The world is not what it used to be since the Coronavirus outbreak. The virus has distorted the daily lives of millions of people across the globe. Social distancing, travel restrictions, work from home – are becoming the new normal. To gain customers’ trust, companies should understand the buyers and their requirements in this unprecedented environment.
Why is maintaining customer relations essential?
Good customer relationships can help a company to grow. As with personal relationships, creating and nurturing customer relationships is essential as well. When organizations develop strong customer relationships, it can lead to loyal customers, positive word of mouth, and higher sales.
What are the customers expecting from you?
For your company’s long-term well-being, you should put the needs of your customers first. Customers will always prioritize their safety and that of their families. They expect businesses to understand their shopping style, keep essentials well-stocked, be treated as a valued customer, and get benefits even in these hard times.
How to maintain customer relations in the pandemic?
- Maintain hygiene: The safety of the customers should be the priority of any business concern. Therefore, businesses should keep their stores thoroughly sanitized. When a customer goes to the store, there should be provisions for social distancing and contactless operations to reduce the risk of contracting the virus.
- Communicate with the customers: In the wake of the pandemic, everyone is in distress and fear. In such times, if a company can keep communicating with its customers, they will feel considered and cared for. By maintaining contact with its customers, the company can also stay informed about the customers’ needs and wants through feedback, thereby stocking inventory accordingly.
- Make them feel special and valued: By storing customer information such as important dates, companies can surprise their customers with gift vouchers, coupons, gift hampers for special occasions such as birthdays and anniversaries. They can even send over medicines for the aged family members of the customers. Such little things can increase customer loyalty.
- Understand what customers are looking for: Businesses can identify the needs and wants of its customers through research and surveys.
- Added benefits: In these hard times, companies can give their customers free masks and sanitizers with the items they purchase.
It is important for a company to bear in mind the immediate needs of its customers during the Coronavirus crisis. By maintaining strong customer relationships, companies can ensure sustainability and brand loyalty while running their businesses in these challenging times.
More Related Posts
Small and Medium-Sized Enterprises (SMEs) have received a tremendous fillip of late, with the Government pitching in to give a hands up to this very vital business sector. SMEs engaged in businesses ranging from electronics to ad services, or from engineering to textile to handicrafts routinely face a cash crunch that handicaps their everyday operations, as well as hampers plans for expansion.
SMES and the short-term loan
It takes immense courage to begin your business, and taking risks of establishing, sustaining, and expanding it can be prohibitive for many. Financing is the fundamental issue here, and many businesses are compelled to shut shop or to approach banks in order to raise short-term business loans.
Finances are the lifeblood for any enterprise, and any business plan worth its salt must include sound planning for fund sources as well. Short-term business loans and short-term finance are available in plenty and offer SMEs a chance to overcome their temporary financial problems as also provide an opportunity to expand their business. However, these loans are not without pitfalls. Here are some tips that will help an SME to take a well-considered decision when it comes to applying for short-term business loans:
1. Do your homework
SMEs are recommended to do adequate research to identify the option that are most suitable to them. Occasionally, and especially if the borrower has a good credit score, a simple overdraft or line of credit can help the SME to tide over their cash flow problems. Bank loans carry low-interest rates, but the paperwork involved and time taken to sanction can be burdensome. Crowdfunding, inventory financing, and credit card financing are options that can be explored. Promoters also help to finance a large chunk of working capital requirements. But if a short-term loan is a final option, a careful look at the costs involved can help to tip the scales over.
2. Try online loans
Short-term online loans are meant to be repaid anywhere between 90 days to three years. They are quick, convenient and flexible. A good deal of the paperwork process is cut off and friendly financiers also help eliminate the traditional application method of back-and-forth conversation. The huge advantage lies in not necessarily having to offer collateral. Provided an SME finds the right fintech lender, they can benefit from the speed of digital processing. Additionally, preclosure penalties and hidden charges are also avoided. Genuine financiers will also provide the convenience of flexible loan tenures.
3. Measure business liquidity
There is always a possibility that even a profitable SME can run into cash-flow problems, regardless of the numbers reflected on the cash-book records. Delays in receivables have hurt many a lucrative business, and are in fact a common cause for cash-flow mismatches. In such cases, measuring the liquidity of the business can be very useful for an SME in order to find an alternative way to mitigate problems of a cash crunch. The proper evaluation of liquidity can be extremely beneficial, and can be measured in two ways:
Quick Ratio It shows the capability of business in covering current liabilities with current assets, and utilises the formula:
Quick Ratio= (Current Assets – Inventory)/ Current Liabilities
It is measured by calculating the difference between the current assets and current liabilities, with the formula:
Working Capital = Current Assets – Current Liabilities
Getting these figures in hand can help measure business solvency, and thus available funds can be duly channelised and prioritised.
4. Capitalise on credit score
It pays to maintain a good credit score history, in more ways than one. A good credit ranking can help you bargain for lower interest rates on short term business loans. Also, it opens up room for tapping into other means of raising money, such as getting into partnerships or seeking non-traditional lenders for funding.
On occasion, the lender may analyze both your business and your personal debt load, in addition to your credit score. If any of these is already high, the lender may hesitate to extend or provide fresh credit for your business. So, it is important to keep a tight rein over your credit utilisation, so that the services offered by the lender are not affected by your credit score.
5. Check APR
While comparing and selecting the best short-term business loan and finance service, one must always keep in mind the number of applications they are filing for apply for the term loan. After receiving multiple loan offers, one must select the most suitable loan offer by comparing the Annual Percentage Rate (APR) of every term loan lender. This is perhaps the most important calculation to estimate how expensive a loan is. Once you understand the logic of short-term business loans, it is easy to decide whether or not getting a particular loan is a right choice in terms of its actual cost.
6. Be ready for lender’s queries
Things don’t end here. There are chances that the lending party can contact the SME for verifying their documents that they submitted while applying for term loan. Thus, the SME owner must always be ready for answering any query regarding their documentation or regarding their future goals for the company. A small preparation toward this can prove to be very beneficial in getting a loan finalised. Ergo, shortfalls of cash may be inevitable, but not insuperable. A little bit of math and careful consideration of the choices can help you get the cash you need—hopefully at the price you can afford— without having to fall into a debt cycle.
Oct 24, 2018
GST — the unified tax system that is set to revolutionize indirect taxation in India— is finally here. Some of its key proposed advantages are streamlining of tax payments, reduction in tax frauds, and ease of doing business. Here is a look at how these will play out in the manufacturing domain.
Make In India & Manufacturing
The manufacturing sector in India contributes a mere 16% to the overall GDP. However, the potential to make this a high-growth and high-GDP sector is huge. The “Make in India” campaign by Prime Minister Narendra Modi makes this possibility real, by giving impetus to the sector. Furthermore, PwC estimates that India will become the fifth largest manufacturing country in the world by the end of 2020. It would be interesting to know how the Goods and Services Tax or GST impacts this roadmap.
Impact of GST on Manufacturing
GST is one of the key policy changes that will have a direct impact on manufacturing establishments. So far, the existing complex tax structure has been a dampener, resulting in the slow growth of the sector. GST is expected to liberate the sector by unifying tax regimes across states.
Overall, GST is expected to have a positive impact and boost manufacturing. Here is why:
- Removal of multiple valuations will create simplification: The old tax regime subjects manufactured goods to excise duty, which is calculated differently in different states. While some states calculate excise duty based on transaction value, others calculate it based on quantity. Most manufactured goods’ excise duty is currently considered on MRP valuation. This creates great confusion in valuation methods. GST will usher in an era of transaction-based valuation, making calculation of tax much simpler for the manufacturer.
- Entry tax subsummation will reduce cost of production: The subsuming of the entry tax for inter-state transfers is a key reason for reducing cost of goods and services. For example, a supplier of cement from Maharashtra to Karnataka was earlier required to pay entry tax when the supply crossed the interstate border. For Karnataka, the entry tax rate was 5% of the value of the goods. The supplier would pass on this additional cost to the customer, resulting in increase in selling price. With entry tax being subsumed, the supplier need not pay the entry tax rate amount and consequently, not charge the customer this amount either.
- Improved cash flows: Under the new tax laws, manufacturers can claim input tax credit on input goods, which seems to be a positive sign for cash flow. SMEs are keenly observing the time difference between input tax credit and the credit being available.
- Single registration process will provide ease of registration: The old regime required manufacturers to register each manufacturing facility separately, even those in the same state. GST will simplify the plant registration process by allowing single registration for all manufacturing entities within the same state. Previously, if a brick manufacturer had factories in Bangalore, Hubli and Dharwad, each unit had to be registered separately. Under GST, all of these factories would be jointly registered under the state of Karnataka. Of course, different state-entities will require separate registrations under GST too.
- Removal of cascading will lead to lower cost-to-consumer: The old tax regime does not allow manufacturers to claim tax credit on inter-state transaction taxes such as octroi, central sales tax, entry tax etc. This results in cascading of taxes—an extra cost to the manufacturing company. Manufacturers end up passing on these extra costs to the consumer. The unified GST regime will eliminate multiple taxes and thus lower cost of production; this, in turn, will mean lower pricing for the consumer. For example, prior to 1 July 2017, SMEs in manufacturing used to pay Excise Duty, Central State Tax and sometimes VAT too at 12.5%, 2% and 5.5% respectively. With GST in effect, they are required to pay 18% in taxes.
- Restructuring of supply chain: To align with the GST law, businesses will be required to realign their supply chains. However, this is a blessing in disguise. Till date, most supply chain structuring has been designed around how to manage tax regimes. With a single tax regime, this will change, and supply chain structures will focus on driving business efficiencies. An example is that of warehousing. The old regime demands that warehouse management be based on arbitrage between varying VAT rates across states. This is expected to change to bring in economic efficiencies and more customer-centricity going ahead.
Manufacturers, however, are concerned about the following aspects:
- Increase in immediate working capital requirements: Branch transfers and depo transfers will be treated as taxable under GST; IGST will be applicable on these transfers. This increases the requirement for immediate working capital. Another reason for increased working capital requirements is that the receipt of advance is taxable as per GST rules. Also, stock transfers are treated as “supply” and hence are taxable under the GST regime.
- More stringent and elaborate transaction management: GST aims to achieve better tax compliance. To make this possible, manufacturers must work towards streamlining existing transactions; this means additional resources and costs. For example, under GST, credit in respect to an invoice can be taken only up to one year of the invoice date. Also, the provision of reverse charge means that the liability to pay tax falls on the recipient of goods/services instead of the supplier. The payment of reverse charge is dependent on the time of supply (30 days from the date of issue of invoice by the supplier in case of goods and 60 days for services).These changes will require manufacturers to carefully assess and track their supply processes, especially the timelines. This may mean hiring a better skilled compliance workforce, and better systems and software. More legal considerations will also mean more costs.
- Lack of clarity on local exemptions: Despite GST being proposed as a unifying platform for indirect tax, all the components for manufacturing are not yet clear. One such area is localized area-based exemptions. The old structure provides certain exemptions for certain goods in specific states (for example the North East or hilly states). Under GST, most of these exemptions are likely to be removed, resulting in a negative cost-impact on these manufacturers. Such companies must reassess their financial position in view of such likely changes.
Overall, one can say that the impact of GST on the manufacturing sector is positive. It provides a unique opportunity to streamline business operations to become more compliance and profitability-oriented, rather than tax-oriented. It puts power in the hands of business leaders to bring about positive change and steer their enterprises on a growth path, powered by GST-compliance.
Read more of our content on GST by clicking here.
[maxbutton id=”4″ url=”https://safe.capitalfloat.com/cf/default/register?utm_source=blog&utm_medium=button&utm_campaign=blog-content-button&utm_content=implications-gst-manufacturing” text=”I want Business Loan” ]
Oct 24, 2018
To sustain their business growth, small and medium enterprises (SMEs) sometimes need additional working capital, and the most direct way of getting it is to apply for a loan.
With business loans coming from banks, non-banking finance companies (NBFCs) and private money lenders, SMEs have multiple sources to get funding for their operations and expansion. However, these credit options have their pros and cons and should be understood to choose the most helpful alternative.
Secured vs Unsecured Business Loan
Most companies are familiar with the idea of a secured business loan that requires them to offer the lender some collateral as a security against the funding provided. The credit here is issued when the borrower hypothecates a financial asset to the lender. The hypothecation ends only when the entire principal, together with interest and any other associated charges, is fully paid off.
Banks and most other conventional sources of finance are more willing to offer secured loans because from the lender’s point of view, these carry less risk than unsecured funding.
The main advantage for a borrower taking a secured business loan is that the interest on such credit is lower since a guarantee of their asset backs the loan.
Conversely, the challenge is that lenders, particularly banks, accept only selective assets as collateral. They need to ascertain that such an asset can be liquidated in minimum time in case the lender defaults on payment. Due to this condition, many SMEs find it difficult to get secured loans. They may not have assets that are considered as relevant or sufficiently valuable by the lender.
An unsecured business loan, on the other hand, is granted without any collateral. A non-banking finance company with a digital lending model offers such loans based on the creditworthiness of borrowers. If a business has a successful operational history of at least one year, and there are no blots on its previous credit history, it is eligible to get its unsecured business loan from a digitally operating NBFC, also known as a FinTech company.
For an enterprise that has no collateral for business loans, it is natural to opt for an unsecured loan even though the interest charged on this is slightly higher than on secured loans. However, some FinTech companies have created additional benefits with their policies that make unsecured business loan better than secured loans on multiple fronts.
While looking at secured vs unsecured business loan, these are some of the advantages that make the latter more valuable for start-ups and SMEs:
- An unsecured business loan is available for short terms – borrowers can take a working capital loan for a tenure of less than one year and thus avoid the burden of debt on long term.
- A FinTech lending company usually has a fully digital application process for its unsecured loans – it takes less than 10 minutes to complete the application and the documents to verify the information therein can also be uploaded online.
- The time taken to receive funds from a FinTech in the business bank account is less than a week – the application is usually reviewed on the same day when it is submitted, and, if approved, the sum is disbursed in the next 2-3 business days.
- A loan processing fee of up to 2% and the interest rate are usually the only charges on a FinTech company’s unsecured business loan – the borrowers do not have to pay any documentation fee, loan insurance premium, legal fee and other hidden charges.
- The repayment options are more flexible for unsecured loans issued by FinTechs – the borrowers can pay off the loan sooner than the predetermined schedule, and maybe charged a nominal pre-closure charge for making the payment.
For an SME that does not have financial assets to hypothecate and needs faster access to cash, will find unsecured business loan better than secured funding.
Here is a summarised view of the features for Secured Vs Unsecured Business Loan:
|Secured Business loans from Institutional lenders||Unsecured business loans from FinTech companies|
|Collateral required||Backed by a financial asset for collateral||No collateral / Security|
|Advertised interest rate (annual)||Between 12% and 24%||Between 18% and 24%|
|Loan processing fee||>= 2%||<= 2%|
|Extra charges||May have extra charges for documentation, loan insurance and other statutory requirements||No extra or hidden charges|
|Time to get funds into account||1 to 6 weeks||72 hours|
|Loan application process||Digital and paper-based, document-intensive loan application||Fully digitalised loan application and document submission|
|Repayment of loan||Only through EMIs||Flexible repayment options|
Capital Float is a leading FinTech company that asks for no collateral for business loans. We have customised our loans for a variety of business purposes and working capital needs. Our short-term unsecured business loans are issued purely on the creditworthiness of the borrowers and the potential of an organisation to pay back in time. We evaluate every loan application within minutes of its submission to provide the decision on the same day.
[maxbutton id=”5″ url=”https://safe.capitalfloat.com/cf/default/register?utm_source=blog&utm_medium=web” text=”Apply for unsecured business loan” ]
If you have an attractive business opportunity to capitalise upon, do not put off your plans. Talk to a representative in our customer service team at 1860 419 0999 and avail yourself of the benefits of a loan without collateral.
Oct 24, 2018