/ -- Startups, SMEs and MSMEs are very aggressive for growth but have unique problems to address. Manoj Pinjarkar (32), a proprietor of Pinjakar Fabrication works at Mumbai, has grown his business by leaps and bounds in the last 7 years. Earlier he was taking small assignments from retail clients. For the last 2 years, he has started taking orders from Corporates and other SMEs to grow his business. As the business grew, problems got bigger. One of his big clients refused to pay dues for 7 months work. When we asked retrospective questions, Manoj accepted a few mistakes. "I am good at my job, but billing and accounting is not my cup of tea. I was working well with the client but forgot to submit bills on time. When I put the bill of 6 months together, the manager refused to accept the bill. There was a mess. I lost my client and money. I am following up with the manager for a workaround but my money is stuck." He says "local client's payment comes quickly but the payments of corporates and SMEs are always delayed." As learning from this now Manoj has a dedicated person for billing and money collection.
If we look at SME segment collection is a burning problem across sectors and industry. As per reports around 2 Lakh Crore is stuck as receivable on balance sheets of Indian SMEs.
As per RBI reports, the average credit period amongst MSMEs is close to 210 days & Gross Working Capital cycle is running at 400 days. During slowdown, it is necessary to give extended credit period to continue business with existing clients or one may lose the client. The fear of losing a client makes small businesses get into the trap of extended credit periods & elongated working capital cycle.
To save MSMEs in this rough patch, MSME ministry has come to the rescue with MSME Samadhaan scheme. According to MSME Samadhaan scheme, buyer needs to make payment within 45 days of transaction or buyer will have to bear penalties for the same.
This kind of scheme clearly shows how severe the problem of delayed payments is & even the government is taking active steps to help MSME in the current situation.
With higher NPAs & cautious approach during a slowdown, Banks & NBFCs are not keen on lending to SMEs. MSME problem gets worse when they are not given additional credit when they require the most.
The government had to come to the rescue with 59 minutes loan, TReDS platform to help MSME sail through in times of uncertainty.
Solutions by Neo banks like EZO Banks:
Neo Banks in India focused on SMEs Like EZO, Open and Numberz are doing major heavy lifting in this time of slowdown. 30K+ SMEs are banking on EZO for Financial Management, Receivable Management, Collection of Money Online, Inventory Management, Bank Recon and keeping profit and loss statement in check. EZO has unique features that address SME's problems.
87% of SMEs do not have access to a laptop or desktop, thus EZO has Mobile-First Approach. 5 MB lightweight App can fit in any mobile and all SMEs can use it.
Indian Local languages
A workforce of SMEs is skilled and they know how to deliver better stuff, unfortunately, the majority of tools for business and financial management are in English. SME's workforce does not have proficiency in English. As a solution for this, EZO App is available in 10 different languages. At this stage, 61% of customers use App other than the English Language.
Easy and intuitive UI
EZO has intuitive UI/UX for easy onboarding, if required video tutorials are available in local languages for easy understanding.
Free Payment Collection Automation
One can easily set Payment Collection reminders for receivables. Also, SMEs can collect payment Using UPI for Zero MDR. This is the most used App feature. 70% of SMEs have experienced a reduction in the payment cycle with the help of Reminder Automation.
Financial Services Integrated in the Business Workflow:
SMEs have limited opportunities, one has to make the most out of available opportunities. Many time financial constraints can cost the business valuable opportunities. EZO comes with an innovative solution. One can use pre-approved services available in their workflow. One can use OD, or preapproved loan loaded in the account at the time of making the purchase for high season or for getting a bulk discount or better payment terms from the supplier. The company's financial booster is always with them.
The app can be used by multiple stakeholders at once killing the silos in the workflow.
Bank recon can be done very easily as a bank account is attached to the profile.
All Important business reports are available in the app for business decisions. These reports can be used for GST filing and Income Taxing filing. This reduces a lot of compliance efforts.
EZO Banks Executive Gauravkumar Kate is optimistic about the economy and disruption that Neo banks are bringing for SMEs. Gauravkumar said, "EZO is very aggressive in terms of Tech and Distribution. We have had good planning for building a scalable tech and distribution network. The team has planed to Onboard 1 Million SMEs in next quarter. Our Mentor Asutosh Upadhyay from Axilor Ventures, Banglore is guiding us to hit the right milestones."
Neo banking or Open banking will be an interesting space to watch in the coming future.
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.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)