If a business is not able to pay its vendors, staff salaries and also not able to collect its receivable from customers, then the business will not be able to survive in the long run as the business is inefficient to manage its working capital.
Every business should give immense importance to working capital as it is the key metric to measure a business’s liquidity and cash flow efficiency. As in the recent past, we have seen many businesses being liquidated just because they were not able to manage their working capital well.
Earlier it was very difficult for businesses to manage working capital manually because the process was tedious, time taking, and was also lacking transparency.
In Today’s scenario, the financial services landscape has changed drastically. Now by providing cutting-edge technology solutions fintech is gaining more traction and also businesses are seeing value in fintech Companies. As fintech is helping them by providing better transparency, efficiency, and cost-cutting and hence resulting in generating a higher profit.
Now let’s deep dive into how fintech can help companies optimize working capital :
1. Working capital financing
Earlier it was very tough for a small business to get the working capital loan because of the hefty bank procedures and also banks were not keen on providing short-term loans to small businesses as the loan amount was small.
Now with the convergence of finance and technology, a small business can easily avail of collateral-free working capital loans whenever required. Also, it can negotiate the rates as per their requirement from the different players available on the online marketplace.
Hylobiz has also entered into a partnership with Bajaj finance and Neogrowth to help SMEs in optimizing their working capital.
By using Hylobiz a business can easily get its detailed business health report, which can be used by the lending partner to determine the state of business.
2. Invoice discounting
In today’s digital world a business can encash their invoices with the help of bill discounting or by availing factoring services.
In both factoring and bill discounting businesses pay a small fee to the service providers but in return a business enjoys high liquidity by saving more in terms of bad debt and collection fees.
Also, they save themselves from chasing invoices and they can utilize their time in growing their business along with managing their working capital efficiently.
3. Helps in determining future targets
With the help of cutting-edge technology used by fintech companies, a business can easily analyze its future requirement and performance in a far better way.
Businesses can easily set their performance metric by analyzing the past sale and purchase data provided by the system, also they can rely on the data as there is no human intervention and hence that is transparent and accurate.
With this digital feature provided by Fintech Companies, a business can easily analyze how much raw material they need to procure, how much inventory they should hold, also they can easily achieve their target along with enjoying healthy cash management.
With Hylobiz a business can determine its future target with no hassle, as hylobiz provides a detailed informative dashboard and key reports which act as key inputs in determining future targets.
4. Manage your inventory digitally
Nowadays Fintech Companies have revolutionized the traditional way of managing inventory. With the online tools, you can manage your inventory in a nicer way than ever before.
With fintech offerings, you can analyze your inventory count and hence you will not lose any cost by holding any irrelevant inventory or slow-moving item.
Automation helps you achieve better inventory management by shortening your inventory turnover cycle, with this you can enjoy more liquidity in your business.
At the Hylobiz platform, inventories are updated on a real-time basis which can be accessible by both buyer and supplier, this also helps in reducing inventory turnover and thus results in improving working capital.
5. Faster collection of account receivable
Fintech companies help your business in getting paid faster. They ensure the delivery of invoices along with the delivery of goods.
With the ease of creating an online invoice and receiving payment through digital modes, businesses are able to collect their invoices faster.
Also, they can remind their clients in case of late payments and with all this, a business enjoys a shorter operating cycle.
6. Negotiate with your suppliers
With the help of fintech companies, SMEs enjoy wider scope in choosing their supplier like they can negotiate the rate and payment terms with the supplier on the same platform.
Also, businesses should choose the supplier who is providing a longer credit period so that they can enjoy more cash in their business.
Now Hylobiz has also introduced a new feature on its platform where a business can chat with its clients and suppliers in a better and easier way.
Hylobiz is an SME-focused Fintech Companies that helps SMEs in managing their cash flow efficiency by streamlining their receivable, payable, inventory management, and e-invoicing.
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