5 reasons to pay EMIs/Credit Card payments on time

Timely payment of EMIs or credit card bills is an essential aspect of taking charge of your financial life. Very often, people miss their bill payments because of their busy schedules. Making on-time bill payments a priority will lead to many benefits and will keep you out of debt traps.

Here are five reasons to pay your EMIs or credit card payments on time:

  • Good credit standing: Making timely payments of EMIs or credit card bills will ensure that your credit history remains positive. A good credit score makes you creditworthy. Having a high credit score will enable you to avail quick, formal finance to address your needs in the future.
  • Avail loans easily: If you have a high credit score, banks or financial institutions won’t hesitate to sanction your loans. You can even get higher loan amounts with low-interest rates.
  • Save on fines: You may avoid the penalty or late payment fee that banks charge by paying the EMIs or credit card bills on time. This helps avoid increasing your financial burden.
  • Save money: When you pay your EMIs or credit card bills on time, you save more as the interest on the outstanding amount does not increase. Lenders may charge high interest on delayed repayments.
  • Keep the monthly payments low: When you miss your bill payment for a month, you will need to pay it the following month. So, the amount to be paid in the next month will increase. Your next payment will include two installments and also the penalty charge, thereby compounding the owable amount. 

Late payments can affect the financial position of people adversely. Make it a habit to pay all your dues on time. It will not only reduce your stress level but also help you avail of all the benefits mentioned above.

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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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GST Rates Revised for 27 Goods and 12 Services

GST Rate Revisions as on 6 October 2017

Good/Service Present GST Rate Revised GST Rate
Duty credit scrips 5%  Nil
Mangoes sliced dried  12%  5%
Khakra and plain chapati / roti
Namkeens other than those put up in unit container and, –
(a)bearing a registered brand name; or
(b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily
Ayurvedic, Unani, Siddha, Homeopathy medicines, other than those bearing a brand name
Paper waste or scrap
Real Zari
Food preparations put up in unit containers and intended for free distribution to  economically  weaker sections of the society under a  programme duly approved by the Central Government or any State Government, subject to specified conditions  18%  5%
Plastic waste, parings or scrap
Rubber  waste, parings or scrap
Cullet or other waste or Scrap of Glass
Biomass briquettes
Hard Rubber waste or scrap 28% 5%
Sewing thread of manmade filaments, whether or not put up for retail sale  18%  12%
All synthetic filament yarn, such as nylon, polyester, acrylic, etc.
All artificial filament yarn, such as viscose rayon, cuprammonium
Sewing thread of manmade staple fibres
Yarn of manmade staple fibres
Poster Colour  28%  18%
Modelling paste for children amusement
All goods falling under heading 6802 [other than those of marble and granite or those which attract 12% GST]
Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal
Plain Shaft Bearing
Parts suitable for use solely or principally with fixed Speed Diesel Engines of power not exceeding 15HP
Parts suitable for use solely or principally with power driven pumps primarily designed for handling water, namely, centrifugal pumps (horizontal and vertical), deep tube-well turbine pumps, submersible pumps, axial flow and mixed flow vertical pumps
E-Waste 28%/18% 5%
Imposing GST only on the net quantity of superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB] 18% 18% (Clarification to be issued)

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Oct 24, 2018

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Why is GIFF the Best Time to Take a Loan?

The second half of every year brings with it a large number of festivals. As consumers wait with heightened excitement for significant festivals to roll into their calendars, SMEs prepare for the season by adding to their product lines and offering sweeping discounts on their offerings. To support SMEs all over India in their preparation for the season, Capital Float introduced the ‘Great Indian Finance Festival 2017’ – a one-of-a-kind business loan bonanza.

What is GIFF?

The Great Indian Finance Festival (GIFF) is a loan festival designed exclusively for SMEs like you to help steer your business towards growth. From 1st July to 30th September, Capital Float, the largest digital lender in India, brings you unique deals for financing your business. Our timely processing, low interest rates and great offers will assist SMEs like you focus on fuelling business growth while we take care of the financial requirements.

Timing is Everything

SMEs may be aware of the nature of credit they are seeking, however the timing of availing the loan is usually outside of their control. Factors such as seasonality, market trends and lender’s turn-around-time could affect the timing of availing a loan. Through GIFF, Capital Float attempts to provide SMEs like you quick access to customized working capital loans ahead of the festive season, in order to help you prepare for the peak in consumer demand.

GIFF becomes the best time to take a loan because you can:

  • Cash in on festive buying frenzy: Mid-year marks the beginning of the festive season in India, with most Indian festivals such as Ganesh Chaturthi, Onam, Durga Puja, Dussehra and Diwali falling in the second half of the year. Festivities are widely associated with new purchases and bargains, and business owners must not miss this opportunity. Whether it is expensive gifting in Diwali or home renovation before Ganesh Chaturthi, consumers are prepared to spend. Timing is everything and you need to be ready for the surge in demand to make the most of the festive season. This is where the Great India Finance Festival will help you. At GIFF, you can borrow funds at low interest rates, improve or scale up your portfolio and pass on the cost benefit to your consumer.
  • Get an auspicious start: Several festive occasions in India—for example, Onam—are considered an auspicious time to start something new. This traditional belief adds an air of positivity and encourages SMEs to engage in fresh business initiatives. GIFF further aids by offering lucrative deals to SMEs looking to make the most of these opportune occasions.
  • Save on interest: If you are penny-wise in business dealings, the subsequent savings will directly enhance your cash flow. The Great Indian Finance Festival offers innovative and affordable finance products at low interest rates starting at 16%. Since collateral-free, quick loans are usually available at higher rates of interest, GIFF is the perfect opportunity to avail of customized loan products for different working capital needs.
  • Earn in Gold: To add to the rare loan opportunity that GIFF brings you, Capital Float offers lucrative rewards on loans availed during the season. You get to earn Gold up to ₹10,000 on the loan offering featured during Flash Sales. Keep checking our GIFF page or follow us on Facebook and Twitter to find out the dates of Flash Sales.

Capital Float’s Great Indian Finance Festival can help you make new business headways this festive season. Create a solid foundation with the best financing deals on offer, and push your business towards greater heights with GIFF.

Oct 24, 2018