/ -- From low consumer demands to thinner margins for businesses, from delayed payment cycles to lack of lending from banks, from low trust amongst the business community to businesses shutting down. If one hears any of these things, then the slowdown in the economy has already arrived.
Rotation Problem
The worst-hit during a slowdown is small businesses. As per RBI and MCA data, in 2008 slowdown average credit period rose up to 281 days from 57 days. In the current slowdown, the average credit period is ranging between 180-210 days. Longer credit cycle leads to a higher Gross Working Capital cycle which has currently moved upwards of 400 days. This extended cycle leads to Poor Cash Flow, where there is rising pressure to make payments to vendors & lack of recovery from debtors. This situation is famously known as the 'Rotation problem' or 'cash crunch'. This is the time when SME thinks of adding more working capital in business in the form of enhancing existing bank limits or taking fresh credit.
Slowdown leads to poor cash flow which is a red flag for SME to get Formal Credit. Banks are seeing rising NPAs & have already got cautious in lending. Small businesses hit a roadblock when formal credit gets inaccessible. 6 in 10 SMEs are facing this issue. Many SMEs are even shutting down if this issue gets severe. As per the SME Chamber of India, in the last 18 months, over 9 lakh MSMEs have shut down due to the above-mentioned problem.
Receivable Outstanding problem has become serious & caught govt eyes to start MSME Samadhan portal, where payment has to be made to MSME within 45 days.
Receivable Outstanding
Mr. Rakesh Sakia, Owner of Digital Media agency at Mumbai had tough times with payment collections. He used to create invoices on paper and share it with clients. Due to work pressure and asymmetric cash flow, he was delayed in following up on payments. The moment he realized the problem, he was in a big mess already. 3.5 times the monthly revenue was overdue in the market, and tracking and following up was going to be an uphill task. Gaurav Kate understood this gap & is making life easier for small businesses.
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Gaurav Kate - Founder of EZO Banks says, "I have closely followed my Mother, who runs a small business at Akola, a city in Vidarbha region of Maharashtra. As a small entrepreneur, she faced multiple problems like payment collection, tracking outstanding, checking cash flow & trying to find a source of funds in Suspense A/c at year-end when Accountant does finalization. Also in my previous ventures when I was talking to many small entrepreneurs, these were the common problem which consumed at least 40% of their time. These basic pain points were the thought behind building EZO."
Solution By Neo Banks
EZO Banks is a perfect solution for Indian small businesses and SMEs to sail this slowdown safely. EZO digitally manages all Credits, Expense, and Inventory. One can set auto-reminders for credit on WhatsApp, get paid online with Zero MDR, track day to day expenses and reconcile operations and Bank statements with ease. EZO has integrated Critical financial services like Working Capital Loan, OD, CC are integrated into the business workflow in collaboration with Banks. So that entrepreneurs do not have to struggle for growth financing. To ease the burden of compliance on SMEs, EZO has partnered with LegalDocs for regular compliance services. SMEs can available critical services like regular GST filings, MCA filings, HR and Policy Documents, Trademark and other Legal Services
30k SMEs across India are growing their business with EZO App. EZO is built for entrepreneurs of Bharat. EZO has a mobile-first approach as 87% of Indian SMEs do not have access to desktop. It is available in 10 Local Languages of India apart from English. More than 45% of EZO users are opting for a language other than English. 70%+ EZO users are non-metros users making truly a product made for Bharat. With a strong execution team and seasoned mentors like Axilor Ventures, EZO is taking the slowdown problem HeadOn with growing SMEs base.
About EZO Banks:
Ezobanks.com is Mobile First Neo Banking platform for Indian SMEs. EZO is breaking the silos in operations and financial services to unleash the full potential of SMEs. EZO is built for emerging entrepreneurs, It is easy, secure and powerful.
For more information: https://ezobanks.
Disclaimer: No Business Standard Journalist was involved in creation of this content
