Patience has a bottom, which my SME friends are observing.
Well, since November 2013, my SME friends have seen paradigm shift in how business is done in India. Sadly and unwillingly, extended payment cycles and lower business volumes are accepted as normal phenomenon.
On the contrary, In Last 24 months, at regular intervals, sparks of hope surfaced in terms of majority government (May 2014), interest rate cuts, priority SME lending (union budget provisions), crude oil prices, and FDI reforms.
However, when I speak to SMEs, they genuinely express that situation is going worse. Responding to extended payment cycles, One SME owner made a stetement, saying,
“We SMEs are now in the same business, and that is of providing financial services to our customers, no matter how we do, chemical / pharma / engineering / trading / manufacturing”.
Higher working capital requirement (extended payment cycles) becomes bottleneck and lowers business volumes. So what is the solution? Most of my SME friends are very conservative on their finances. Changed conditions mandate the change in the way SMEs source finances.
I suggest two point strategy to swim through these circumstances.
1. Technology Upgradation to increase efficiencies for better profitability and,
2. Maintain business volumes by unsecured business loans.
MSME organizations, Government and Banks are keen on giving unsecured business loans to SMEs. Somehow, SMEs have least tapped these resources. I strongly believe that you can set right your business by fueling with unsecured business loans and technology upgradation, of course, it comes at 16 to 18 percent cost, but is worth to make sure that you maintain and grow your business volumes. This additional cost of capital can be nullified by upgrading technology to lower costs to increase profitability.
At Synersoft, we champion for SME benefits. Our knowledge center is now equipped with resources to guide SMEs on how to materialize an unsecured loan for technology upgradation and working capital.
BLACKbox is now available on finance which is a good news. Better news is, finance on BLACKbox can be accompanied by a unsecured business loan of Rs 10 Lacs to 2 Crores for technology upgradation and working capital.
In fact, we can do in flat 7 days with minimum papers.
Just do it, happy business to you,
Founder and CEO,
Synersoft Technologies Pvt Ltd