The technology revolution has changed the banking sector, and the internet and mobile revolutions are continuing to accelerate the pace. From online banking through to mobile payments, the way that businesses exchange money with their clients and customers has completely changed – and is still changing. In addition, financial technology is having a huge impact on the flow of money on markets and exchanges.
Technology has made major improvements
Technology and the internet age has made managing finances and accounting operations dramatically easier. Whereas even small businesses had to maintain reams of paper records and tediously transact in print on a day-to-day basis, many businesses can now operate in a paperless fashion – and transactions are concluded instantly in many cases.
The internet has been a major driver of this – businesses of all sizes are conducting financial transactions over the internet, from online banking through to entire online accounting systems. Sending an online invoice to a customer and expecting payment online is now commonplace, offering both the seller of goods and services as well as the buyer a more flexible and quicker way of transacting.
Impact on small businesses
Few entities have felt the impact of tech on accounting systems the way that small businesses have. Customers are now increasingly expecting to pay in electronic fashion – whether this is by using their mobile phone, a contactless credit card or on the internet – and small businesses have had to adapt to an increasingly cash-free society.
There is some initial cash outlay and adjustments along the way of training personnel and changing operating procedures. However, the ability to seamlessly bill customers online and reconcile payments in an online accounting system has taken away a lot of the manual work that a business accountant or accounting assistant has had to do in the past.
Advantages for businesses and consumers
Technology has brought down transaction costs substantially. In other words, the costs involved in facilitating the exchange of goods and services is a lot less than it was. Regulatory input has been a contributing factor. With maximum caps on the cost of credit card transactions, some businesses are now finding that making using of electronic transactions is cheaper than handling cash, or the costs involved with processing a cheque.
Further reductions in business costs have come in the shape of less money spent on staff who manage accounting operations, and reducing the costs involved in storing accounting records. Businesses that have fewer overheads can reduce the prices that they charge to the consumers of their products and services, and so buyers of goods and services are benefiting from the reduced business costs.
Consumers are also seeing the advantages that tech has brought to business accounting systems: it is now very easy to link up personal payments systems with the online transaction systems of small businesses, making it simple for consumers to keep track of their spending. Yet perhaps the main advantage that buyers of goods and services are seeing is the impressive improvement in the ease and speed of payment that the last few decades of technology advances have seen.