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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Credit changes hands as Digital Lending takes shape

A wave of change is sweeping across the nation, transforming accessibility of credit at an individual and institutional level. As stated by the World Bank in 2014, nearly 47% of Indian adults are disconnected from formalized financial systems, increasing their dependency on informal credit channels. The nature of these informal channels and the environment fostering their sustenance make these modes of funding exorbitantly expensive. These channels typically provide immediate funding but debilitate the borrower’s sustainability and competitiveness in the long-term. Usurious rates of interest, loans terms disconnected from business fundamentals and delayed-decision making shackle entrepreneurs armed with ambition.

The apprehensions involving credit-access notwithstanding, SMEs find themselves lucratively placed in the timeline of the Indian economy, wherein Governmental and capitalistic forces are aligning in order to further SME progression in the country. Centre-led initiatives and evolutionary processes set up by tactful corporates are becoming building blocks to facilitate economic development through SMEs.

SMEs central to India’s economic development

The Government of India has identified the significant role SMEs play in shaping and developing the economy. The ‘Make in India’ initiative was launched last year to attract foreign and local investment to the country’s manufacturing sector. SMEs are required to participate actively in making this initiative a success. The pro-manufacturing stance of the Government provides these businesses with the opportunity to scale and grow at an accelerated pace.

India destined to become an e-commerce superpower

Similarly, e-commerce companies in India are in the golden phase of technological advancement. According to Goldman Sachs, India’s e-commerce market will cross the $100 billion mark by FY20[1]. A study by PWC indicated that the e-commerce industry is expected to grow from $16.4 billion in 2014 to $21.3 billion in 2015[2]. Alibaba.com, the B2B division of the world’s largest e-retailer Alibaba Group recently announced that India is the second most important market for the company globally [3]. A whopping majority of the e-commerce space presently comprises of e-tailing and e-travel companies. Alibaba is likely to provide B2B companies the much-needed platform to establish their presence.

Credit now just a click away

Several factors could hinder SMEs from expanding at a geometric rate. Possibly the most critical of these is credit. Companies are queuing to alter the perception and approach to credit, with many organisations attempting to transform finance from a function to a service.

A recent article on YourStory mentioned that over 500 financial technology start-ups in India have received $1.4 billion in funding since 2012[4]. These are not merely in the credit services sector but also include companies in the mobile payment services sector. With 90% mobile phone penetration in the country and smartphone sales expected to reach 500 million units in the next five years, digital engagement with consumers will be higher than ever before.

Pioneer with purpose

Capital Float, the pioneer in digital lending for SMEs in India, is spearheading this digital revolution. We understand the crippling effects collateral-based loans have on business progression and the inherent anxiety they cause. Our expertise in big data, decision sciences proficiency and technological prowess gives us the edge to provide specially tailored financial services to small and medium businesses across the country. Competitive interest rates make us relevant and digital platforms increase our reach. Gone are the days when SMEs toiled to acquire credit. Digitized processes have bridged the gap between the borrower and capital, the two now being separated by a few clicks of the mouse.

Digital Lending will gradually replace conventional credit channels. In response to the altering financial landscape, traditional organisations are revisiting their work-flows and are attempting to revitalize processes to become felicitous options.

SMEs are evolving at a rapid rate and it’s not surprising that access to finance too is changing simultaneously.

Author – Rajath Kumar, Marketing Manager, Capital Float.

[1]http://economictimes.indiatimes.com/industry/services/retail/indias-ecommerce-market-to-breach-100-billion-mark-by-fy20-goldman-sachs/articleshow/49532128.cms
[2]http://www.pwc.in/assets/pdfs/publications/2015/ecommerce-in-india-accelerating-growth.pdf
[3]http://articles.economictimes.indiatimes.com/2015-12-08/news/68865727_1_indian-smes-alibaba-com-indian-sellers
[4]http://yourstory.com/2015/10/digital-finance-revolution/

Oct 24, 2018

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Cashflow Management Tutorial for School Owners

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.

Apply for Unsecured school loan

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.

Oct 24, 2018

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5 Practices Business Owners Can Adopt at the Beginning of a Financial Year

The start of a brand new financial year is filled with several emotions for SME owners, ranging from relief after the intense pressure of March, anticipations and excitement for the year ahead. Amidst these, business owners often don’t find the opportunity to celebrate the year that has gone by and the new financial year up ahead.

The new financial year is the only occasion that is of sole significance to an SME, whereas every other event, festival or celebration involves friends and family. It is that time when the SME can celebrate with their team the previous fiscal year that was full of learnings, experiences, peaks and troughs. The beginning of a financial year also presents a unique prospect to start over; SMEs can renew their enthusiasm and vigor as they make new business decisions.

Indeed, celebrating the new financial year can become an ongoing ritual for SMEs as it also helps establish a stronger workforce with a refined drive towards the company’s vision. To gain an advantageous start, here are some practices to ease you into the new fiscal year, so that you can look forward to bigger success celebrations at the end of it.

1. Set financial goals
Whether your financial goals are numerical or tangible, they should be defined in a manner that lets you evaluate if they can be achieved or not. These can be long-term, such as profitability, margins, sustained cash flows, etc. that may not be accomplished over the span of the financial year ahead or specific goals that are short-term.

For example, a retail store that has rented a space might learn that the building owner plans to sell the building eventually, and intends to acquire the space for further expansion. For a smooth sale without depleting the working capital, the retailer should have a clear sense of the cost of down payment, mortgage and additional costs. Based on this, they can create a strict budget for the year and stick to it. Another option is to avail collateral-free finance options such as Term Finance or Merchant Cash Advance that offers flexible modes for repayment.

2. Evaluate the scope of debts
The beginning of the year is the best time to assess the debts that you might have accumulated over the past years. Start by weighing each of your existing loans based on its cost, interest rate and other subsidiary factors such as prepayment penalty. Always ensure that the loan with the highest ticket size is repaid first.

Business finance is not often a liability-encountering measure, but also an instrument for growth, expansion and diversification of your business. If you have a promising business opportunity at hand and are reluctant to accept it due to a shortage of funds, this is when you should consider availing business finance. To determine the customized credit solution that best suits your business, check out Our Products.

3. Improve book-keeping
Unorganized compilation of financial records is the most recurrent theme for SMEs who let go of trickling financial losses, only to discover a gaping hole in its wake. Unexpected, unrecorded cash expenses often eat their way into the profitability of a business, resulting in a long-lasting impact that might take several years to recover from.

It is integral to maintain records of operational and financial performance, and the method you adopt to maintain these play a major role in determining the accuracy of the data. If you have been managing business accounts on your own, it is advised that you hire an experienced tax accountant or opt for an enhanced accounting software this fiscal year. This will keep you free to focus on other tasks, with the assurance that you one step closer to higher profits.

4. Plan for new partnerships
Large corporations can perform the role of different stakeholders to an SME; they can assume roles as business partners, product distributors or customers. Contrary to conventional belief, small businesses have much to gain by associating with bigger businesses that operate differently from the way the SMEs function. This ensures that the partnership remains fruitful for both the entities involved, and avoids situations where they find themselves competing with each other If you feel that your enterprise will benefit from such a collaboration to supplement time, logistical organization and resources, this new financial year is when you can make that move.

5. Identify a new customer base
For any SME, extending the outreach of your brand to a wide demography of consumers is instrumental to evolve into a larger organisation. If you envision a steady rate of growth, what best time to target a brand new audience than the start of the financial year? You can also think of ways to improvise your product or service for a high-potential customer segment that is less exposed to competition. At the end of the day, this is an exercise that promotes out-of-the-box thinking.

A sound financial budget prepared with the above points in mind ensures that you are better prepared to face the new fiscal year. Also, it gives you an edge over your competitors on several fronts, and getting a business finance partner for your needs becomes much simpler when you are armed with a well-calculated plan.

Capital Float exists to serve the unique business aspirations of ambitious SMEs like you. With a growing base of 80,000 customers in over 300 cities across India, we provide customized credit solutions for the diverse needs that you might have. Paperless loan application, minimal documentation requirement and quick processing ensure that you receive funds when you need it. Choose from our new, innovative financial solutions for FY 18-19 and get ready to #BreakLimits!

Oct 24, 2018