What are the Top 5 FinTech Solutions for Amazon Businesses?
January 19, 2021
When you run an Amazon business, it makes sense to also manage your everyday business functions online — especially your financials. Fortunately, there are a number of fintech (financial technology) solutions that can help you digitize how you manage your money.
For years, technology has made it easier and less expensive for Amazon sellers and other online businesses to do their banking, optimize currency exchange, and get financing. Traditionally, these services are designed for large, brick-and-mortar businesses and include manual application processes, various (and sometimes mounting) fees, and — in the case of financing — low approval rates for online and e-commerce businesses.
For Amazon sellers, these conditions are less than ideal. They’re also hard to avoid from traditional providers. In most cases, traditional financial providers are working off of outdated legacy systems that require a lot of in-person and time-consuming oversight. This, combined with large networks of bank branches and other physical locations, costs traditional providers a lot of money — and these costs are ultimately passed on to you.
To save on traditional fees and get your finances to work harder for you, consider these five top fintech solutions for Amazon businesses:
1. Online Banking
If you make all of your money online, why don’t you bank online, too? Sure, you could use a traditional bank’s online and mobile banking options to transfer money, make deposits, check your balances, etc. However, these banks traditionally charge a lot of fees and impose minimum balance requirements and monthly transaction limits. What’s more, they offer little to no interest on your balance.
For banking that’s better for your bottom line, consider an online-only bank that offers more transparency and flexibility. With online business banks like Rho, there are no balance requirements, transaction limits, or hidden fees. Plus, you’ll benefit from high APY or Annual Purchase Yield (which is a fancy way of saying cash back or interest).
Because online-only banks don’t have the same type of infrastructure and overhead as a traditional bank, they’re able to offer business banking services for less. You’ll ultimately save — and earn — more money while avoiding the hassle of tracking things like your number of monthly transactions.
2. Global Currency Exchange
Dealing with currency exchange and international money transfers is a normal part of business for global Amazon sellers. And it adds up. Between transfer fees as high as 3% and unpredictable exchange rates, e-commerce sellers have to pay a lot to do business overseas. The good news is, there are alternatives.
Instead of using traditional currency exchange companies, you can opt for solutions like OFX that use technology to help you save on every overseas payment or receivable.
3. Capital Advances
As an Amazon seller, you are no stranger to cash flow issues. Payout delays of two or more weeks, marketplace selling fees, and other expenses quickly add up, making it difficult to invest in growth. It’s no surprise, then, that more and more marketplace sellers are turning to financing solutions to help them buy discounted bulk inventory, invest in marketing campaigns, or cover other large expenses.
A natural first step in any financing search is to look to your bank. Sure, traditional banks offer small business loans in addition to their business banking services. However, applications can take weeks to complete and approval rates are low for online and e-commerce businesses.
As you likely already know, there are a number of business financing alternatives on the market — including capital advances. By definition, a capital advance is an advance based upon your future revenues (i.e., sales). Companies like Payability offer capital advances specifically designed for Amazon and other e-commerce sellers.
Learn more about the difference between loans and capital advances and what it means for e-commerce businesses.
4. Cash Flow Solutions
Amazon does have a daily payout option, but it’s reserved for grandfathered accounts that started selling on Amazon over 10 years ago. So, unless you’re one of these accounts, there’s no way to change your payout schedule with Amazon directly. Fortunately, you can bridge cash flow gaps in other ways.
As we just mentioned, many sellers turn to financing to boost cash flow. Two popular and more traditional methods include business credit cards and business lines of credit. As you might know from experience, both of these solutions allow you to cover certain expenses as you wait for your Amazon payouts. It’s important to note that while they can help you overcome cash flow issues, they do not actually pay you daily or in real-time.
With business credit cards, you’ll pay interest if you carry a balance and you’ll be subject to fees depending on your account. For example, there might be an annual fee for usage as well as missed or late payment fees. While credit cards themselves are not cash, many come with cash back rewards that you can earn as you spend and pay off your balance.
On the other hand, lines of credit typically offer revolving access to cash that you pay for through interest on what you withdraw. In some cases, you also pay monthly maintenance fees. Traditionally, lines of credit are harder for small and online businesses to secure from large banks, but there are several fintech alternatives that offer business lines of credit.
Just keep in mind that both business credit cards and business lines of credit require credit checks and your usage of them will impact your credit in some way. If you’re looking for a cash flow solution that will not impact your credit score or require a credit check, consider Payability’s Instant Access, which is the only way for non-grandfathered Amazon accounts to get their payouts daily and in real-time.
5. Accounting Software
Bookkeeping and accounting are necessary in business. After all, if you don’t keep track of your financial transactions (the bookkeeping part) or regularly analyze your business’s financial data (the accounting part), you could lose money and miss out on opportunities for growth.
Having updated and properly classified financial records gives you a lot of insight into the overall financial health of your business. It helps you spot trends, identify areas of concern, and perhaps make other observations. You can better control your budgets, identify opportunities to save on expenses, forecast revenues and/or ROI based on things like marketing campaigns, confidently make major business expenditures, monitor overall business growth, and more.
If you’re not prioritizing your books, now is the time to start. But what’s the best way to do it? You could pay an accountant and/or bookkeeper or hire someone in-house. Or, you could try to do it manually on your own. The former can get expensive. The latter can lead to data entry errors, which can snowball into major financial ramifications.
Fortunately, there are online and cloud-based accounting services like Quickbooks Online and Bench that help you streamline and optimize your bookkeeping and accounting needs. With built-in analytics functions, you can get real-time reports and identify areas of improvement and/or investment. All in all, you’ll have more control over your financials — and your business’s growth.
Next Steps
As we’ve just laid out, there are a variety of ways to streamline your business’s financials, improve cash flow, and boost your bottom line. To get started, look at how you currently do your business banking, manage currency conversions and international money transfers, bridge cash flow gaps, and track your financials. If you see that you might be overpaying for these services or feel like you need better, more flexible options, it might be time to consider a fintech solution.
