How to cater and scale technology for a start-up in rapid growth

There are multiple stages in a start-up. At an early stage, most tech start-ups usually include two founding members – a business head and a tech head leading the validation efforts. Further down the line, we notice parallel and vertical streams of teams leading the initial growth of the company. It’s usually at this stage or after this stage, where the business has some solidarity to it and the focus on building tech for a large and scalable model begins. The following points made in this post have been laid out in view of a mature start-up.

Be Agile

Following an agile methodology for development is a no-brainer for any start-up. The environment is fast paced, catering to a dynamic business where release cycles are frequent. Often, the common pitfalls of this method also show a lack of emphasis on planning and documentation while customer expectations sometimes are not clear. To mitigate this, a hybrid of agile and waterfall approaches enables start-ups to move towards a mature business. To do so, the start-up must;

– Identify problems of the business

– Prioritize the need of the hour for the business

– Allow for high level architected solutions for each problem

– Build feature specs

– Execute in sprints (ideally 2 weeks) for maximum output to customers

Extensibility

Your business logic and data is your Intellectual Property. As a Fintech company, this becomes the most critical piece of software development. It is important to protect your data while also facilitating growth with the exact same data. How do you draw this balance?

Build your logic and algorithmic layer around your data and an external layer that does not directly interact with your data set. This permits external endpoints to be consumed by growth partners as well as reduces development efforts for building tech for internal teams.

Micro-services

Enterprise applications are often built using a monolithic approach or as a single unit. Although it’s a natural approach to development, it can be frustrating because of multiple dependencies on modular structure and deployment to the cloud also becomes a challenge.

In contrast, Micro-services architecture equips you to independently deploy services or pieces of software without large dependencies on other services. These services or pieces of software ultimately add up to become a single application while running its own suite of processes and mechanisms.

Additionally, in a Fintech setup, technology is built to cater multiple teams – both internal and external and having a micro-services architecture easily allows horizontal scaling.

Reusable code

In a start-up, it’s a good idea to prototype development. Prototyping facilitates quick delivery of a piece of software and a better understanding of future product development.

Post prototyping, it’s important to pick the right framework for a full-fledged and scaled application. This is where building code that can be re-used in multiple services becomes a factor of efficiency in development. Building custom libraries (back-end or front-end) and even choosing the right frameworks ensure ease of development across resources and knowledge transfer. A choice of using AngularJS as a front-end framework allows for creating directives specific to custom applications and promotes reusable components.

Build vs Buy

A classic point of debate and contention is always build versus buy. There are multiple points to consider while making such decisions in a growth stage start up to create a fine balance between the two.

Often, out of the box or integrated solutions provide quick solutions for increased productivity to a business need but come at several costs, such as pricing and rigidity of use. Sometimes these solutions are not compatible with existing software or custom solutions.

Custom-built solutions provide competitive advantages, builds intellectual property and fit a specific business need but also comes at several costs, such as time for development and uncertainty in product definition.

A hybrid approach can be an effective way of mitigating the disadvantages of build or buy approaches. At times, building on top of or integrating an existing product into your custom built solution adds greater value to the overall business product. An example of such a solution can be integrating a good workflow management tool into your custom CRM application.

Dev Pathi

Dev has been involved with startups for the past 5 years since he returned from US. He has launched several mobile apps that have been well accepted in the Indian startup scene.

In New York, he worked with Conde Nast helping them move their web infrastructure from an enterprise setup to an open source setup.
Dev manages the technology development initiatives at Capital Float.

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How to Determine Your Working Capital Needs

The availability of working capital is probably the most critical aspect of running a business smoothly and successfully. Also known as the current capital, working capital basically refers to the cash available with an organization for managing its daily operations and is calculated by simply deducting the current liabilities of a business from its current assets.

Assets that can be easily converted into cash within a year or a business cycle are termed as current assets and include cash, accounts receivables, inventories and short-term prepaid expenses. Similarly, current liabilities are the ones that a business needs to pay off within a year or one business cycle and includes accounts payable, accrued liabilities, accrued income taxes and dividends payable.

If current assets are greater than current liabilities, the business has a positive working capital situation or extra cash to meet unexpected expenses. Conversely, if the current liabilities are more than the current assets, the business is said to have negative working capital and needs to take working capital business loans.

Adequate cash availability also allows a business to take care of newer opportunities that require quick infusion of funds. However, not all businesses have access to adequate funds to carry out their operations smoothly and often need working capital loans.

Working Capital: Need and Importance

Every business needs to maintain some working capital to continue its operations smoothly. The amount of liquid funds available with a business is a measure of its ability to meet its short-term obligations. It is also a reflection of a company’s operational efficiency. Here are some reasons why working capital is essential:

Smooth Running of Business: Funds are needed for the smooth working of day-to-day operations and spending on the purchase of raw materials, overhead expenses and payment of wages and salaries. Working capital enables an uninterrupted flow of production or provision of services.

Goodwill: Sufficient cash with a business means it is capable of making prompt and timely payments, which in turn enhances its goodwill.

Easy Loans: Banks and financial institutions prefer to lend to organizations with adequate working capital.

Ability to Deal with Unexpected Expenses: Adequate availability of funds prepares a business to meet any unexpected expenses or situations.

Working capital is often used to judge the financial health of a business. A positive working capital situation indicates that a business is capable of paying off all its short-term debts, operating expenses and salaries with some extra amount remaining for reinvestment. In contrast, negative working capital is a cause for concern. It hints that the business may not be able to pay off its creditors.

Need for Working Capital Finance

Many businesses do not have sufficient cash in hand or liquid assets like money in the current account to meet their daily operational expenses. This is where working capital finance comes to their rescue. Small retailers or merchants typically require capital to fund seasonal inventory buildup. Also, businesses that do not have stable revenues through the year may still need to maintain a specific amount of inventory to fulfill any sudden increase in demand for their products. Such units often require a working capital loan to pay wages or meet other expenses during lean periods or when they are servicing an order, and the receivables would become due only after order fulfilment.

A working capital business loan is a short-term finance option that is generally repaid in the period when sales are high and the company has surplus cash. A major benefit of such credit is that its terms is short, which allows a business to maintain full control of its operations. Such loans need to be sanctioned quickly, without a lengthy approval process. Working capital funding can be secured or unsecured, depending on the financial product or lender.

Determining Your Working Capital Needs

The proper assessment of working capital needs is an important part of efficient financial planning. It allows a business to plan well and arrange the necessary funds on time to ensure smooth functioning of daily operations. The amount of current or working capital required by a business may vary. It is dependent on the operating cycle, or the amount needed to pay suppliers, the amount of inventory held and the time taken to collect cash from customers. Also, this may change with changes in demand for its products and services.

The working capital requirements of a business can be calculated by subtracting the accounts payable from the sum of the inventories and accounts receivables. Businesses need to fill the working capital gap by using internally generated profits or external borrowings or a combination of the two.

In case of new units or startups, working capital refers to the amount of money to be borrowed to keep operations going until the business starts generating adequate revenues to cover its operational expenses. Calculating the amount required to carry on business in the initial few months when there are no or very little revenues challenging and often leads to businesses borrowing too much or too little. A business should look towards raising working capital loans that have a prepayment option, or the option to repay the loan before the term is over.

Raising Working Capital Business Loans

Financial institutions use two ratios – the current ratio and the quick ratio – to measure the financial health or liquidity of a business. The current ratio is obtained by dividing the value of current assets by the value of current liabilities. A ratio above one means the current assets are more than liabilities, which is viewed positively. The quick ratio measures the proportion of short term liquidity (current assets minus inventory) to the current liabilities of a business. It gives a good idea of the company’s ability to meet short-term expenses quickly.

Working capital business loans are granted after assessing a company’s liquidity and working capital needs.

Oct 24, 2018

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Top 3 Reasons Why Unsecured Loans Help Small Businesses Grow Faster

A small business generally embarks on its journey through investments from angel investors or venture capitalists. As its business matures, it may aspire to borrow more money not only to keep the enterprise operational, but also to explore new horizons. Such a small business can approach banks and other traditional non-banking finance companies (NBFC) to procure business loans. However, these institutions follow a prolonged process for loan approval and prefer providing small business loans only against collateral. Most small businesses that are still in their growth phase do not have sufficient collateral to get secured business loans, and so their only avenue for business funding is an unsecured business loan.

The new age FinTech companies such as Capital Float provide unsecured loans in India to small businesses to help meet their urgent business needs. By applying innovative technologies, they are able to process an unsecured loan application in virtually no time. Their processing, from loan approval to disbursal, also remains completely transparent throughout. Once approved, the unsecured business loan amount is credited to the bank account of the customer in three working days.

Unsecured small business loans come to the rescue of small businesses at critical times, and with the right amount at the right time, they considerably aid a small business in growing faster. Let us look at how taking an unsecured business loan helps in business growth.

Maintaining healthy cash flows

In the past, small businesses used to be averse to availing an unsecured loan due to concerns about falling into a debt trap. They also occasionally lacked confidence in their ability to repay unsecured loans. This is no longer the case. In a fast-growing global economy such as India, plenty of opportunities are available for small businesses to explore with greater confidence. Maintaining a healthy cash flow position provides them with additional funds for marketing of products and services, adding new inventory, expanding premises or hiring more staff.

Unsecured small business loans provide the strategic edge to make wise investment choices, which help a small business to grow faster. The revenue earned from new business ventures can be used to repay the unsecured loan and to boost the cash flow position.

Timely access to funds

One of the great advantages of taking unsecured small business loans from FinTech companies is the hassle-free and speedy loan approval process. Business opportunities today appear in a flash and and could quickly disappear, unless tapped at the right moment. Therefore, a small business cannot afford to spend time on filling up lengthy unsecured loan application forms and collating the required business documents in support.

The application for an unsecured loan from FinTech companies can be done online or through a mobile app, and all essential business documents such as bank statements, previous loan statements, tax statements, business invoices, KYC documents and the like can be uploaded online. These companies focus on providing unsecured small business loans to SMEs and fully understand the business challenges faced by them.

A variety of unsecured loans for different business needs

Businesses can avail unsecured small business loans at competitive rates from FinTech companies such as Capital Float according to their need. We provide a variety of unsecured small business loans that are designed to take care of differing business requirements. These include:

• Term Finance: Small businesses that have been in operation for more than two years and have sound business financials can take unsecured loans such as Term Finance. This product allows a business to borrow money varying from rupees one lakh to rupees one crore, for a tenure ranging from a few months to up to three years. A nominal processing fee is charged, and there is generally no pre-closure penalty.

• Supply Chain Finance: SMEs with invoice receivables from large companies can avail themselves of Supply Chain Finance for up to 80% of the invoice value. This unsecured loan can be repaid either through monthly instalments or as a one-time payment upon receiving funds on your invoices.

• Online Seller Finance: Certain loans such as Online Seller Finance have been designed keeping in mind the specific requirements of merchants who sell aggressively through online marketplaces such as Flipkart and Amazon India. Such merchants can take up to 200% of their monthly receivables as an unsecured loan.

• Merchant Cash Advance: Businesses such as retail stores and restaurants that receive the bulk of their payments through card swipe machines can also take up to 200% of their monthly receivables as an advance upfront through this loan product. Merchant Cash Advance can be repaid through a fixed percentage deduction from the card settlement amount in the subsequent months.

Benefit from competitive interest rates for unsecured loans

Besides the various innovative services offered through technology, FinTech companies such as Capital Float also offer unsecured loans at the most competitive rates. The services offered are thoroughly professional in nature as compared to other NBFCs, and greater flexibility is offered in the repayment of unsecured loan, so that a business can focus more on achieving its growth targets.

Capital Float acts like a partner to small businesses, which could be traders, manufacturers, service providers or retailers. Unsecured small business loans are provided based on the financials of a small business, and at no point is there a requirement to pledge any asset.

Capital Float believes in being the pioneer in innovation while offering unsecured loans in India to SMEs. This is showcased through our various unsecured loan products to fulfil needs of businesses in every sector. Capital Float charges a flat processing fee of 2% across various unsecured loan products, and no hidden charges are levied beyond the interest rates.

Oct 24, 2018

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6 Types of Business Loans Available to SMEs In India

The Small and Medium Enterprises (SME) sector is of key importance to the Indian economy given that it employs the second largest workforce in the country after the agricultural sector.

Statistics offer a clearer picture. Accounting for 45% of industrial output and 40% of exports, the SME sector can be a significant driver of economic growth. SMEs also produces more than 8000 quality products for the Indian and international markets.

In recognition of their significant contribution, SMEs are receiving a welcome push from industrial associations and government bodies. Yet their biggest challenge continues to be business loan requirements. Lack of timely financial help wreaks havoc on the growth of small businesses. Funding, if not received at the right time is of no use. Often, SMEs are turned away by traditional banks for a number of reasons. Further, the inflexible and complex loan application and approval processes of conventional lenders are discouraging for most small enterprises.

Fortunately, change is in the offing. Thanks to the growing presence of FinTech lenders, small and medium enterprises have reason to cheer. Business loan requirements for two different companies can never be the same. Keeping this mind, online lenders like Capital Float have stepped in to offer a wide variety of customized loans for business in India.

Here is a quick look at the bouquet of flexible credit products that Capital Float provides to SMEs.

Term Finance:

A quickly disbursed working capital loan, Term Finance is a great product for B2B service providers, manufacturers, traders and distributors alike. It helps fast-track business growth and boost profit margins. Term Finance is a convenient means to acquire fast business funding needed to meet your short-term requirements and ensure a positive monthly cash flow.

Online Seller Finance:

With the online selling space growing exponentially, there is an omnipresent demand for high liquidity. Our Online Seller Finance has made loans for businesses in India, especially e-commerce merchants, easily available. B2C and B2B marketplaces can get ahead of competition, expand to new markets and diversify into new product categories with the help of this customized credit solution. Attuned to your business ambitions, this collateral-free business funding ensures you have liquidity in the swiftest manner possible.

Pay Later:

An innovative financial product, Pay Later is ideal for SMEs with increasing orders in the pipeline and need to make supplier payments regularly. It greatly benefits those that can avail large cash discounts from suppliers. Pay Later works well for an enterprise with a base of blue chip suppliers, too. Carrying a predefined credit capacity customized for every applicant, Our Pay Later credit facility helps a variety of SMEs in times of cash crunch.

Merchant Cash Advance:

A simple and user-friendly business funding solution, Merchant Cash Advance ensures you have access to liquidity as and when required. Most suitable for restaurateurs and retail store owners, your unique business loan requirements are met in the most affordable manner. Active use of card payment devices offers an easy experience to customers. Point-of-sale machines aren’t just means of cashless transactions; they can become instruments for availing working capital finance. Merchants who earn revenue from debit and credit card swipes can avail of business funding through this tailor-made financial product. We offer working capital finance up to 200% on the merchant’s sales from monthly card swipes. Capital Float has partnered with multiple point-of-sale (POS) card machine vendors such as MRL Posnet, Pine Labs, Bijlipay Mswipe, ICICI Merchant Services, etc. Partnering with these vendors helps merchants access their customized working capital solutions.

Supply Chain Finance:

Enterprises often need to work with multiple suppliers. Using bills as financial instruments then becomes a given. Delays in payment are likely to impact the growth of a business. Fully comprehending the importance of correct timing, Capital Float’s Supply Chain Finance has been designed to come to the aid of small and medium business owners. This unique loan product takes care of cash crunch situations through accounts receivable financing, which instantly liquidates the SMEs bills into cash. A revolutionary way to put more money into your business by collateralizing your business’ outstanding bills, Supply Chain Finance enables SMEs to procure an advance of up to 80% of their bill value.

Taxi Finance:

India is witness to the recent boom in the radio taxi business. Finding an Ola taxi or an Uber cab is convenient and something one can do round the clock. Inspired by these success stories a number of people from diverse walks of life are looking at taking up work as drivers for tech-based taxi services. While it offers an easy means to earn a good income and hold a steady job, the taxi business needs basic investment in the tools of the trade— a car wired into a tech-based platform.

Taxi Finance, Capital Float’s innovative financial product, offers taxi drivers the freedom to earn more. With this loan, a taxi driver can now own a car, operate independently, and enjoy the benefit of flexible working hours. Capital Float has partnered with several reputed taxi aggregators to enable cab drivers to ply their cars on their platforms and substantially increase their revenue. The aggregator repays the loan installments by deducting the amount from the driver’s earnings on a weekly basis.

Taxi Finance offers a simple, affordable way to earn on the driver’s terms, providing easy business funding that is in stark contrast to business loans in India offered by traditional banking institutions.

Conclusion:

Unique business loan requirements underline the need for tailor-made financial products. We have financial solutions that cater to any SME’s working capital need. Minimal documentation and zero-collateral are among the unique selling points of these business funding solutions. Additionally, easy eligibility criteria combined with no pre-closure or hidden charges make these funding options SME-friendly. With instant approvals and quick disbursal of business loans, it makes sense to choose from one of our many innovatively designed financial products.

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Oct 24, 2018