7 TIPS TO SAVE MONEY WHILE MANAGING PERSONAL FINANCES

In today’s world, saving money is of the utmost importance. If you are stressed about how to save money, then you are not the only one in this regard. Financial planning sounds easier than to practice. Even though it may be more exciting to spend money, you should try to practice saving for contingencies, as the future cannot be predicted and is uncertain.

Why is saving money essential?

Saving money can help you to become financially independent, providing you with security in the face of emergencies. Financial planning is necessary to set aside money for the family’s needs, such as the education of children, marriage expenses, healthcare expenses, planning for significant life events, retirement, etc. Saving money is an effective financial practice and a lifestyle choice with several proven benefits.

7 tips to save money

Though there are several ways to save money, you could consider implementing these seven tips:

  • Awareness: Being aware is one of the most critical factors. If you are aware of your finances and spending habits, you will be able to consciously set more money aside.  
  • Prepare a budget: Begin by identifying your fixed and flexible expenses. This will help you evaluate how much of your corpus is depleted by unnecessary expenditure. After this, you can prepare a budget on a weekly or monthly basis by setting expenditure limits. This will help you pay your bills while simultaneously creating a pool of savings. You can make a budget on a weekly or monthly basis (based on your preference) with spending limits clearly defined. This budget may help you in saving extra money and restricting unnecessary expenditures.
  • Curb the spendthrift in you: Many people aren’t always conscious of how lavishly they spend money on unimportant things. Tracking expenses will help you maintain a close vigil on expenses and keep the spendthrift within under control.
  • Create an emergency fund: While facing emergencies, financial support in the form of insurance or loans may not be immediately available or they may not cover the need of the hour. At such times, savings come in handy to address the contingency. Therefore, make sure you set aside a fund for unforeseen expenses.
  • Sell things you no longer use: There are many things we buy, and after some time, do not use any more. These items can be sold to generate funds.
  • Savings calculator: Various types of savings calculators can be found online. These can be used to calculate the amount one can save over a given period of time. Using these calculators could encourage the habit of saving.
  • Switch to a personal finance money management app: Spends tracking and budgeting can be made easy with personal finance management apps. Walnut is one of the most loved and rated apps in the market with over 10 million downloads. Use this app to unlock the financial planner in you. 

It is necessary to save money, as it provides security, financial independence, and reduces stress. Get started on your journey of personal financial planning to achieve peace of mind and money in the bank for when you need it.

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5 Big Reasons to Opt for a Merchant Cash Advance Loan

While dining at a restaurant, customers either settle the bill through cash or by using a credit or debit card. Similarly, online shopping also offers the advantage of choice of paying by cash or card. In both cases, apart from offering quality service and/or products, the customer experience is further enhanced when a merchant offers the convenience of choice. Keeping customer satisfaction in mind, the use of card payment devices has become a norm for modern-day businesses. After all, a business’ success largely depends on how happy its customers are. A well-run business attracts more customers and eventually ensures long-term gains. These include better profit margins, wider customer base, higher brand value, etc.

One of the key factors that makes all this possible for a business, regardless of its size, is working capital. A travel agency runs very differently from, let’s say, a flourishing B2B business. However, the need for access to quick finance is something they have in common. Given that swiping of credit or debit cards is fast becoming commonplace, businesses are waking up to the fact that they can utilize point-of-sale card machines to their advantage. In other words, they can use the cash flowing into their merchant account from card swipes to avail of merchant credit advance.

Merchant cash advance companies ensure a quicker and easy access to money. Turning to a conventional lender for working capital needs is not always possible for a small business, nor in most cases is it simple. This swings the spotlight on merchant cash advance loans. A tailor-made financial product, Capital Float’s merchant cash advance option has benefited several Small and Medium Enterprises (SMEs).

Our association with several point-of-sale card machine vendors like Mswipe, ICICI Merchant Services, Pine Labs, Bijlipay and MRL Posnet enables a wide range of merchants to obtain customized working capital solutions from us in the form of a merchant cash advance loan.

Approaching merchant cash advance companies like Capital Float makes sound sense for SMEs in search of quick access to funds. Here are 5 important reasons why SMEs should opt for merchant cash advance loans over other types.

1- Broader loan range: Capital Float’s merchant cash advance loan offers SMEs the flexibility of choosing the exact amount of capital they need. Addressing credit requirements ranging from as low as Rs. 1 lakh to as high as Rs. 3 crores, this is a customized financing option based on the monthly card settlement of a business. A merchant credit advance loan is an ideal solution for those who have consistent card inflows as well as short-term investment requirements.

2- Flexible loan tenure:  Apart from offering the advantage of cashless transactions, point-of-sale machines can help speed up access to working capital. Capital Float’s merchant cash advance loan, based on card swipes comes with the benefit of flexible loan tenure. SMEs can opt for a 6-month or 12-month repayment term, making it easier to pay back the loan at their convenience.

Besides, payment to the merchant cash advance company varies directly with the merchant’s sales volumes. This means SMEs have the option of paying less during a low season. Additionally, with this innovative alternative, they need not pay monthly EMIs which are the norm in traditional small business loans; they can pay weekly or fortnightly installments too.

3-Get up to 200% of your monthly card settlement: Merchant credit advance loans work like a charm for retail businesses as well as restaurateurs. Given the high extent of card swipes in today’s digitized and connected world, one can receive financing up to 200% of monthly sales from card payment machines. Higher card swipes can mean a higher loan amount.

4- Apply anytime, anywhere: Typically, loan applications are a laborious process requiring several trips to the bank. But alternative financing options like merchant credit advance are anything but that. In fact, merchant cash advance companies offer a quick and hassle-free online application process, with forms that can be filled and uploaded anytime, from anywhere. The entire process of filling out an application form and submitting the required documents takes just 10 minutes. It is time to bid adieu to lengthy procedures and paperwork required for a conventional loan.

What’s more, at Capital Float we understand the value of quick access to credit. Meeting an unexpected business expense or leveraging a lucrative business opportunity can be a challenge for well-managed businesses. Utilizing innovative technology for speeding up loan approvals, Capital Float disburses merchant cash advance loans within 72 hours.

5. Simple pre-requisites: Merchant credit advance is something SMEs can easily apply and avail of. The prerequisites are simple and include the following qualifiers:

  • Operational history of one year
  • Minimum turnover of Rs 20,00,000
  • Card acceptance vintage of six months
  • Minimum monthly card volume of Rs 1,00,000
  • Minimum of six settlements per month

Personalized and transparent

Capital Float fully comprehends the fact that loan products need to be customized according to the needs of a business. Therefore, going for a financing option like merchant cash advance loan makes sound sense. SMEs receive exactly what they are looking for in terms of working capital; and the merchant credit advance is convenient in terms of repayment.

Capital Float believes in conducting business in a transparent manner; we do not levy any kind of hidden charge whatsoever. There is no pre-closure penalty either — another advantage in the merchant cash advance loan. The borrower is only obligated to pay a processing fee of up to 2% of the loan.

Capital Float aims to remove financial barriers that stand between SMEs and growth by providing easy access to capital.  Our merchant cash advance loans are a simple and secure means to bridge the credit gap that small businesses routinely face.

Oct 24, 2018

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Why SMEs should go digital

The Digital SME

If you’ve been reading the papers over the last year, you must have come across the words ‘digital’ and ‘SME’ on almost a daily basis. From the the ‘Digital India’ initiative by the government to cut red-tape, bureaucracy and dare I say even corruption, to the KPMG-Snapdeal report on how going digital (or selling online) has helped SMEs increase their turnover and profitability, there’s a lot of excitement in India about SMEs going digital.

Over the past few months I’ve been asking myself a couple of questions:

  • Do SMEs really understand what “going digital” means?
  • Do SMEs know what are the benefits of going digital?


Going Digital: What does this really mean?

Depending on which report you read, SMEs can sell products online for prices between ₹1500- ₹3000. So does this mean the SME has now gone digital? I think not. This just means the SME now sells its products online and therefore has a greater reach, which to be honest is a great achievement in itself, but the SME still has to adopt technology internally for it to go truly digital. A modern digital SME is powered by solutions that are spread across multiple functions: From Customer Acquisition to Risk Management to Operational Efficiency to Enabling/Empowering Workforce. Adopting new age technological solutions internally will allow an SME to achieve scale and more importantly operational efficiency at a lower cost. Some of the largest start-ups have managed to scale globally because they have successfully done this. Firms like Practo, AirBnB and Uber for example, have successfully incorporated technology in their internal processes which has allowed them to grow globally at a rapid pace.

The rapid growth of technology has given SMEs:

  • Access to Enabling Infrastructure through increasing device penetration and an enhancement in internet connectivity.
  • Availability of economically feasible enterprise solutions and services along with a thriving mobile applications (apps) ecosystem.
  • Customers who have adopted technology and ecosystems that are allowing this adoption through key initiatives.
     

Going Digital: Key Benefits

4 areas are likely to be directly benefited if SMEs adopt technology:

A) Customer Acquisition

Technology can be leveraged to access clients in distant geographies and create a greater visibility among target segments. Personalisation in engagement and customer relationships, for both new and existing clients, can be managed in a more efficient manner. The immense data that is captured using technology will allow SMEs to develop customer intelligence which will then allow them to optimize sales and engage with various ecosystems to open new sales channels.

B) Operational Efficiency

Automation and streamlining of core processes will allow the SME to become more efficient, reduce wastage and utilize resources in an optimal manner. This will allow them to enhance the customer experience and optimize their supply chain management through better visibility and control over logistics. With efficient processes in place, SMEs will be able to choose suitable potential partnerships that will fit their internal processes and not cause any disruption,

C) Workforce Enablement

Technology can go a long way in identifying workforce shortfall and identifying key areas of skill development needed within the organisation. A number of digital tools are now available for employees to collaborate and for the SME to monitor employee productivity. Web based solutions for skill development and training for employees will help the SME ensure that employees are empowered with new tools and concepts on a regular basis

D) Risk Management

With use of technology comes the responsibility to protect the information the firm has gathered. Data Security becomes paramount for customer/employee data as well as the company’s financial information. Digital solutions for preventing such leaks would strengthen the organisation. Technology can also be used to safeguard and monitor physical assets through the use of surveillance, asset control and tracking solutions.

There has never been a better time for SMEs in India to “go digital” and leverage technology to incorporate financially feasible solutions.

Akshay_Sarma

Akshay joined Capital Float after completing MBA from Judge Business School, University of Cambridge. Following 6 years with Deutsche Bank across various functions and geographies, he opened a French Italian bistro in India. At Deutsche Bank, Akshay worked across risk management, structuring derivative products, trading Indian government bonds and structuring and executing assets financing trades.
Akshay manages Capital Markets at Capital Float.

Oct 24, 2018

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Secured Vs Unsecured Business Loans: The Difference and How it Matters for SMEs

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.

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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