Convenience: The technology tao to keeping commercial finance clients
Picture the scene. You’re the owner of a small business. You started factoring your invoices two years ago. You chose your factor because they offered a decent cost of capital and made it easy to start borrowing. You simply connected your accounting system to their online system and they did the rest.
Since then, your factoring facility has been ticking along nicely in the background. You sell to customers; your factor picks up each invoice automatically; you receive funds straight to your account.
But time has passed. You’re wondering whether your factoring facility is still the best deal for your business. You know other lenders offer cheaper rates.
So, you make enquiries.
Yes, another lender can save you money on your current facility. But there’s a catch.
The new lender can’t connect to your accounting system. To access funds, you’ll need to download data from your accounting system, reformat it and upload it to the new lender’s system – every single week.
Do you stay with your current lender or do you make the switch?
Many clients would choose to stay, rather than take on extra work with a new bank or lender.
Cost of capital is only reason to choose a lender. Convenience counts. Banks and lenders that use technology to save their borrowers time and effort are more likely to retain those clients – especially if borrowers can’t find the same level of service elsewhere.
In the example above, I described how Open Accounting can save borrowers time and money. But lenders can implement countless other technological changes to make their clients’ lives easier. Automated payment processing, automated reconciliation and embedded finance can all help borrowers to save borrowers time and effort on a daily, weekly or monthly basis.
Investing in technology isn’t the only way that banks and lenders can make their services more convenient, of course. They could expand their customer service teams. They could offer a wider range of products. They could make their product terms more flexible.
The difference is that borrowers may not see or appreciate these changes. So, they may not be enough to convince their borrower to stay with their lender.
In comparison, technologies like Open Accounting offer borrowers a level of convenience that’s hard to ignore. Borrowers must upload their ledger manually every week, or not at all. Payments are processed in hours, or borrowers are required to wait days. Buy now, pay later is offered at the point of sale, or it isn’t.
Everybody knows that it costs less to keep a client to win a new one. Technology can be the key to giving your borrowers an experience they won’t find elsewhere – and a good reason for them to never have to look elsewhere!
This article was originally published on TRF News, here.