" might be good news, because as a business is growing is often when you start to have those cash flow problems," said Facebook's Sheryl Sandberg in an interview with Inc. That’s why you shouldn’t be alarmed if you see more money leave your business than come in-at least initially. You might need to buy new equipment, pay for a website, or put down a deposit to rent office space. If you’re thinking about starting a business or you recently launched a new one, you’ll need to invest some cash in the early days to get set up. But when your cash only trickles in, you can stumble into cash flow issues. When you have enough money put aside, it’s easier to pay your expenses as they come due. Positive cash flow is what makes your business flourish, and the pace of cash flow is just as important as having cash flow at all. This may include employee payroll, bank loans, or other business expenses.Ĭash flow is the lifeblood of your business. This is an important part of calculating the profitability of your business.Īccounts payable is a liability account that tracks the money leaving your business (as we mentioned, this is the money that you owe). What is accounts receivable?Īccounts receivable is an asset account that keeps track of money coming into your business (money you receive from your customers for the goods and services you provided). Accounts payable rounds up your liabilities, like payments or debts you owe. Accounts receivable represents your assets, like a positive bank balance or cash on hand. It’s important to differentiate between accounts receivable and accounts payable. Accounts receivable versus accounts payable revenues and income), that’s when you have a cash flow issue. expenses) exceeds the cash coming into your business (i.e. But when the cash flowing out of your business (i.e. When you have more than enough money in your account to cover your bills, you have a positive cash flow. Think of it this way: Your cash flow represents all the transactions you make. So actually it is a very big step of the total credit growth for merchant lending growing much beyond, not just for them but for others also is my personal opinion.ĭon’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.Let’s answer the question on everyone’s mind: What is cash flow? Defining cash flow is simple: Cash flow represents the movement of money in and out of your business. So actually a large player entering in that would open up big market because of their trade data availability, they would be able to provide credit to millions of new merchant and they will become credit worthy which means that that would expand credit for every other player in the market itself. Having said that, the total credit gap for small businesses in India is staggering $400 billion of which the merchant financing is around $150 odd billion. When you do merchant lending as an independent unit, then it is like an unsecured loan, it becomes a little difficult because you do not know real movement of the cash flow. So obviously they can do this in very big sizes so they will have both focus on consumer as well as merchant. The merchant lending in ecosystem, the company which you are naming have a large ecosystem wherein on the retail chain you have merchants which are selling the material, which are buying the material so they will have the benefit of the trade data and basis that they can provide the credit. You should divide it in two part, merchant lending in an ecosystem and merchant lending as an independent business. Is there space for everybody? Is the economics very lucrative there or only risk is high? So if India's most valued and largest company is looking at that piece as an opportunity, you are working there for long. And so I want to understand how large is this opportunity? You work with all across SMEs, MSMEs, right? This one big lender, which is taking shape from a conglomerate gradually is also looking at that merchant lending opportunity. And in the lending space, what we pick up is that lending to merchants in their ecosystem be it retail etc. One thing I wanted to ask you as an industry participant, not as a representative of U GRO there is a very big kind of a big start-up which is being born in the lending space, perhaps the biggest start-up over one lakh crore in valuation which is being born tomorrow. So real collection efficiency should be seen and what is the resolution rate of that and that we are very good at that so it is more than 97-98%.īut in terms of the net loan origination, the first quarter we have the net loan origination of around 500 odd crore.
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