5,600 Loans And Counting: How Fintech Startup Lendingkart Group Is Working To Bridge The Gap Between Lenders And SMBs

AMBIKA CHOPRA | December 7, 2016

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In a recent article in Forbes, Ajit Ranade, the Chief Economist at Aditya Birla Group delineated the growth structure of Indian economy, emphasising this adage. Globally, in terms of ease of doing business, India ranks 130 out of 189. Apart from lack of infrastructure or access to credit, the impediments faced by SMEs and MSMEs in India are rooted deep in a culture that did not value innovation and self-sustenance to a large extent. While this is not the case anymore – StartUp India, StandUp India being a strong indicator of the change, and several other government and private sector initiatives – the sector is still largely unorganised, thereby struggling to maintain even the basic workflow requirements, in terms of capital access.

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Treasury management at SMEs - Still too neglected?

Article | August 18, 2021

Treasury management or more generally Supply Chain Finance management is still a neglected topic at many SMEs. While large international corporations make the investment into expensive treasury management solutions (often part of their ERP solution) and even setup their own In-House Banks, this is considerably more difficult for the mid-corp segment and even more so for the smaller segment of the SMEs. Often SMEs lack the funding, time and expertise to deploy those platforms and often those platforms lack the flexibility required by an SME. Nonetheless in this globalized competitive market with fast moving cash, even SMEs are in need of an effective treasury management. Every SME has its own specific challenges, due to its specific payment cycles and cash reserves. Nonetheless most SMEs (estimated to about three-quarters) still do their treasury management via (complex) Excel sheets, requiring a lot of manual effort. 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Reduce effort (resource workload) for financial management, like the follow-up of payments of incoming and outgoing invoices, automated generation of payment instructions for incoming invoices… Optimized cash management allowing to keep on your current account only the required cash amount to run your business, thus allowing to invest excess cash, but also to avoid requiring short-term debt when too much cash is invested (and blocked in medium- to long-term assets) Reduce foreign currency costs and exposure risks by keeping the right reserves of foreign currencies, applying hedging (like swaps or options) techniques, correctly taking forex rate fluctuations into account in future cash flow predictions… Reduce transaction commissions for bank transactions, by selecting the right banking products, but also by using the right banking partner(s) (especially for international foreign currency payments big price differences exist between different banking parties) Reduce cost of fraud by improving control, transparency and accountability via a pro-active, automated monitoring of all cash flows, allowing to detect anomalies as soon as possible … This can be achieved in multiple ways: Setup and optimize the processes and tooling with the help of specialized services companies (like e.g. the offering of BelPay) Setup or acquire software solutions (often in the form of SaaS offerings, i.e. Treasury in a Box) for cash & liquidity management, like invoice generation and follow-up (including invoice and payment matching), debt collection, incoming invoice processing (including payment), cash pooling, cash forecasting/capital planning… These software tools allow a more pro-active treasury management and reduce manual effort by automating certain steps in these processes. 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Usage of solutions for cash management (e.g. international cashpooling, sweep accounts…) and more general treasury management services offered by banks to their customers. These can be incumbent banks or new Fintechs, which specialize in the niche of serving SME customers. 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As such there is a big market for consultancy and other services firms, specialized in helping SMEs to improve their treasury management processes.

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