provide lenders and credit unions the relevant and accurate information to set up ideal financial loans for the borrowers. They aggregate customer credit data from various third-party resources and send it through the algorithm to enable financial institutions to make better financial decisions.

[henrysmith81]

The Power Of Financial And Accounting Data APIs in Fintech Sector

The Fintech world is pretty huge. From chatbots, money transfer platforms to the blockchain sectors. Enthusiasts of the Fintech industry use APIs to provide customer-oriented products and to brim over bequest banking models.

What is the meaning of an API?

A group of syntax or functions created to transfer and access the data from one platform to another platform defines an API also known as the Application programming interface.

For example:- Making payment via a money transferring app. APIs are changing the direction of customers how they interact with financial applications in day-to-day life and all these actions happen in real-time.

Benefits Of APIs In The Fintech World:-

APIs are Cost-Effective:

Years ago, only primitive services were used by banks like manual underwriting, etc. From underwriting to lending all these services were very costly and time-consuming. But nowadays, with the help of financial and accounting data APIs, credit unions and lenders have access to a wide range of services to reach customer expectations cost-effectively.

Empowers Fintech:

Earlier banking institutions were quite deceptive about their customer information security. It was the best thing, but it failed to give convenience. Financial data APIs have opened floodgates to create many apps and services to access customers' business data easily and securely.

Real-time access:

Banks and lenders no longer need to invest time in gathering customer business data. With the help of financial data APIs, credit unions and lenders are now leveraging real-time access to customer financial data in a single click that is helpful to make better and faster financial decisions.

Lending:

FinTech is revolutionizing the way consumers obtain financial loans. The technology permits us to personalize the loan process and customize it to each individual depending on factors such as income, credit history, etc. This makes it much easier for folks to borrow money and considerably raises entry to credit in underserved populations.

Furthermore, consumers can ask for their credit reviews multiple times annually. In doing this, it is possible to monitor the health of your credit with time. This particular can be helpful in regards to controlling credit and making better selections about the type of loans or various other financial products that would be right for you. This is a great advantage because you could cut costs by not trying to get the same loan repeatedly.

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Cash Flow Forecasting Importance For Small Businesses

For small business owners, whether they are from any region in the world, cash flow has been one of the most challenging and stressful concerns for their businesses. With top cash flow management, you can look for the success and longevity of any small business. Even accurate cash flow forecasting has been prominently proved as the only solution for SMBs to get rid of the mysteries and stress about cash flow.

A cash flow forecasting is an important tool for you as a small business owner or an accountant as it helps to estimate the cash inflows & outflows of your/client's business over a specific period of time. And, there are some key reasons that cash flow forecasting is used as a vital tool for small businesses:-

Know when a small business may have short of cash: cogitate it as a wake-up call to predict and take preventative actions to fill the cash gap within a timely manner.

Stay updated to understanding the role of cash in a small business to get confidence about the future growth of the business.

Helps business owners to identify current cash positions and the impact of levels in the business to make even better decisions for their business growth, investments, and credit commitments.

A cash flow forecasting can help with better planning for growth and determine possible short-term business loan needs because sometimes the growth isn't equal to sales with growth in the amount in hand due to higher additional sales or the match in supplies and resources. That's why cash flow forecasting is the right tool to deal with such scenarios.

Recognize possible customer payment issues in a timely manner as delays in payments cause major financial stress on a business but reviewing a regular cash flow forecast can be helpful knowing negative tendencies in customer payments and business owners can take preventive actions at the right time.

The use of forecasting cash flow also demonstrates a small business owner’s delivery to invest time in the right management.

In today’s digital era, multiple third-party tools can help in accessing real-time data to feed into cash flow forecasting. Harnessing the facility of technology can mean the sting over rivals because the ability to reply to changes during a business environment is supported by knowledge and clarity around the expected cash position.