Cashflow is the lifeblood of any organisation, including schools. Unlike most small and medium enterprises that have unstable revenue because of variations in customer purchases and seasonal cycles, schools are usually assured of a running income from the fees paid by the students each quarter. However, cashflow management is as serious a task for educational institutions as it is for any other business.
With the fee they receive, schools have to pay their teaching and administrative staff, maintain the campus, periodically purchase lab equipment, sports supplies, furniture and other items, and keep some reserves for unforeseen expenses. When money falls short of requirements, they may have to apply for loans from a school finance company. In addition to banks, FinTech organisations have stepped forward as significant providers of school finance in India.
Whether a school manages its operations with its earnings or takes the support of school finance, it is essential to handle the fund prudently. The following tips for cashflow management in schools can help the owners avoid severe financial constraints:
Anticipate future requirements: Will some students be leaving the school to change their board (CBSE, State Board, ISC, IGCSE) from the next academic year? Will you be hiring any new staff members? Does the school need to replace any furniture or teaching equipment? It is good to have a basic idea of such needs as they have an impact on your earnings and expenses. If you feel that the outflow of cash could be more than the inflow and reserve funds, it may be necessary to apply for school finance.
Make arrangements with vendors: If you have developed long-term relationships with the vendors who regularly supply lab materials, sports gear, canteen groceries and other provisions to your school, you can make occasional arrangements on payment terms. As an example, if your regular pay cycle from the receipt of invoice is 30 days, it can be extended to 45 days in a period when you are spending funds on additional works in the school.
Work to maximise cash inflows: With constant improvements in your education services, you can attract new students, which will have a positive impact on your earnings. Schools that have classes till Standard VIII but have a reasonably high strength of students can work with an education board to upgrade to Standard X or XII. To facilitate the construction of a new building and for additional campus amenities, you can apply for school finance by sending a quick digital application to a FinTech company. The revenue generated from fees paid by students in new upper classes will help you to pay off the borrowed amount and interest in small EMIs.
Stay connected to lenders: If despite your best efforts on cashflow management, money falls short of requirements, remember that funding for schools in India is available on easy terms from a FinTech school finance company. You can get a collateral-free loan, and you need to submit only the soft copies of eligibility proving documents when you choose a FinTech company as your lender.
Capital Float is a friendly FinTech organisation providing school finance to recognised educational institutions that have functional classes till Grade VIII or above and collect a yearly fee of minimum Rs 75 lakh.
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Capital Float plans expansion in over 100 cities as it bids to offer loans for small brick-and-mortar store owners for a bigger share of the growing financial lending market
Capital Float, which is currently focused on offering loans to small and medium merchants in Tier 1 and metro cities, is now looking to concentrate more on tier 2 and tier 3 cities.
Mumbai: SME lending platform Capital Float, run by Zen Lefin Pvt. Ltd, is looking to expand its reach to over 100 cities and venture into newer categories like loan for small brick-and-mortar store owners, as it eyes a bigger share of the growing financial lending market in the country.
“We are expecting a 10 times growth by the end of March 2017, adding 15,000-20,000 customers (borrowers) cumulatively across all the loan products segment,” said co-founder and managing director Sashank Rishyasringa.
The company has offered loans to 3,000 borrowers until now.
Founded in 2013 by Rishyasringa and Gaurav Hinduja, Capital Float has disbursed loans amounting to over Rs.400 crore.
A technology-led non-banking financial company (NBFC) underwrites unsecured loans online to start-ups, business-to-business (B2B) providers, manufacturers and e-commerce merchants through its own books.
It currently gets 33% of the business from online vendors.
With the aim of extending its focus to small mom-and-pop or kirana shops along with micro small and medium enterprises (SMEs), the company has already made a mobile application that approves loans in less than eight minutes.
Loans to kirana shops could be in the range of Rs.50,000-100,000.
India currently has minimal lending options for small businesses. These businesses are largely ineligible to receive any financing from banks or NBFCs.
Traditional banks ask for collateral, financial statements and bank statements and do not offer small ticket size loans.
Capital Float is trying to solve the problem by lending money to small businesses that might not have collateral, significant revenues or years of experience.
The company offers an alternative for these small traditional business houses that have largely banked on chit funds and local money lenders to borrow money from.
Identifying a need to extend credit to such under-served, Rata Tata, Vijay Kelkar (former finance secretary and chairman of the National Institute of Public Finance and Policy) and Nandan Nilekani (co-founder of Infosys Ltd and the architect of Aadhaar) will soon start a microfinance institution named Avanti Finance, Mint reported on Monday.
Capital Float, which is currently focused on offering loans to small and medium merchants in Tier 1 and metro cities, is now looking to concentrate more on tier 2 and tier 3 cities. “I expect a significant contribution of these cities (tier 2 and tier 3) to the company’s growth, which could be around 33% by next year,” Rishyasringa added.
The loan products currently include working capital finance to online sellers for 90-180 days, long-term finance to merchants for six months to three years, bill discounting and taxi financing (loans for cab drivers), among others.
Broadly, the company has partnered with e-commerce websites, payment gateways, cab services, amounting to 50 partnerships, including with Snapdeal, Shopclues, Paytm and Uber to offer loans to a large pool of small businesses and merchants who work with these partners.
The company is also eyeing profitability in the next 12 months on the back of a robust demand for loans by SMEs.
To enable faster disbursal of loans, the company launched its mobile application two to three months ago, which is privately available to businesses through partners.
While loan applications were initially accessible only through the website, Capital Float is now seeing that mobile application and mobile browsing has grown to contribute 50% of loan applications, said Rishyasringa.
The mobile application is built on four technology pillars of India Stack—Aadhaar-based authentication, an electronic process of know-your-customer (e-KYC), electronic signature (e-Sign) and unified payment interface (UPI).
India Stack is a set of publicly available application programming interface (API)—that enable companies to build applications and businesses based on these four pillars.
The fin-tech company receives a loan enquiry every three minutes, said Rishyasringa. An inquiry implies a prospective borrower initiating a loan application process.
While the company remains stringent in extending loans, by approving 20% of the applications, total loan disbursal amounts to an average of Rs.70 crore per month.
Additionally, the average loan amount extended to a merchant is Rs.10 lakh at an interest rate of 16-19%, for a tenure of between 60 days to 2-3 years. The company maintains and targets to continue to maintain a non-performing asset (NPA) proportion of less than 1% of its total loan amount.
NPA is the proportion of the amount of bad loans to the total amount of loan disbursed.
Backed by George Soros’s Aspada Investment Co., SAIF Partners and Sequoia Capital, the company has raised $42 million, including $25 million in series B round of funding in May.
Other players in this segment that Capital Float competes with are Capital First Ltd, NeoGrowth Credit Pvt. Ltd and SMEcorner.in (Amadeus Advisors Pvt. Ltd). In July, NeoGrowth raised $35 million from IIFL Asset Management, Accion Frontier Inclusion Fund managed by (Quona Capital) and Aspada Investments, along with other investors, reported PTI.
The original article is written by Arushi Chopra. Click here to read the original article.
Oct 24, 2018
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Oct 24, 2018
Coronavirus pandemic has impacted millions of people around the world. The virus has also affected lakhs of people in India, leading to several lockdowns to curtail the transmission of the virus.
These lockdowns have severely affected various sectors throughout India, chief among these being the restaurant industry. If the coronavirus pandemic lasts for a long period, people may get habituated with the idea of not dining out, which will inevitably take the industry longer to recover.
In India, the restaurant industry has faced numerous challenges because of the COVID-19 outbreak: the end of group dining at restaurants, protecting the health of both the employees and the customers, following the safety regulations laid down by the Government, working with a limited number of workers, running expenditure without revenues to match, etc.
Restaurants can address these challenges by actioning the following:
- Focus on takeaways: Group dining has become a thing of the past due to the coronavirus pandemic. In this situation, focusing on building the business via takeaways would be a wise decision. This would promote social distancing and would prevent the virus from spreading while ensuring operations are sustained.
- Collaboration: Restaurants can collaborate to benefit from each other’s strengths. This would not only reduce cost but also increase the number of customers (combining the customers of both the restaurants). The merged restaurant can prepare their best dishes (for which they are famous) and focus their efforts on selling these (which would also result in zero wastage). Collaboration would also help in merging the workforce and have more people available for extensive cleaning and door-to-door delivery.
- Social media marketing: With the onset of COVID-19, traditional marketing wouldn’t prove to be fruitful. On the contrary, it will be expensive. Owing to the lockdowns, people are getting time to surf on social media. Thus, social media marketing would catch their attention. Restaurants will also be able to connect directly with their customers to build effective customer relationships.
- Opt for online food ordering: Since people cannot go to restaurants, the only way for these businesses to operate would be through food delivery. They can list themselves on Swiggy, Zomato or other food delivery aggregators to increase sales. They can even opt for food orders placed directly through phone calls. This would reduce costs and create a revenue stream.
- Create a social awareness program: The restaurants can create a social awareness program around frontline healthcare workers of COVID-19 by supplying them food. Apart from the element of social service, this can also be marketed or advertised on social media and other digital platforms to create goodwill amongst customers.
- Follow the norms laid down by WHO on hygiene: There are operational challenges in the wake of the pandemic. To overcome those, restaurants should maintain hygiene by extensively using hand sanitizers. They should bear in mind that food safety should be their priority. The working stations should be wiped down at regular intervals using a bleach solution. The executives and valets should be cautious during food delivery and opt for contactless payments.
Oct 24, 2018