Categories
Financial Planning

6 Steps To Finance In Right Direction For Progress In Every Aspect

Talking about the stream of planning your daily expense, there are times which you must consider cutting the shape in your business. It is the type of understanding which every people living in your house should have. The benefit gives you to handle the management of finance in the given prospect to settle a career. When you know that if you proceed with proper planning, then you can sit with adequate funding.

What about those individuals who are new to explore the section of money? For them, it can be an essential step that helps you to take the beneficial towards better working. If you are looking for some aspect that gives you much interesting way you should think before you start.

Therefore, the effect it produces in the making of financial stability is that it gives better career options. There are times which you should handle the charge of beneficial finance, but in the lack of experience, you stand in trouble. But do not worry, you can think of option creating a business towards better progress.

When is finance alarming for you?

With the beneficial factor of maintaining the finance, there are times which you must consider where you can only win management works. Another amazing point to discuss is that when and how come to know finance is not working as plan.

To know about the secret of making the beneficial way of managing the situation, you must first check with the financial history. After that or you can say with a successful checking, you can count on the case towards progress.

TIME TO READ SOME GOOD REASON TO FINANCE THE MONEY IN A RIGHT WAY.

  • Take calculative measures

When it comes to handling finance, there are times where you must proceed with calculative steps. It is because running with your innocent might can give you a false belief of achievement. You must be practical and assertive in your actions so that your mind and body execute in the fulfilment of the dream project you are aspiring for. Besides, you should also be knowing of alternative in finance such as online borrowing. It can be a saviour in your project because you can avail money within installment loans for bad credit to avoid the financial halt.

  • Budget stuck

Sometimes the role of income can become the advantage or hindrance. It is because when you plan something, then the most important thing you need to divide the money wisely. With the smartest way of distribution in income, you can track down towards the best decision. Not only that, if you take the help of alternatives sources towards better managing prospect, but you must also consider every way towards progress. Also, to address the feature of online borrowing, you can set flexible features which can be easy for you to deal with funds.

  • Planned investment

Everything should be planned, and every step should be taken with full advice. It is because dealing with money in every aspect is not an easy task. You might get drown, and you might fall in the trap of loan sharks. If you are looking to keep yourself safe and worthy, then only planned investment may work in favour of the successful completion. The benefit of working on a strategic trick also gives you confidence, and the making of situation flourished in the best way possible.

  • Financial conduct

Have you ever wondered that the pointers mentioned above could give you the best space to work because all of it will handle by you? Yes, you have guessed that right that your behaviour in dealing the entire task is essential. If you get distracted and do not pay attention, there can be chances of you losing everything. Investing is all the time hard task rule to follow up, and you must be vigil and working in its progression.

Therefore, there are times which you must think upon and their situation where you have to be wise. The mentioned pointers are examples to make you understand that finance your money is not an easy task.

Conclusion

The programme of making your every move is the progress of your work. You should also be aware of the situation towards a better understanding of finance. Therefore, if you are wise, then you may win the challenge of winning the task of funding. But if you think that managing the given situation with ease which is only possible when you have a strategy to perform.

Categories
Small Business Accounting

Why should a Startup or Small Business not take a loan from NBFCs?

In the wide range of loans offered by banks, the one on top of the list for every startup owner is the unsecured business loan offered by banks.

You must be wondering “why not secured loans?”.

The answer lies in obvious reasons. To start with, the majority of the time (I would go as far as to call it 9 out of 10 times) we are without property and bank balance.

No bank in their right step of mind wants to fund a Startup without any bank balance or property. In fact, banks are wary of taking risks and giving loans to Startups.

So, what do Startups do? How do they fund without spending months waiting for a VC to give them a look?

The answer lies with NBFCs aka Non-Banking Financial Companies. A Startup or a small business can get an unsecured loan from an NBFC at different stages of business.

However, I do not suggest that go to NBFCs because of the issues that plague the NBFC sector in India. Please note – I am in no way suggesting that the loans provided by NBFCs are not good. Instead – all I am saying is that these loans are not suitable from Startups.

And why is that? Let’s discuss why startups should avoid loans from NBFCs:

 

  • High-interest rate and higher charges

The interest rate of an NBFC could be way higher than that of banks. This is major because the cost of funding of NBFC’s is higher than that of banks.

 

Banks have a lot of funds through their savings and current accounts. Hence the cost of acquisition is lower and hence they can offer loans at lower interest rates.

 

Further, NBFC’s may have a higher late payment and associated charges. Also, NBFC’s tend to have a higher processing fee.

 

As a startup, you’ve not really raked in money and each of these extra or higher payments would pinch you.

 

In my experience, you are looking at close to 18 to 22% per annum as the rate of interest for unsecured funding from an NBFC.

 

Now you are a new business and anything in that interest range should be a red flag for you. Irrespective of how well your business is doing, you will be saddled with debt and will be paying from your nose to repay this amount.

 

  • More risk:

 

NBFC’s are subject to less stringent supervision and regulations. This, however, reduces the lending standards, leading to higher borrower leverage building up credit and liquidity risks.

 

The lending through NBFC’s has increased in recent years but so have the vulnerabilities including credit risks, higher interest rates, and higher contagion rates.

 

In times like today, when Coronavirus has bought all financial institutions to their heels. NBFCs will be the first one to sink – thereby, putting your startup to more risk.

 

  • Corporate mismanagement;

 

NBFC’s are known to be less stringent when passing loans. Although this could be a boon, it also turns out to be a disadvantage. When the supervision is minimum and the regulations are less stringent, the chances of bad loans increase drastically.

 

In the recent NBFC crisis, NBFCs had borrowed short term loans from banks and mutual funds while lending to developers of long-term projects, which however got held up.

According to Live Mint, they also lent to unscrupulous developers and willful corporate defaulters indulging in round-tripping of funds and ever-greening of loans.

 

As cash flows dried up, NBFCs couldn’t repay their lenders. The start of the bad loans was ignited with one of the biggest companies in India – ILFS accumulating a debt of Rs.91,000 crore.

 

With debt like that with a company like IL&FS, it only sets a bad example for the other NBFC’s.

(source: https://www.livemint.com/industry/banking/the-ripple-effect-of-the-nbfc-crisis-on-the-economy-1557242882381.html)

 

Outstanding credit by NBFCs/HFCs to real estate developers increased four times from Rs 64,000 crore in FY 2011-12 to about Rs 260,000 crore till 2017-18 fiscal

 

http://jllapsites.com/real-estate-compass/2018/12/nbfc-liquidity/

 

It is also found that there is a growth in the bank advances to NBFC’s.

https://www.livemint.com/Money/bbjbHf9BdHr3Mk0O41k9WM/In-Chart-The-scorching-pace-of-bank-credit-growth-to-NBFCs.html

 

  • Troubled sector:

 

NBFC’s disburse loans without making any checks, and this is more a disadvantage than an advantage.

 

When banks lend money to startups, they analyze every aspect and detail of your business and make various projections as to the viability of your project.

 

They need to be convinced as to the profitability of your business, and only after that being done would they disburse a loan to you.

 

Thus, if a bank passes a loan, you have a certain kind of certainty that your business

is heading in the right direction, which does not exist in the case of NBFC’s.

 

An analysis was done by the Federal Reserve bank of San Francisco (Pacific Exchange Blog) with various findings.

 

This rapid growth of India’s NBFC industry and its attendant vulnerabilities was highlighted by the high profile collapse of the Infrastructure Leasing & Financial Services Limited (IL&FS) last year. The incident incurred an estimated $12.8 billion in investor losses and raised concerns on NBFCs’ financial soundness.

 

The firm’s heavy use of leverage—with a debt-to-equity ratio of 16.8x, as of March 2018—amplified potential risks for its investors.

 

Many mutual funds and banks that hold IL&FS debt—roughly $13 billion in total—faced significant market losses as agencies slashed ratings for companies that were part of the IL&FS Group.

 

According to Credit Suisse, as of the end of 2018, bank lending to NBFCs was up 55 percent year-over-year, accounting for roughly one-fifth of all new loans, and now 7 percent of total Indian banking sector loans.

 

Since public sectors lend to NBFCs, the exposure of some public banks to NBFCs is as high as 10-15 percent of banks’ total loan books.

 

In real estate and construction, non-banks have provided essential funding, over 55 percent of NBFCs’ portfolio, as of FY2018, for commercial and residential real estate combined.

https://www.frbsf.org/banking/asia-program/pacific-exchange-blog/indias-non-bank-financial-companies-emerge-from-the-shadows/

 

  • No Assistance or advisory

NBFC’s are in the business of providing financial capital and not financial advice.

Banks, on the other hand, have gone beyond the traditional roles of being finance providers and also give great financial and investment advice.

 

They could give you a good idea of what is a good investment and what is not.

Entrepreneurs are known to be the engine in the growth of the economy and this is well understood by commercial banks.

 

Apart from the above, banks also provide general business advisory and counseling and assist you at every stage of your business. Besides, a lot of commercial banks also provide book-keeping services and help your business maintain its accounts.

 

None of this exists in the case of NBFC’s.

 

In a case study done by the IOSR Journal of Business and Management (IOSR-JBM) on ‘The Role of Banks in the development of entrepreneurship in India’, the advantages of getting finance from banks was bought forth.

 

One of the objectives of the study was to know the role of banks in the development of entrepreneurship.

 

That’s the theory part of why startups should stick to Banks and not NBFCs for loans. Let me share some past experiences of why you should not be taking loans from NBFCs:

One NBFC changed the conditions of term loan they gave us by setting a repayment structure in which they took the majority of principal in the first year.

Their repayment structure worked in a way where you pay the highest installment in the first year and then the installment would cut drastically in the second year and it will come down a notch in the third year.

Incidentally, I was told that I must pay a flat EMI for the 3 years.

When I saw the repayment structure I was furious. My first thought was “This is not what I agreed on”.

I called up my agent to discuss the issue. As usual, he said he will revert to me by the end of the day.

He did call me at the end of the day only to sound apologetic. He said, he left the blanks for the NBFC to fill.

These guys are good with fill in the blanks. They score a perfect 10 out of 10 in this section of the question paper.

Now, I have nothing against the NBFC. They have their own rules and since they work in a high-risk environment, they are entitled to protect their interest.

But the terms now imposed on me were unfair.

Let’s just keep aside my emotional outburst and think logically about why I found the terms of repayment – so draconian.

I needed a loan “urgently” because I had some catastrophe to take care off. Usually, such incidents don’t just go away overnight and can take months of your business’s life.

The first few months of any business under distress taking a loan are crucial because you are to wisely spend the money and get business back on its feet.

What I had with me was a repayment structure where I paid say 20 Rs./month for the first year. 10 Rs. /month for the next one year and 7 Rs. /month for the last year of term loan.

So basically, when I should have paid the least EMI was the year, I was paying the most EMI.

The NBFC. in pursuit to cover its risk broke our back by putting terms that are beyond comprehension.

I accept the fact that I did sign the papers but that does not make me guilty. Let me ask you “How many of them have ever read every single line presented to them by a financial institution?”.

You know the answer.

Overall, I would personally ask you to stay away from them. However, if you fall upon bad times and urgently need a loan – you know NBFCs don’t mind turning a blind eye to an issue or two.

Here are some simple tips to help you deal with NBFCs:

  1. Never leave the blanks empty while applying for the loans
  2. Deal with NBFCS with extra care. They are the modern version of Money Lenders from bad old days.
  3. Always have a backup plan when things go south with these financial institutions.
Categories
Small Business Accounting

How No Guarantor Funds Be the Backbone of Every Financial Folly?

In life, it becomes difficult to address, predict or keep yourself prepared every time to save from financial loop.  But there is always that you must cover and accept that no matter how many problems you face because of low funds, the solution will always be there. It may help you to know about the areas so that you can proceed with a note of positivity. It is because the best deal of solution keeps you working and attentive the moment you come across the financial trouble.

There are times where the performance of the best ruling in the making business the strategy of money comes first. You must be wondering that to keep yourself safe and aloof from the better working of the projects you are working upon. There are times that you should be handling to proceed and the making of every situation run in the favour. But the matter of the fact is that it might be challenging to capture and always be looking for a unique strategy.

The performance may help in giving the factual achievement of solving financial trouble if you think that practising of managing the money is not everyone’s cup of tea. Therefore, you must understand that people should not get afraid of any trouble related to finance.

The first concern should be HOW?

It is because the performance of online borrowing can be taken as the best source, which may help you to overcome the money with less trouble. With the help of the given platform, you can get yourself clear of the fact that you can anytime make the best use of functioning towards the best learning. For example, if you avail the money called no guarantor loans, then the planning of the situation gives rise to the beneficial fact of any time.

You can quickly fill the online application form by sitting in the comfort zone. You do not have to worry about the approval, as it is acceptable from every corner. The most important take on the betterment of the situation is that you can figure out the plan of making things working in the situation.

When should ‘borrowing’ be the only decision?

The important fact of making a situation run in your favour is to know about the fact that it may help you to perform everything wisely. If you have planned to use the money, then you should not take its criterion lightly. You must prepare to figure out a solution that should be working by every means when you avail the online funds, and then you should know that you must be aware of the situation for better working.

You can keep the borrowing for the time when you have no option left because, with the help of the given platform, you can manage the juggle of finance anytime. By getting the instant disbursal, you can take the risk of making a decision that should be right and convincing.

Down Below Are Some of the Tips to Handle the Borrowing

The benefit of online borrowing is to make the work easy and trustworthy that any financial loop can be handled properly.

  • You need to check for the credit score, as it is an essential tip to follow when you use the financial take. The best possibility of getting the funds allows you to discover and handle mark in the best way possible.
  • The reason to use the money freely that you are not liable to present the guarantor to get the money. The ease of the service allows you to be the anchor of the borrowing in the best way possible.
  • Savings corners can never go wrong when you know that online borrowing is the only option left for you.  The best thing to plan is to enhance the skill and earn from extra sources to repay the amount on time.

These are some of the essential learning to proceed for the better working of the solution.

Conclusion

If you think that using the online platform gives the best reason to climb, and you must ensure the idea that you should be confident. The best benefit is needed to handle the borrowing in the best way possible. Therefore, with financial terms like loans for bad credit with no guarantor people can always assure the online platform to be the backing for covering financial folly.

Categories
Small Business tips

How to scan business receipts and invoices like a Pro

Are you one of those busy small business owner who finds it really frustrating to keep all your receipts and invoice in a place, transactions and file it properly. We get it, it is not a fun thing to do, along with other priorities that you are running into.

It is not a task that is not easy to delegate, further it is vital to keep business receipts and invoices for 3 – 5 years for compliance reasons, and you may be asked by taxing or government agency for auditing purpose. So it is very important to hold onto your business receipts and invoices.

Even with smartphone, just taking a photo of your receipt may help. But with thousands of photo you take, it is going to be really difficult to keep track of you receipts in your phone photos, not an efficient way to manage your receipts or bills.

But fret not, now with some cool business app this can be quick and easy task. There are quite a few apps available which will let you efficiently take a quick snap of the receipt and invoice and store securely in a cloud server. There even app which will extract the information like date, vendor and amount from the receipt, so that you don’t have to enter them manually. Accuracy of it will differ based on the quality of your camera and receipt.

Here are the list of apps which will let you take picture of

Expensify

Expensify is the world’s leading app for expense receipt scanning & management, and business travel. One of the best apps for manage your expenses.  However not budget friendly for an average small business owner with group cost starting at $5 per user.

Expensify can identify and categorize every receipt, and can also instanteously submit business expenses for further review and approval. With sophisticated features like business credit card reconciliation, multi-level review and approval workflows, and automatic syncs with all major accounting apps, Expensify will definitely reduce time required for expense management for businesses of all shapes and sizes.

Learn more at https://www.expensify.com/

Zoho Expense

Zoho Expense (which starts at $3 per month when invoiced monthly for 10 users and is additionally available in a freemium version), an awesome expense tracking tool that does well at its core set of functionality and can be tailored to meet the needs as much as most customers will require. Another advantage with this app is the options of software that comes as part of the Zoho One plan, which is billed at $30 per employee per month—an pretty good deal.

Learn more at https://www.zoho.com/expense/

myBooks

myBooks app will let you scan the receipts from phone camera and safely store in the accounting software. You can use your web app to review. It is fully integrated accounting software with expense management, it will be of great help for small business owner to manage their entire financials with myBooks

Further you can upload your bank statements and identify all the expense directly from that. Once expenses are created then you can attach the receipts for record keeping purposes.

Learn more at https://www.zetran.com/mybooks/

Shoeboxed

Shoeboxed is an excellent app for receipt scanning and keep track of your mileage expenses. This is a very good tool for tax time, there is an option to note, which expense are tax deductible.

You can create receipts from your phone and send it directly to your colleague or tax preparer. You can also send receipts and accumulated business cards and other relevant documents to Shoeboxed in a prepaid “Magic Envelope” for digital scanning. Envelopes also comes with free shipping both ways. All documents submitted to Shoeboxed is reviewed by human eyes

Learn more at https://www.shoeboxed.com/

Smart Receipts

You can scan your receipts into Smart Receipts and can create detailed reports with this app. Another distinguishing feature of Smart Receipts is private labeling services. With these options, your company can create a white label customized expense reporting app for your clients and users.

Smart Receipts has fully customizable reports which can be downloaded in ZIP, PDF and CSV formats, you will be able to create excellent reports for your personal finance tracking as well as for your employer’s needs. It allows you to choose from over 20 different default data types (including dates, cost, tax, receipt types, comments, payment options, etc.) to help you get the perfect report, saving you many hours of time reviewing expenses and letting you back to things you actually care about.

Learn more at https://www.smartreceipts.co/

Conclusion

So there are many options to manage your receipts just from your phone or a computer, the important take away point is consistency and discipline in maintaining your receipts. These tools will simplify the process a whole lot, however the process has to be done religiously and regularly to make sure, you stay on top of your receipts and business invoices.

Categories
Financial Planning

Financial Planning Checklist for Your Small Business

Financial Planning Checklist

The financial management strategy of your business determines your growth in the competitive market. When you want to attract potential investors towards your business, it is first important to start with solid business planning.

Note that the financial section of the business is made up of three important elements: they are the balance sheet, cash flow projection, and income statement. The financial planning checklist must include a valuable analysis and a brief explanation of all these elements.

Considering stock of expenses:

There are two main categories of business expenses; they are operating expenses and start-up expenses. The cost that is required to set up your business is named start-up expenses; it includes the registration fee, inventory, rent deposits, licensing, permits, utility setup fees, and down payments of the equipment, etc. This list may expand when you start with proper planning.

The second important element is operating expenses, and it includes the cost that you need to spend to run your business. They can be better defined as monthly expenses, and the list includes rent payments, salaries, raw materials, distribution utilities, promotion, maintenance, and office supplies, etc.

Here are the three important elements of financial planning checklists:

The income statement:

The income statement defines your expenses, revenues, and profit for a specific duration of time. This snapshot may help you understand whether your business is moving in a profitable direction or not. You should subtract the expenses from revenue to calculate the loss and profit. The established businesses prefer to produce their income statement once in the fiscal year; however, experts advise to generate it monthly during the first year of business.

The cash flow projection:

The cash flow projection determines how cash is expected to flow within and out of your business. It is considered as an essential tool for analyzing cash flow management. This analysis can help you check if your expenses are growing too high or you have enough cash flow surplus. The cash flow projection will show the level of capital investment required by your business. Investors may also consider this statement to decide whether it is safe to invest in your business or not. Hence, one should be careful while designing this statement.

The balance sheet:

The balance sheet is useful to report the net worth of your business at a specific point of time. It presents the summary of financial data of your business while dividing it into three different categories: assets, equity, and liabilities. There is an important relationship between these three parts of the balance sheet; it can be expressed using this equation: Assets = Liabilities + Equity.

While developing your business plan, you should create a well-analyzed balance sheet that provides a clear summary and information about cash flow projections and income statements. The small business owners need to prepare a balance sheet once in the year. And as soon as your balance sheet is complete, it becomes easier to write a brief analysis of all these three financial planning checklists.

Categories
Financial Planning Small Business Accounting

You don’t need a finance guy to your finance, you can use tools

A preconceived notion that most entrepreneurs fall prey to is that in order to resort to a powerful and beneficial financial planning, one will have to seek assistance from a professional. Evidently, hiring a financial advisor would imply that he will also have to be paid at the end of every month and this is what persuades the businessmen to drop their plan of delineating a budget and let things be as they are. However, in this article, we will be busting this myth for you. Far from consulting a business specialist, you can chalk out the business plans all by yourself using tools, some of which are even available for free.

 

Thereby, the answer to do you need a financial advisor as a small business owner would be no. Also, let’s not forget the fact that nobody is as familiar with the intricate notches of the business as you and this perspective can be capitalized on for fruitful financial planning. It is you who has been the closest witness of its past success and failures and are now sticking out hopes for the future. If you are baffled about where to start from and how to go about it, here are some ideas.

Reassess your strategic plan

First things first, to build a solid business plan you will have to be certain that your strategic policy is at its place. Ask yourself a series of questions like:

  • Is there enough cash flow?
  • Do I need to expand my business and resultantly hire more staff?
  • Should I invest in more efficient equipment to boost production/supply?
  • Do I need financing? If yes, for which areas exactly and how much?

When you have an answer for all of these queries, note them down and outline a realistic estimate for all of them and how the amount is going to affect the next 12 months (6 months) of your business expenditures.

Compare them with the past records

Because all these expenses will be borne by none other than the funds of your business themselves, pull out as many records as you can and compare your targets with them. Use tables, spreadsheets and means of calculation to form neat registers that will weigh your company’s performance so far and furnish you with the clean insight into how much you can risk spending, even if it is for the welfare of the business this year. For instance, if you gather that the average profit from the last five years is not as much as the sums that you are looking forward to financing this year then don’t succumb to the risk. Either spread out your plots to be attended over the next few years, or cut on the extras that you can possibly do without at the moment.

Consider the unforeseen emergencies

While carrying out the business planning do not forget to take the unforeseen emergencies that can hit your business into account regardless of how distant or erratic they are. Market analysts always recommend small business owners to have an emergency fund ready which they can fall back on during a contingency. The prospects include having room for enough line of credit or saving cash for the odds.

Examine

Lastly, like all other businessmen, you too must have a number of expectations from your company. Therefore, all you will have to do is examine whether or not these targets are being fulfilled in reality and if not, what are the feasible adjustments that you can implement to make ends meet.