How Codat is empowering the new business boom

With the recent emergence of digital-focused SMEs in the wake of COVID-19, how can Codat help to empower the UK’s new businesses?

There isn’t a corner of the economy that hasn’t been shaken by the outbreak of COVID-19, but one surprising and positive outcome of the pandemic has been an increase in the creation of digital-first businesses. The Financial Times reported that business incorporations in the UK were up 30% in the four weeks to mid-December, compared with the same period last year – with the annual growth rate entering double digits since June. 

But with the excitement and dedication that comes with pursuing dreams, many new business owners will also be facing a difficult road ahead when it comes to managing their finances. 

In 2020, Starling Bank commissioned the Make Business Simple report, which highlighted that the average micro-business spends 15 hours per week or 19% of their time tackling financial admin tasks. One Starling Business Account customer said: 

“I didn’t get into business to do finance-related admin, but without it, you are doomed. I’m still learning. I’ve purposely put myself through some training, but I can still say that this is the worst part of running a business…”

Accessing capital can be tough…

Unfortunately, when traditional credit scoring methods are applied, new businesses often struggle to access funding, even with a strong business model. 

If a bank considers a new business too risky, there’s a lack of collateral, or detailed business plan, then the chances of getting a loan are slim to none. What’s more, some lenders won’t even consider businesses that haven’t been operating for a minimum of 12 months. 

According to a report by Genesis Initiative, 50% of small business owners in the UK don’t seek funding elsewhere when traditional lenders are unable to help. With these intense stresses denying new SMEs the opportunities to spread their wings, they could find themselves at a higher risk of falling into the 80% of businesses that fail within their first year.

…But it doesn’t need to be this way

The recent rise of SMEs, combined with enhanced digitisation, brings with it even more opportunities for financial service providers to help make life easier for their owners. Via Codat, banks and fintechs can plug into their customer’s key accounting, banking and commerce data platforms seamlessly. Codat takes care of the heavy lifting of integrations, leaving clients free to focus on how that data can improve their products or services. This can be done by streamlining the process of applying for funding, perhaps by pre-populating applicant financial information and automating the entire data collection practice, via our white-labelled authorisation journey. It is this capability that ensures SMEs are considered more than just their credit score.

Already, tens of thousands of small businesses are using apps, services and financial products that are powered by Codat to allow them to harness company data to achieve their ambitions every month. These businesses are no longer having to spend up to 24 hours collecting the data required to submit a loan application. Even the newest businesses who would normally be considered high risk or ‘thin file’ applicants are now better supported when it comes to applications for funding. Security is also greatly improved, as connecting financial data via Codat’s API is much safer than sharing sensitive information over email.

How exactly does Codat help?

There are four key Codat products that help achieve this, all silently working together under the hood to deliver unparalleled ease:

  • Core: Allows you to access important data from all the leading financial platforms used by SMEs 
  • Visualise: Lets you view data and determine performance trends clearly, enabling you to quickly anticipate and act upon any changes
  • Link: Allow your SMEs to seamlessly connect their data in minutes by embedding a white-labelled link
  • Sync: Be able to provide automatic updates to your customers’ financial software at the click of a button

With the number of clients and partnerships growing every day, Codat is incredibly proud to be able to empower more small businesses than ever before.

Sign up today to enjoy a 30 day free trial and see how Codat could enhance your customer experience in a matter of hours.