5 Ways to Measure the Financial Health of Your New Business

The slow build-up of debt can contribute to the eventual collapse of a business, and small businesses are struggling now more than ever. Over time, your company may show signs of trouble, eventually moving into a deeper state of financial distress. And if the early signs are not actively addressed, your business can quickly snowball.


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Below, we’ll discuss how you can keep tabs on your company’s finances, which is instrumental for the immediate and future success of your startup

Cash flow test  

Cash flow refers to the movement of money in a business. If there’s more money leaving the business than there is entering, this is a sign of a business at financial risk.

If your business has poor cash flow, you may begin to struggle making essential payments to suppliers, creditors and employees. And if the money coming into your business fails to stack up against outgoing spend, you’re at risk for eventually falling into debt.

Balance sheet test  

A balance sheet provides a breakdown of your company’s assets and liabilities. If the value of outstanding debt outweighs the value of assets, your company may run the risk of operating while unable to pay those debts.

The following elements should be included on your balance sheet:

  • Your company’s tangible assets (such as vehicles and machinery used for daily operations)
  • Any physical cash held in your business
  • A breakdown of short- and long-term liabilities
  • A breakdown of any money owed to you, as this is important in terms of factoring in pending funds

If you find your business is asset-rich but has poor cash flow, this signals a problem for the long-term viability of your business.


Related: What Lenders Want to Know About Your Business Right Now

Month-to-month performance

If you are struggling to meet essential bills (such as rent and utility payments) on a recurring basis, this is an indicator of trouble.

If you find yourself in this position, it’s essential to enforce a plan of action early. The health of your business could quickly worsen and failing to make payments could result in legal action taken against your business. It may be time to rethink your financial strategy if you find your business is making late payments regularly.

In addition to late payments, hitting the credit limit on any of your business credit cards hinders your startup’s financial security, as you’ve exhausted any emergency funding available to you. This is very risky, since by using up all available credit, your business is left with no breathing room.

On the other hand, if you’re gliding month-to-month with enough funds to fulfill your business expenses and cover additional investment, this is a sign your business is on strong footing. 

Off-target budgeting

Accurate record-keeping allows you to stay within budget and ensure that your financial forecasting is on target. Inaccurate records could inflate the perceived value of your business, which could have drastic and damaging effects.

A budget can help you visually grasp the amount of money your business has. If your budget is on target, you can start streamlining your financial strategy by identifying how your business can work more efficiently.


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Accumulation of bad debts and late payers 

You will inevitably come across a handful of customers, suppliers and clients who are notorious for late payments. However, if this tardiness turns into non-payment, you’re facing what is called “bad debt.” Bad debt refers to the unlikely prospect of a debtor failing to repay funds owed to your business, eventually resulting in the debt to be written off.

An effective way of tackling bad debt is to set terms for non-payment, putting the possibility of legal action on the table. This will likely work as a deterrent for late payments.

Overview

If you suspect that your business is at the end of its financial lifeline, it’s essential to explore ways to keep your company afloat. Act early and identify any pressure points before they cause deeper injury to your business.

If your business is going full-steam ahead without any financial strain, it’s all the more important to put measures into place to prepare for a rainy day, ensuring that your business can support itself financially.

The post 5 Ways to Measure the Financial Health of Your New Business appeared first on StartupNation.

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Appway raises $37M, its first-ever funding, for financial customer management tools

With the renewed push for more of the services we use everyday to be accessible online and in a non-physical way, a company out of Switzerland that builds tools for financial services companies to interact better with their customers via the web is today announcing a round of funding to expand its operations.

Appway, which provides software to help banks and others that transact with customers to build banking, mortgage, regulatory compliance and other service management tools, has raised $ 37 million in equity funding from a single investor, Summit Partners.

Hans Peter Wolf, Appway’s CEO who co-founded the company with Oliver Brupbacher, said in an interview that the money will go towards continued expansion of its business, both by adding more customers and by building more tools for those customers in turn to provide services to their own users. He added that North America has been one of Appway’s fastest-growing markets, and so the plan will be to double down specifically there alongside existing operations in Europe and Asia.

If you’ve not heard of Appway before in the world of tech, that’s not too unusual: the Zurich-based company has been quietly living, bootstrapped and profitable, behind the scenes and under the startup radar since 2003. But in the last 17 years, it’s managed to amass a long list of impressive customers — a list that features 10 out of 25 of the largest wealth managers in the world, including Credit Suisse, HSBC, J.P. Morgan, LGT, LPL Financial and Deutsche Bank; the telecoms giant Orange, KPMG and others.

The services that it provides range from online banking, mortgage software and wealth management, through to account management, onboarding of new services and customers, and a long list of back-office tools to manage customers and data to help the financial services companies comply with regulatory requirements.

Business has been strong, but the reason Appway finally decided to bite the bullet and raise money, Wolf said, was to ride the wave of growth, and bring in new people to the board who could help guide what the next steps might be as its business matures.

He noted that Appway has seen an acceleration of interest in recent months — predating the current health pandemic, he added, but absolutely sped up with urgency because of it — related to “business transformation.”

Yes, that’s a term thrown around a lot in the world of enterprise, but it’s actually an important one that is propelling a lot of business for disruptive startups: huge institutions have been using the same legacy systems for decades, and that creaky infrastructure finally is being replaced with more modern and flexible software, often sold as a service from the cloud, in order to expand what companies can do for their customers.

That’s where the current pandemic has figured in a key way for companies like Appway. A lot of financial services — especially those at the higher end of the market (eg wealth management) — have long existed around the concept of personal relationships and years of face-to-face service, but much of that has had to be reassessed in recent times. Some might have bristled at or resisted the changes (or investments in the changes) in the past, their hand has been forced, so to speak, in current circumstances.

But coupled with the fact that so many people today are more accustomed to carrying out much of their lives online, the changes are turning out to be, in many cases, not as painful as you might think, and in the case of financial services, we’re seeing a big turnaround and embracing of the new platforms. And that means strong business funnels for companies like Appway.

There are a number of companies providing tools to organisations to help build and run services online. Those in the same general area as Appway include Pega, Intalio, Oracle, IBM and more. One key difference is that many of these are general purpose, aiming their low-code approach to a number of verticals, which in one regard makes them potentially much bigger enterprises, but in another means they cannot speak as specifically to the needs of any particular vertical. Appway’s focus on financial services in particular — and of course the fact that financial services happens to be a hugely lucrative industry — is one thing that stood out for Summit when making the investment.

“Unlike general purpose low-code development platforms, Appway seeks to address core pain points in the financial services industry by automating the flow of work to revolutionize the customer experience and drive digital transformation across organizations,” said Dr. Matthias Allgaier, a Managing Director at Summit Partners who will also join the Appway Board of Directors, in a statement. “We believe the company has delivered impressive, consistent capital efficient growth, and we are thrilled to partner with Hans Peter Wolf, his co-founder Oliver Brupbacher and the entire Appway team.”

When you hear about companies like these, successful startups that have been off the grid of tech media because they haven’t been tightly linked to the investment cycle or any obvious consumer news stream, suddenly raising money, you have to wonder how many more there are innovating and doing more good work in the same way.

One reason Wolf said that Appway never raised money before was because when it was founded, it was just how things were.

“In 2003, venture capital and private equity didn’t exist at all in Switzerland, and I don’t think the country’s startups were on any radar of any PE house,” he said with a laugh. “Ironically, the financial crisis was when we had our first successes in the US,” partly because of its regulatory compliance tools, which were suddenly in demand. “Now, I would say it’s a steady pattern, Appway made the decision to raise growth equity during an arguably even bigger crisis.”

Indeed, as we continue to see more activity spread out beyond the most-obvious tech hubs, it may well be that yet more Appways fall under the spotlight.

Startups – TechCrunch

GoBear raises $17 million to expand its consumer financial services for Asian markets

Singapore-based fintech startup GoBear has raised $ 17 million from returning investors Walvis Participaties, a Dutch venture capital firm, and Aegon N.V., a life insurance and asset management provider. The funding brings GoBear’s total funding so far to $ 97 million, and will be used to expand its consumer financial services platform, which is available in seven Asian markets: Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Founder and CEO Adrian Chng told TechCrunch that GoBear will focus on what it calls its “three growth pillars”: an online financial supermarket that evolved from the company’s financial products aggregator/comparison service; an online insurance brokerage; and its digital lending business, which it recently expanded by acquiring consumer lending platform AsiaKredit.

The company has also added three new executives over the past few months: chief information technology officer Valeriy Gasratov; chief strategy officer Jinnee Lim as Chief Strategy Officer; and Mike Singh from AsiaKredit as its new chief lending officer.

GoBear originally launched in 2015 as a metasearch engine, before transitioning into financial services. The company now works with over 100 financial partners, including banks and insurance providers, and says its platform has been used by over 55 million people to search for more than 2,000 personal financial products.

The startup serves consumers who don’t have credit cards or other access to traditional credit building tools. Similar to other fintech companies that focus on underbanked populations, GoBear aggregates and analyzes alternative sources of data to judge lending risk, including patterns in consumer behavior. For example, Chng said if a loan application is filled out in less than a minute, it is more likely to be fraudulent, and applications made between 8:30PM and midnight are less risky than ones made between 2AM to 5AM.

Data points from smartphones is also used to assess creditworthiness in markets like the Philippines, where the credit card penetration rate is less than 10%, but more than 40% of the population uses a smartphone.

Despite the COVID-19 pandemic, Chng said GoBear has been gross margin positive since the end of 2019. Interest in travel insurance has declined, but the company has continued to see demand for other insurance products and lending. Its online insurance brokerage has grown its average order by 52% over the last three months, and the company has seen 50% year-over-year growth from its loan products.

There are other fintech companies in Asia that overlap with some of the services that GoBear offers, like comparison platform MoneySmart, CompareAsiaGroup and Grab Financial Group. In terms of competition, Chng told TechCrunch that not only is the market opportunity in Asia huge (he said there are 400 million underbanked people across GoBear’s seven markets), but the company also differentiates with its three core services, which are all interconnected and draw on the same data sources to score credit.

Chng anticipates that the pandemic will spur more financial institutions to begin digitizing their products and looking for partners like GoBear to help them manage risk. In turn, that will make more financial institutions open to using non-traditional data to score credit, enabling underbanked markets to have increased access to financial products.

“The momentum is here. I think now is the time for tech and data to transform financial services,” he said. “As a platform, we are really looking for partners to come with us for the next phase of growth and investment. I feel positive even with COVID-19, because I think that we will have more acceleration, and the opportunity to change people’s lives and benefit them and investors by solving tough problems will only increase.”

Startups – TechCrunch

[ThetaRay in Crowdfund Insider] ThetaRay, Provider of Big Data and AI-enhanced Analytics Tools, Introduces FastStart Platform to Combat Financial Crime During COVID-19

Israel-based ThetaRay, a provider of Big Data and artificial intelligence (AI)-enhanced analytics tools, has launched FastStart, a product that aims to address the requirements of financial institutions during the COVID-19 crisis.

Read more here.

The post [ThetaRay in Crowdfund Insider] ThetaRay, Provider of Big Data and AI-enhanced Analytics Tools, Introduces FastStart Platform to Combat Financial Crime During COVID-19 appeared first on OurCrowd.

OurCrowd

[yulife in PR Urgent] YuLife Wins The Financial Services Forum 2020 Award for Product Service and Innovation in Insurance

Incentive-based life insurance platform YuLife recognized as insurance industry leader in the prestigious Financial Services Forum’s annual awards

Read more here.

The post [yulife in PR Urgent] YuLife Wins The Financial Services Forum 2020 Award for Product Service and Innovation in Insurance appeared first on OurCrowd.

OurCrowd

[ThetaRay in IBS Intelligence] ThetaRay launches FAST START to tackle financial crime in COVID-19 times

Israel’s AI-based data analytics provider ThetaRay, announced the launch of FAST START, a new offering designed to address the needs of financial institutions (FIs) during the uncertainty of the novel Coronavirus (COVID-19) pandemic. FAST START packages the power of ThetaRay’s financial crime platform into a cloud deployment that is up and running within 30 days to provide banks with immediate support at a time when bank fraud and money laundering scams are significantly increasing.

Read more here.

The post [ThetaRay in IBS Intelligence] ThetaRay launches FAST START to tackle financial crime in COVID-19 times appeared first on OurCrowd.

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[ThetaRay in PR Newswire] ThetaRay Launches FAST START to Accelerate Financial Crime Investigations as Solution to Covid-19 Pressures

NEW YORK, May 20, 2020 /PRNewswire/ — ThetaRay, the leading provider of AI-based data analytics, today announced the launch of FAST START, a new offering designed to address the needs of financial institutions during the uncertainty of the Covid-19 pandemic

Read more here.

The post [ThetaRay in PR Newswire] ThetaRay Launches FAST START to Accelerate Financial Crime Investigations as Solution to Covid-19 Pressures appeared first on OurCrowd.

OurCrowd

Pennylane is an accounting service that improves your financial visibility

Meet Pennylane, a new French startup that is a building a full-stack service to deal with your financial data. With Pennylane, you get a real-time view of your financial data and you don’t have to work with an accounting company — the startup hires accountants for you.

The startup just raised a $ 4.3 million (€4 million) seed round with Global Founders Capital, Partech and Kima Ventures. Pennylane’s founders previously worked on PriceMatch, a startup that was acquired by Booking.com in 2015.

“We invested in 25 to 30 startups — we went to see them and asked them what was missing,” Pennylane co-founder Arthur Waller told me. The team realized that there was a big discrepancy between accountants and CEOs.

Many companies work with third-party accounting companies but don’t see the direct benefits of that relationship beyond complying with the law. And yet, accountants have access to all the financial data of the company.

Usually, accountants receive data once a month in a very unstructured way. They waste a ton of time entering data in accounting software. As for companies, a CEO doesn’t know how to use accounting software and can’t take advantage of the accountant’s work to see if there’s any outstanding invoice, if clients haven’t been billed or how your company is doing financially.

That’s why many companies end up using Excel for financial projections and visibility. It’s a big waste of time as you need to connect to multiple services to download invoices, receipts, pay slips and more.

Pennylane aggregates all your financial information using APIs. You set it once and your data is automatically fetched in Pennylane. For instance, you can connect your Pennylane account with your bank account, Stripe, GoCardless, Revolut, PayFit, etc. And if you store your invoices on Google Drive, you can also connect Pennylane with your Google Drive account.

The service then tries to go through this data set on its own as much as much as possible. The company uses optical character recognition and pre-fills accounting information. The result is that companies get a clear overview of their financial data.

“Software alone isn’t going to solve that problem,” Waller said. So Pennylane has hired eight accountants who can check data, correct information if there’s anything wrong and make sure you comply with the law.

By saving time on data entry, accountants can focus on other tasks that they couldn’t handle in the past. “We want to provide a service at the same price as a traditional accounting service but that is ten times better,” Waller said.

The company started accepting customers in March and now has 117 customers, such as Luko, Liberkeys and Pricemoov. Pennylane targets medium companies, those that need to outsource their accounting because it is too complicated but don’t have an in-house accountant.

Startups – TechCrunch

Dutch scaleup Slimmer AI that combats financial crime secures €4M funding

Slimmer AI, the Dutch AI startup has recently secured €4 million from a group of long-term strategic investors and experienced fintech entrepreneurs. Its investors include a number of international family offices and experienced tech entrepreneurs including Daniel Ropers (co-founder and former CEO of bol.com), Adriaan Mol (founder of Mollie Payments and co-founder of MessageBird) and Maikel Lobbezoo (former Head of Growth at Adyen).

In the current times, credit risk and fraud are major cost items for companies and over €30 billion is laundered due to the same every week across the world. Though policymakers have tightened regulations over the past two decades, the outdated technology deployed to detect suspicious transactions failed to keep up with the same.

This demands financial institutions to increase hiring to keep up with tightening regulations. Given that each report requires an intensive research, over 99% of the cases flagged are false claims, thereby being ineffective in preventing financial crimes. This is where Slimmer comes to play as it aims to eliminating false reports.

Accelerate the development of Sentinels

The Amsterdam/Groningen is a scaleup with over 10 years of experience in the industry of applied AI software solutions. Slimmer AI will use the investment to accelerate the development of Sentinels, the anti-money laundering, fraud and credit risk software solution. Basically, Sentinels uses Artificial Intelligence to combat financial crimes and has screened financial transactions worth €20 billion since it went live in October last year.

Slimmer AI CEO JC Heyneke is pleased with the investment: “The fight against financial crime continues to be a top priority for both governments and financial institutions, especially with the current rapid increase in online transactions and merchants. The access to additional capital, as well as the expertise and experience of our investors, will allow us to rapidly scale up.”

Uses AI and machine learning

Slimmer AI uses Artificial Intelligence and machine learning and has developed Sentinels, which is an intuitive workflow solution that eliminates false reports and lets experts focus on the most complex financial crime cases.

“Sentinels harnesses an AI-driven approach to fight financial crime for payment providers, fintechs and other financial institutions. Thanks to the additional investment we can accelerate our work on applying AI to smart alert generation, network analysis and investigations by working with the best minds in Machine Learning” added Joost van Houten, business owner of Sentinels.

Main image picture credits: Slimmer AI

Stay tuned to Silicon Canals for more European technology news.

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