Now or never: Why today is time for SME lenders to optimise their customer journey

Lenders have faced a fierce battle over the last six months, as COVID-19 put domestic and international marketplaces under immense, extraordinary pressure.

Here in the UK, banks strained raced to issue issuing £41 billion of government-backed loans1 in response to the lockdown crisis. Meanwhile, however, non-bank lenders have suffered a significant drop in business2, with businesses favouring bank support despite the loans’ underwhelming approval rates (just 51%3) and delayed cash drag. In May, the number of bank loan applications in the UK broke records4;by contrast, the country’s asset finance market plummeted by a year-on-year 60%5.  

So far, so tough. But while independent financiers must work harder to win business, the COVID crisis poses an extraordinary opportunity. Getting ahead of competition could be extremely profitable, with experts forecasting British SMEs to borrow an average of £65,000 over the next twelve months6.

To take advantage of the opportunity, lenders must stand out from the crowd.

In our latest podcast, Dancerace CEO Elliot Avison sat down with Co-founder and COO of leading accounting integration software firm Codat to discuss three ways for B2B lenders to embolden their business and captivate new customers.

#1.   Be more human 

The way businesses make decisions is changing. Teams now spend just 17%7 of their procurement time talking to a real person. But that time is crucial, because getting it right can increase the chance of a sale by as much as 90%8. 

Experts have found that the best sales results come from so-called 'Information Connectors'9; helpful, expert individuals who handle customer queries with the most relevant information. As human interaction becomes rarer throughout the lockdown, it’s also become more valuable. 

B2B lenders who adopt a hybrid service of digital efficiency and personal contact will add value to their customer journey. Providing a helping hand is more important still for those businesses applying for credit for the first time – as will be the case across the world.

#2.   Extract accounting data seamlessly 

77% of SMEs struggle with complex procurement processes10, which ultimately prevents them from making B2B purchases. “Applying for finance shouldn’t feel like a second job”, stresses Alex.

The easier your customer onboarding process, the more successful it will be. Data extraction is one such way to simplify the credit application process for SMEs.

Data extraction technology – as provided by Codat in our backoffice, customer onboarding and customer portal systems – seamlessly connects to customers’ accounting platforms to extract their financial information. With this data, lenders can make faster, surer credit decisions.

“[Lenders] must get to that point where they can make more human-related decisions without huge operational overheads”, confirms Elliot. For independent lenders, digital onboarding and due diligence processes aren’t only more efficient; they’re also essential where lockdown has stopped risk teams from conducting on-site visits and in-person meetings. 

And data extraction isn’t only useful in the onboarding phase. Once a client has consented to their data being extracted, they can continue to allow the system to pull their ledger and invoice data throughout the course of their time with a lender. This removes the need to manually upload data for the customer and reduces the number of upload mistakes and potential fraud issues for the financier. Everybody wins.

#3.   Use enhanced data to offer different services

Using data extraction with our onboarding platform, lenders can pull up to seven years’ worth of accounting data from their new customer’s systems. This offers a treasure trove of information for lenders to learn from and respond to – something they must do as COVID shifts sands in all areas of business. 

We know, for example, that the number of days it takes to get an invoice paid is increasing and set to grow even further in the future11 12. In response, lenders must harness this unique time to offer new facilities that meet businesses’ needs today.

Offering selective invoice finance could be one such solution for lendersInvoice financing is one service which lenders could leverage. “[Lenders’ use of customer data] is going to be one of the most interesting things that will play out over the next few years”, comments Alex.  “With additional data you can move further up the receivables chain … and invoice finance will be in a really interesting position to take advantage of those additional points of which people can be financed”. 

Seizing the opportunity to improve user journeys by re-aligning resources and implementing new technologies like data extraction can and should drive success for B2B lenders in the post-COVID era. 

With these tools – and the data insights they offer – lenders can make faster, better lending decisions and offer greater support to customers, encouraging them to use invoice finance on a recurring basis in their business.

The field is wide open. Will you join the fray?


Listen to our interview with Alex Cardona at Codat via The Ledger, and find out more about our invoice finance and data extraction technologies via today.













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