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After repeated queries on www.FundsTiger.com and frequent requests for demonetization updates, here are a few select tips for MSMEs ( Micro, Small and Medium Enterprises ) post the demonetization effort in India from our experts – let us accept that old 1,000 and 500 notes are gone forever – so are the private financing routes – and a new transparent business regulation regime is ushering making MSMEs to change their ways of business to survive and thrive.
FundsTiger receives a large volume of SME and Self Employed Professionals and Proprietors on a daily basis seeking loans and sharing their funding concerns with us candidly. Our call volumes have risen tremendously since the demonetization and we are gearing up for an economy where good credit worthy SME owners can easily get funding for their businesses – working capital and growth. Till now, small businesses were forced to choose private financing – at rates as high as 1% a day, because banks and even NBFCs were finding it tough to bring them into their traditional lending parameters. Now, there shall be a huge credit demand from the MSME Sector – such that our government will have to double down on their existing schemes as MUDRA Loans – and ensure that these schemes reach the right business borrowers – for easy access to credit, lower interest rates for borrowers and catering to lower ticket sizes of loans from INR 1,00,000 to INR 25,00,000.
Given that demonetization is now going to put a search light on various compliance and cash accounts in your business – it is high time to change and be more accounting friendly – so that in the end you get benefitted by accessing formal lending channels with confidence, and move out of old private money financiers and credit card maxed out limits. Don’t worry about tax implications – mostly you shall have minimum impact for tax purposes. Keeping good accounts shall help keep your tax returns clean and mostly you shall be looking at a very fair tax level. Government is committed to a lower tax slab for businesses and you shall get good benefit by good tax compliance. Invest in a good accounting software – and consult your CA for making financial statements that are not for tax arbitrage, but for future growth and stability.
There is now no need to keep two separate accounts – one for business and management accounting , and one for tax filing. We suggest that you have a single accounting system – use the accounting software to track your sales, monitor your inventory levels, understand your purchases and vendor payments, your employee payroll and become better not only compliant wise but also better your management practices.
Start to utilize your banking channel and digital banking channels – to get payments and to make payments – this will help you get your business done in easy way, keeping a good audit trail and free you from other hassles in life.
This is high time to utilize and take advantage of your compliance, transaction records so that you can become more credit worthy. This can be used for getting good working capital loans, enhance your Over Draft and Cash Credit limits, get more equity injections in the company through stock sale and leveraging your balance sheet to the most optimum level.
Keeping good records also helps you to use your surplus funds in the most optimum and efficient level, without any fears and full utilization. Why to leave your money in cash, when it can be making more genuine money for you?
FundsTiger provides easy credit ratings and credit scores free of cost – use them to get a good understanding of your business and the areas where you can improve.
GST is going to be a big game changer – and starting small and digital, investing in the right accounting software and keeping a good discipline to record your transactions shall get you tremendous benefit in terms of getting back your TDS and your GST Payments in the GSTN linkages. Become a player to win the coming days.
It is in the wider interest of everybody – businesses and citizens to move to digital channels – be it wallets, payments, smartphone apps, mobile payments , UPI, NPCI, wire transfers, Rupay card payments and other electronic means. It will reduce the transaction costs drastically and you benefit by a good user and customer experience.
Also, get your friends, relatives, vendors, customers – all to a new way of doing business.