Digital banking vs traditional banks

 

 

 

Digital banking is no longer a novelty as more and more customers discover the advantages of doing all their banking online. And both personal and business customers are seeing the benefits. Due to the technology evolving quickly, new features and services are being added all the time, enhancing what we can do with digital banking.  

Traditional banks are seeing that digital banks are a real threat and are responding by trying to offer similar online services. However, for the most part, these are based on an archaic banking model and simply can’t compete in terms of pricing, functionality or added value features. 

 

 

24/7 banking has arrived 

 

At a time when just about everyone has access to the Internet, even on the move, banking online is easier than ever. Now, you can access your account anytime, making money management effortless, which is especially handy if you’re running a business.  

The new breed of fintech companies have made it easier to connect and manage your financial life on more platforms, such as mobile devices and tailor-made apps, so you can connect with customers round the clock. These days, online banking isn’t simply about checking your balance and paying bills – you can do a whole lot more, such as receiving payments from customers.  And because of Open Banking, you can do it all in conjunction with your old traditional bank account. 

 

 

More convenient 

 

When was the last time you took a cheque from a customerProbably not too recently. Because more people are making payments online, there is less need to go to a physical bank to lodge cheques or cash.  

Even ATM usage is falling as contactless payments are being completed more than ever before. The Covid crisis has added to this as fewer people want to handle money due to the risk of infection. This is set to continue when the pandemic has passed.  

Best of all, many new online banking platforms interface seamlessly with other software packages, such as those that handle accounting, taxation and payroll. 

 

 

More choice 

 

Fintech companies, such as KoalaPays, provide customers with more choice than ever before. For example, we offer unique services targeting specific needs of our business customers, and adding more value than a generic traditional bank ever could.  

Our easy-to-use platform allows clients to hold and convert over 20 major currencies, which makes cross-border payments quick and secure. Furthermore, having a fully digital account, makes managing your cashflow and identifying how you can improve your revenue streams easier than ever. 

 

 

Fewer fees 

 

With no costs for maintaining physical branches, online banks are very cost-efficient, especially as many transactions carried out online don’t require third parties, as it is the case with traditional banks. Automation of many banking processes also means fewer staff are needed. All this adds up to considerable cost savings over the traditional banking model – savings that can be passed onto customers meaning fees are exceptionally low and, in some cases, only charged for premium services. 

 

 

Faster and more efficient 

 

Everything is faster and more efficient online and this applies equally when it comes to banking. Since a lot of processes are automated and stored in the Cloud, paper errors are significantly reduced. Even customer support is better. You can get answers to most of your questions by email, through an app or by using a chatbot. 

The traditional banking model has become outdated. Fintech companies have made digital banking faster, more convenient, cheaper and more useful for customers. New functionality makes it easier for clients and businesses to manage their finances in ways that were impossible before and provide new types of innovative services that meet the unique needs of their customers. 

Four steps to creating an effective business budget

 

 

 

A healthy business depends on its finances. And managing your finances successfully means developing a budget that works for your business. In fact, some entrepreneurs would say that your budget is the cornerstone of your business. While a budget is obviously useful for keeping you in the know when it comes to cashflow, it’s also there to help you make informed decisions, identify when it’s time to cut costs, grow revenue or invest in the business. 

Here are the four main steps to go about creating budget that works for your business.  

 

 

Add up what you have coming in 

 

The two main components of any budget is income and outgoings. Start by listing your revenue streams and how much you expect these to bring in. While your income will vary from month to month, be as realistic as possible.  

If you haven’t been in business long enough to figure out a monthly average for income, it can be beneficial to be overly-conservative in your estimate as this may give you some headroom in the event of an unexpected drop in business revenue. The longer you’re in business, the easier it will be for you to see fluctuations in revenue due to seasonal demand and other factors. This will be critical information when planning ahead for the leaner months. 

Remember to calculate for total revenue, not profit. That comes later.  

 

 

Subtract what’s going out 

 

Outgoings will fall into several categories, including fixed costs, or the bills you know you have to pay each month (and how much they are). Rent, utilities such as Internet/fixed phone charges and any loan repayments are good examples of fixed costs. 

Next, there are variable costs, or expenses you are expecting, but can’t be fully quantified as they vary from month to month. These include items such as electricity/heating and travel expenses. It’s a good idea to add these up each month over a period of time, so you can come to a realistic monthly average going forward. 

You also need to consider one-off expenses, such as those for an emergency purchase or repair. These can be very difficult to cost, so it’s a good idea to put a regular amount each month into a ‘sinking fund’. That way, you’re prepared when the unexpected happens and the money is there to help you cope.  

 

 

Balance the books 

 

Now it’s time to balance your revenue with your outgoings. This lets you forecast your cashflow and (hopefully) your expected profitability. This is also known as your Profit & Loss (P&L) statement. If the figures don’t add up, then it might be time to go back to the drawing board and see where savings can be made or new revenue streams can be added. Straightaway, you’ll be able to see how having these figures can help with decision-making when it comes to your business.  

 

 

Make your budget work for you 

 

Once you have your basic budget in place, there are things you can do to make it more effective, so it helps you manage your business finances better. Your first step here should be to invest in technology that can help automate the budgeting process. That way you don’t have to spend too much time on it each month. Here, it’s important to use a software package that works best for the size of your operation, as well as your business model.  

Of course, there are other technologies that can help with your finances, such as getting an online business bank account with a company like KoalaPays. With an all-digital payments platform, you can easily make money transfers, convert between currencies, manage your money and even use our online Payroll system.  

It also allows you to process payments from customers. This can be set up in a way that integrates with your existing systems and makes it easier to manage your overall finance function.  

Depending on the size of your businessperhaps the best way to create the most effective budget is to hire an accountant. This has the added benefit of making sure that you don’t fall foul of the law when it comes to tax compliance. 

Few business owners like dealing with budgeting and accounts, but it‘s something you have to get to grips with if you want your business to succeed.  

Five tips for managing your business accounts

 

 

When you’re running a small business, it can be a struggle to devote all the time and resources you need to manage your accounts effectively, but it’s vital that you do. After all, accounts and cashflow form the foundation stones of a successful business.  

Here are five strategies you can implement to make managing your accounts easier.  

 

 

Get the right accounting software 

 There is a huge range of accounting software packages out there for businesses and they’re easier to use than ever. What’s more, many come with additional features that can be really useful for your business. The key here is to find software that meets the needs of your business and can offer the best value for your investment. 

While you’re at it, research apps that can help you be more organised and keep track of your incomings and outgoings when it comes to both personal and business finances. 

 

 

Don’t leave accounts to year end 

Make sure you don’t leave it all until year end. Keep your accounts up to date as you go along, even if you have to hire someone to do it for you. There’s nothing more certain of disaster than leaving all of your accounts to year end and going to an accountant with a box of receipts and invoices. Again, there are platforms out there to help with this. All you need to do is devote a little time every day or an hour at the end of the week to input the relevant details. The technology should do the rest. 

It’s vital to comply with tax legislation and all the deadlines that come with it. Keep all your receipts in an orderly fashion and include all those important dates in your business diary/calendar. While taxes can be daunting, a visit from a tax inspector or an audit can be a real strain on a small business with limited resources.   

Likewise, make an estimate of your tax liabilities for the year ahead and ensure that you set aside a reasonable amount each month to make sure you’re covered when making your annual tax return.  

 

 

Keep personal and business accounts separate 

 If you’re just starting out, or are a sole trader, it can be tempting to mix your personal accounts with your business accounts, but this can be a big mistake. Open a dedicated business account. That way your personal finances stay personal and your business accounts are much easier for you or your bookkeeper to manage. Above all, resist the temptation to secure your business finances with personal funds as it will create an accounting mess which you may need professional help with later on. 

 

 

Look after credit control 

 While it’s important to pay your bills on time, it’s just as important to stay on top of credit control. After all, this is what keeps cash flowing through your business, so you can pay those aforementioned bills, as well as yourself (and, of course, any other staff you have working for you), while continuing to invest in the success of your business.  

Make sure you have a great credit control strategy in place and follow up on invoices as soon as they become overdue. Run credit checks on businesses before offering credit terms and be clear upfront that your terms of payment must be met. If necessary, charge interest for late payment.  

 

 

Get help  

 The best way to get to grips with accounts is to educate yourself. When you’re running a business, accounting and taxes are a vital part of the puzzle. Fortunately, there are plenty of courses out there that can help you get acquainted with the basics, covering topics such as VAT or online filing. The more you understand business finance, the better you will be able to make money management decisions that influence the success of your business.  

Accounting for a small business may be daunting at first, but with the right technology, knowledge and a little help, you can put in place the systems that work best for your business. It’s vitally important that you invest the time and effort to get it right. Financial mismanagement is one of the leading causes of failure in small businesses.  

Which is why, here at KoalaPays, we provide tailored solutions to make business finance management a breeze.  With us, your business will get its own dedicated Account Manager to provide you with a first-hand advice and help you look after your financial affairs. 

Five ways for small business owners to increase productivity

 

 

If you own a small business, then you probably feel that there isn’t enough time in the day to get everything done. Prioritising tasks when it comes to cashflow, marketing, admin, tax and dealing with customers isn’t easy. Making the most of the time that is available to you, means being as productive as possible.  

Fortunately, there are ways in which you can increase productivity across every area of your operations.  

 

 

Use productivity apps 

 

If you don’t keep track of the various tasks and projects you’re working on, you won’t get much done. Today, there are many productivity apps designed for small businesses and entrepreneurs to help you organise your workload and your time.  

Use bespoke apps such as Evernote to create To-do lists for short, medium and long term goals. Work through them methodically, delegating where you can. Give tasks a due date and a value, in terms of how easy they will be to complete. Work on the most difficult ones early in the day. If you start your day by completing the most difficult task, then that day has already been a success. Review your To-do lists daily to keep them up-to-date, removing tasks that are no longer relevant. 

 

 

Automate your business 

 

The technology is now available to automate many business tasks and processes, such as payroll, invoicing, CRM and even social media. Make use of it. Research the best solutions for your venture’s needs, as well as any services that can make your job easier. The more you can automate, the less you have to do and the more time you have to focus on core business projects.  

Continually review what’s out there that can help. For instance, at KoalaPays, we’re always looking at new ways to automate tasks for our clients through our platform and add new services that make it easier for you to run your business.  

Likewise, if you find that you’re constantly sending the same emails to customers, suppliers or business partners, create templates for them. That way, they become much quicker to deal with.  

 

 

Consider outsourcing 

 

By using a payment solution provider such as KoalaPays, you’re already outsourcing tasks that used to be done in-house or via a bank. You can’t do everything yourself, so consider outsourcing other functions, such as marketing, payroll, or another specialised area to free up more of your time. You’ll also get the expertise you need to run these functions more efficiently. You might even save money. 

Another way to freeing up more of your time through outsourcing is to hire a virtual assistant. This can be done very inexpensively through a freelancing platform, as long as you take the time to find the right person with the best skillset for your needs.  

 

 

The Pareto Principle 

 

The Pareto Principle, also known as the 80/20 rule states that in any project 80% of the results come from 20% of the effort. You can use this rule to decide which tasks you take on, or which to prioritise. This means reviewing every project that comes your way and investing your time on those which will deliver the most results for the least effort.  

Done right, this can massively boost your productivity. For instance, is there a marketing channel that takes up a lot of your time and isn’t delivering solid returns? If so, cut it out and focus your energies on another channel that is delivering more sales for the business. 

 

 

Look after you 

 

The longer you work, the less productive you become. Take time out to recharge your batteries. Make sure you eat healthily, get enough sleep and exercise. That way, when you are at work you know that you’re operating at optimal effectiveness. Spend time on hobbies and with loved ones. This can give added perspective, focus and clarity to why you do what you do in the first place. 

While all of these things can help you be more productive with your time. It’s important to realise that there are certain non-essential tasks that need attention too. Spend a little time, perhaps just fifteen minutes at the end of the day, to focus on non-urgent tasks, such as looking at what your competitors are doingcarrying out market research or simply catching up on industry news. Because these tasks aren’t seen as urgent, or essential, small business owners often neglect them. But, while they may not deliver much in terms of immediate rewards, they can result in unexpected insights or opportunities that benefit the business in the long term 

Tips for managing your payroll more efficiently

 

 

Payroll can be a complicated business, especially for small firms that don’t have the necessary resources for a fully dedicated payroll department. But it doesn’t have to be. There are a lot of tools out there that can help you streamline and manage your payroll much more efficiently. The good news is, today, a lot of payroll functions can be simplified with the right software. And even payment service providers like KoalaPays can provide tools as part of your business account to make it easier to integrate your business accounts with your payroll.  

 

Start by getting the right software  

Every business, big or small, has different needs, so it’s important to research what payroll packages are out there to get the best most appropriate solution for your company’s needs. Make sure you get a software package that integrates with the rest of your IT infrastructure, as well as one that’s compatible with other technologies.  

Many payment providers are now integrating their services with payroll software so companies can pay their employees more efficiently. Here, at KoalaPays, we see the technology progressing all the time and are continuously working on further developments to make it even easier for companies to manage their payroll in the near future. 

 

Train your staff up 

 Having software that can automate many of your payroll functions means you shouldn’t need to hire too many extra staff to run it, but it’s important to make sure that staff responsible for payroll functions are fully trained to make sure you get the most from your payroll package and errors are minimised. Sending just one dedicated member of staff on a training course could be one of the best investments you make.  

Don’t neglect compliance. It’s vitally important that whoever is in charge of payroll also knows the rules regarding employment law and tax. This is especially important if you trade internationally. Rules are complex and updated regularly so it’s advisable to get professional advice when it comes to regulatory and statutory compliance. 

 

The joys of being paper-free 

In this digital age, there’s no need to give every employee a wage slip, especially as nearly all salaries are paid directly into a bank account. Preparing and posting wage slips is a very laborious process and can cost your business money. It’s much more efficient to do it all online and almost completely eliminate paperwork.  

 

Regularly review your payroll processes 

Your payroll needs will change as your business evolves. Make sure the processes you have in place are still the best for the needs of your company. Do regular audits of work flow process of the payroll function to see what’s working and what could be done better.  

Payroll isn’t the most fun, so why devote so much time to it. Put these tips into action and you and your staff will have much more time and resources to focus on core objectives like growing the business.  

Understanding Open Banking and APIs

 

 

Open Banking has come about as a result of the EU PSD2 directive – a piece of legislation devised to standardise payments services across Europe, protect consumers and improve the speed and cost of cross-border payments in the EU. APIs (or Application Programming Interfaces) allow third party developers to build apps, websites and services around banks and financial institutions. These APIs are used as a secure method of communication between Trusted Third Parties (TPPs) and online banking systems.  

 

What exactly is an API? 

Typically, these APIs are developed by FinTechs in order to offer their own technology and services to traditional financial institutions, as well as to their own customers. In effect, the API gives these third parties access to account information, as well as balances and transactions, at the customer’s primary bank.  

 

While there are three types of APIs: Private APIs, Partner APIs, and Open APIs; it’s the Open APIs that are responsible for making data available to third parties. At their most basic, APIs allow different computer programs to talk to one another in a language they both understand. This is vital for banks, as it allows their older systems to integrate with newer ones developed by FinTechs, so they can offer more products, and ultimately, more value to their customers. 

 

In fact, APIs have been around a long time, but it’s only really since January 2018 when PSD2 came into effect that their usage has increased among the financial institutions, as they see the need to keep up with the services offered by FinTech. 

 

Benefits of APIs 

While banking institutions benefit from being able to offer more services to their customers, these APIs can mean big benefits for businesses too. This is because banks are able to offer access to third party services making it easier for businesses to carry out certain transactions, such as making and receiving cross-border payments. The benefits don’t stop there. Platforms such as KoalaPays are developing new tools that can help businesses in terms of reporting, cashflow, payroll management and other functions. 

 

While the move to Open Banking has been great for start-ups and FinTechs, it’s online businesses and their customers that are seeing the advantages. Typically, this has meant faster, more efficient and secure services, especially in terms of cross-border payments. SMEs are now able to accept payments from across the world quickly and efficiently, at less cost, so cashflow moves faster through the business. 

 

A good example of this would be a Payment Initiation Service Provider (PISP) connecting directly to a customer’s bank account to make a transaction. This means an online retailer can take a payment directly in real-time rather than authorising a credit card. 

 

The future for APIs and Open Banking 

 APIs are driving industry innovation, disruption and connectivity. Here, at KoalaPays, we’re using the technology to make it easier for customers to do business with our own clients’ ventures. But there’s much more to come. APIs will continue to evolve and incorporate additional features that will offer more functionality and usefulness for businesses in every sector. 

 

Even though PSD2 is a pan-European initiative, other developments are taking shape outside of Europe in places such as South America, the United States and Australia. These should lead to further co-operation between financial institutions in other regions of the world, affecting services like cross-border payments.  

 

APIs transfer information securely and conveniently and therefore enable financial institutions to connect with businesses and consumers instantly. This allows banks and financial service providers to boost the scope of products and services they can offer.  

 

When bank accounts were invented, they weren’t built for an online world. APIs are making that happen and, ultimately, will have a profound transformative effect on the future of banking. For businesses to reap the rewards, companies should look to payment solutions providers such as KoalaPays to understand the real business benefits these platforms can offer. 

 

 

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