Practice Management Tech Trends

How the Expansion of Accounting Technology Has Changed the Face of Business Financing

Written by Meredith Wood

It’s no secret that technology has revolutionized the way we do business. We’re in a world in which we can communicate with customers 24/7, collaborate with team members across the world, and increase  productivity with endless software options in nearly every area of our companies.

In the accounting industry, specifically, technology has enabled accountants to step away from slaving over tedious paperwork, and start embracing roles as financial advisor to their clients, opening a whole new suite of offerings.  

But accounting technology has changed more than just accountants’ lives. Its impact on many business processes, such as applying for financing, has been immense.

Here are a few ways accounting technology has changed the financing process for businesses—and how your firm can take advantage of this.

Simplified Application Process

Throughout the course of the past decade, online lenders have become a popular alternative to traditional banks. These online lenders offer faster, simpler processes to borrowers and, in many cases, more options than traditional banks.

What’s particularly interesting is that, in an effort to simplify the process as much as possible, many of these online lenders are starting to integrate with a business’s accounting software during the application process.

As these lenders are able to get the financial information they need from the accounting software, this means the application is much shorter and more streamlined for the small business owner.

In fact, there are even some lenders, such as Fundbox, that requirean integration with QuickBooks or other accounting software in order to apply for their invoice financing product (it is not required for their line of credit product). There are others, such as Bluevine, where the integration of accounting software is highly encouraged and creates an even better experience for the business owner. Kabbage is another lender that allows borrowers to sync their accounting software for an even easier experience.

While not all online lenders have embraced integrating with accounting software to simplify the application process, one can only expect that as technology continues to advance a process where borrowers simply connect their accounting and bank accounts is all it takes to get a loan.

Faster Approval Process

technology has revolutionized the way we do business

Not only has accounting technology made it easier for borrowers to apply for financing with lenders like those mentioned above, it has significantly quickened the underwriting process. Traditionally, when applying for a loan, business owners would provide all the required documents—and then wait for a bank (or other lending entity) to review it. The turnover required weeks or months of uncertainty.

But, these tech-leading lending companies that are utilizing accounting and bank integrations are actually turning around much faster approvals (often in a matter of days). The access to this technology gives them twice the information at a fraction of the wait time, getting funding faster to these small business owners in need.

Access to More Information

When lenders gain access to a borrower’s accounting software, they’re able to learn more about a business than ever before. Singular documents, whether a few months of bank statements or one P&L, show a snapshot of a business. They don’t tell the whole picture.

But, with access to a business owner’s QuickBooks or Xero account, these lenders are able to understand so much more about a business—the seasonal flows, financial habits, historical numbers, and so on.

On one hand, for small businesses with their books in order, this is a big win. Let’s say, for example, their business is a ski shop. Their finances are going to be strongest in the winter time, and really slow down in the summer. When a lender can see the whole picture, it works in this borrower’s advantage.  

Of course, the other side of this is the business whose books are a mess. When a lender can see at all, there’s no way to hide it.

Given that many lenders are moving in the direction of utilizing accounting technology in their process, it’s more pertinent that business owners get their financials in order. Most businesses will take on some sort of funding throughout the course of their business’s history, and as accounting professionals you can certainly have a role in ensuring your clients get the best funding possible.

As accountants role as financial advisors to businesses continues to evolve and grow, never forget to mention that your ability to help these businesses get their financials in shape can help in many ways they might not realize—like getting a small business loan.

About the author

Meredith Wood

Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.

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