Analyzing the Utility of Cash Advance Services in Improving the Cash Flow of Businesses

The COVID-19 pandemic has had a horrendous impact on the global economy due to both demand- and supply-side shocks to the economy. While supply-side shocks to the economy were due to the lockdowns and social distancing norms, demand-side shocks were a result of a much deeper and complex problem. The uncertainties caused by the pandemic made businesses hesitant to spend and invest money, thus leading to a drastic fall in consumption. To solve this problem, banks across the globe started pumping money into the economy to increase the cash flow and revive the demand. Along with this, governments allowed banks to frame mechanisms to provide quick loans to people and businesses who were looking for urgent cash access. The advent of cash advance services is a result of these mechanisms and deliberations.  

How have cash advance services helped in improving the liquidity in the economies?  

One main problem with traditional lending institutions is that they have complex loan application and disbursement processes. These complex processes deter businesses from opting for loans, thereby hampering their ambitions to expand their operations. Moreover, the time taken by traditional banking channels for loan disbursement is very high. Hence, traditional loan provisioning methods fail to fulfill the urgent cash requirements of businesses. Another important feature of conventional loan disbursement procedures is that these loans reflect on your credit score and play an important role in deciding the approval and amount of subsequent loans.  

Cash advance services, particularly merchant cash advance facilities, offer an ideal solution to these problems. Firstly, the loan application and disbursement processes in the case of cash advance facilities are quite simple and convenient. Owing to the rising popularity of cash advance facilities, many fintech companies have launched software applications that offer easy cash advance disbursement facilities. Moreover, the loan processing is quick, and the cash gets deposited in the bank account within 1-2 days. Thus, cash advance facilities are perfect in case of urgent cash requirements. Additionally, cash advance facilities are also available to those business entities whose credit score isn’t that strong. Hence, even startups and businesses who are new to the industry can avail loans using this route.  

Understanding the evolving nature of the cash advance services industry  

In the past few years, the cash advance services industry has undergone considerable changes to suit the evolving nature of the global economy and fulfill the credit demands of various businesses. As part of this change, many fintech companies are remodeling their software applications and platforms by incorporating and integrating new technologies.   

  

An important shift that has been witnessed in cash advance apps is the use of cloud-based recordkeeping solutions. Since the popularity of cash advance facilities has increased, businesses operating in different sectors have been opting for these loans. Hence, cash advance apps have experienced a massive surge in the inflow of data that needs to be stored efficiently. Cloud-based recordkeeping solutions help loan providers to store large amounts of data securely. Furthermore, since the data is stored on the cloud, the risk of data loss is reduced significantly. Moreover, cloud-based solutions can be scaled easily to meet the growing influx of data.  

Apart from cloud-based recordkeeping, cash advance providers are also integrating automated data extraction technology. This technology can help loan providers to obtain client information such as bank account details and transaction records. The obtained information is then validated using the same technology, thereby offering the loan providers complete information about the debtor.  

To summarize, cash advance services have become an extremely popular loan disbursement tool. Merchant cash advance facilities, by offering quick loans, help businesses address their urgent cash requirements. The integration of cloud-based recordkeeping technology and automated data extraction and validation solutions in cash advance apps will further expand the scope of this industry in the coming period.  

  

Short Description: Cash advance services, as compared to conventional loan disbursement channels, have simple loan applications and offer quick loans. Cash advance facilities are especially beneficial for new businesses whose credit score isn’t strong enough to avail themselves of loans from conventional sources. To enhance the efficiency of cash advance facilities, loan providers are integrating advanced technologies in their apps.  

  

 

✍ **𝑨𝒓𝒕𝒊𝒄𝒍𝒆 𝒘𝒓𝒊𝒕𝒆𝒓: Akhilesh Prabhugaonkar