Know your Working Capital Cycle

 

As a business owner, your ability to execute can be measured by the number of working capital cycles you can complete. The higher the number of working capital cycles, the higher the churning, the lower the indirect cost (fixed cost may remain proportionate) and the lower the cost higher the margin levels.

One being the owner, hence, you need to push all the stakeholders in one direction where you can move the working capital cycle faster and better.

Accelerate Your Business Growth with Efficient Working Capital Management

Generally, the working capital cycle varies from industry to industry. The working capital cycle for the manufacturing and service industry may be around 30–90 days and for the trading industry, it may be for around a day only. So shorter the working capital, the better the churning of the funds and the better the churning, the higher the margin in the business.

Nowadays getting work orders may be easy but delivery on time is tough and may get tougher every day. And one of the many reasons for it is the working capital arrangement. Most of the time, instead of using your bank credit facility, your customer wants to use your credit facility with the bank. So keeping a close eye on working capital is one of the important parts of financial management.

Factors Impacting Your Working Capital

1) Convenient and clear Payment Terms

You should have a very clear understanding of the payment terms with your customer. Because you're also a customer for your suppliers. In a scenario, where you misunderstood your payment terms with your customer, it will not only impact your working capital cycle but also impact your supplier's working capital cycle. Your debtors will pay you late, so you may pay late to your suppliers.

2) Understand Your working capital supporters

Let's say you have a working capital limit of Rs. 5 cr from your banker and the available facility is getting exhausted with your existing work orders, then you should be very careful while taking the new orders. There are multiple ways to deal with this scenario.

a. First, you can ask your existing customers if they can pay you early. If yes, you can use these funds to procure the material for a new order.

b. Second, you can check with your existing bankers, if they can enhance your working capital limit (this may be time taking part).

c. Third, check with your creditors, if they can allow an extra credit period.

d. Fourth, You can also explore if you can get some advance (proportionate to your raw material purchase) for a new order and the remaining can be paid on a milestone basis.

3) Long-term association with all stakeholders

This is a very important aspect. Choose all the stakeholders wisely and stay with them for a long time. Including your raw material suppliers to your daily utility supplier. Over the period these suppliers/stakeholders know you and your business well.

And once they get confidence in you (as a promoter) and your business, these stake holders stand by your side in tough times. While raising the funds, we have seen many businesses rebuild their business only because their stakeholders supported them in the tough times.

4) Delivery Time

Two major factors are holding India to compete with China - Fast delivery time and economies of scale. Because of these two factors, Indian manufacturers are not able to sell at cheap. In most cases, the credit period starts after the delivery of the products.

So faster delivery will help you to cut down on your working capital. You can also understand this - because of good quality roads, there is a substantial increase in the last-mile delivery of the products. This will apply only to the manufacturing and trading

5) Short on Debtors and Long on Creditors

We don't suggest you squeeze your creditors, but you can always check if you can get an extended credit period from your suppliers. And faster payment from your Debtors.

6) Timely Payment

Keeping your word is always important. This should always remain your ethical obligation. You may ask your creditors for an extended time, but make sure, the payment should not be delayed by a day even. This helps you to gain the confidence of "Person of Words". This always helps to develop and maintain a smooth relationship with all your suppliers.

Conclusion

Effectively managing working capital is crucial for maintaining a healthy cash flow, optimizing margins, and ensuring the smooth operation of your business. By understanding key factors such as payment terms, stakeholder relationships, and timely deliveries, you can navigate the complexities of the working capital cycle management and position your business for sustained success.

At Terkar Capital, we specialize in helping businesses facilitate working capital solutions tailored to unique needs. Our expertise and customized approach ensure that you have the financial support necessary to thrive in today's competitive market. So, Let Terkar Capital work with you in achieving optimal working capital cycle management and propel your business growth.

Follow Terkar Capital on Linkedin!!

Master Working Capital Cycle Management for Business Success

 

Introduction to Working Capital Cycle Management

As a business owner, strategic working capital cycle management is crucial. Your ability to effectively navigate multiple working capital cycles demonstrates your execution power. The more working capital cycles you can complete, the higher the churn, leading to lower indirect costs (with fixed costs remaining proportional) and increased margins.

To achieve this, it is essential to align all stakeholders towards the common goal of accelerating and optimizing the working capital cycle. By doing so, you can enhance efficiency, reduce costs, and boost profitability.

Understanding the Working Capital Cycle

Generally, the working capital cycle varies from industry to industry.  For the manufacturing and service industry may be around 30-90 days; for the trading industry, it may be around a day only. So shorter the working capital better the churning of the funds and the churning higher the margin in the business.

Explore the working capital cycle in service business here

Nowadays getting work orders may be easy but delivery on time is tough and may get tougher every day. And one of the many reasons for it is the working capital arrangement. Most of the time, instead of using your bank credit facility, your customer wants to use your credit facility with the bank. So, keeping a close eye on working capital is one of the important parts of financial management.

Learn Effective Management of Working Capital Cycle from the Insights, here.

Factors impacting your working capital

1) Convenient and clear Payment Terms

You should have a very clear understanding of the payment terms with your customers because you’re also a customer of your suppliers.

In a scenario, where you misunderstood your payment terms with your customer, it will not only impact your working capital cycle but also impact your supplier’s working capital cycle. Your debtors will pay you late, so you may pay late to your suppliers.

2) Long-term association with all stakeholders

This is a very important aspect. Choose all the stakeholders wisely and stay with them for a long time. Including your raw material suppliers to your daily utility supplier.

Over the period these suppliers/stakeholders know you and your business well. And once they get confidence in you (as a promoter) and your business, these stakeholders stand by your side in tough times.  While raising the funds, we have seen many businesses rebuild their business only because their stakeholders supported them in the tough times.

3) Delivery Time

India has two major reasons to compete with China – faster delivery time and economies of scale. Due to these two factors, Indian manufacturers cannot sell cheaply. In most cases, the credit period starts after the delivery of the products. So faster delivery will help you reduce your working capital.

You can also understand that – due to better road quality, there has been a significant increase in the last-mile delivery of products. This will be applicable only for manufacturing and trading

Learn the working capital cycle for manufacturing business, Here.

4) Short on Debtors and Long on Creditors -

We’re not suggesting you squeeze your creditors, but you can always check if you can get an extended credit period from your suppliers. and faster payment from your creditors.

5) Timely Payment

Keeping your word is always important. This should always be your moral obligation. You can ask your borrowers for an extension, but ensure the payment is not delayed by a day.

This helps you gain the confidence of a “person of words”. This helps in developing and maintaining smooth relationships with all your suppliers.

Apply for Working Capital Finance at ease, Here.

Understand Your Working Capital Supporters

Let’s say you have a working capital limit of Rs. 5 cr from your banker and the available facility is getting exhausted with your existing work orders, then you should be very careful while taking the new orders. There are multiple ways to deal with this scenario.

●     First, you can ask your existing customers if they can pay you early. If yes, you can use these funds to procure the material for a new order.

●     Second, you can check with your existing bankers if they can enhance your working capital limit (this may be a time-consuming part).

●     Third, check with your creditors, if they can allow an extra credit period.

●     Fourth, You can also explore if you can get some advance (proportionate to your raw material purchase) for a new order and the remaining can be paid on a milestone basis.

Many other factors need to be considered – some of which are industry-specific and some of which are company-specific. But you should know your working capital cycle well set some rules and follow them.

Unleash business potential with Unsecured Working Capital at Ease.

Conclusion

Effectively managing working capital is crucial for maintaining a healthy cash flow, optimizing margins, and ensuring the smooth operation of your business. By understanding key factors such as payment terms, stakeholder relationships, and timely deliveries, you can navigate the complexities of working capital cycle management and position your business for sustained success.

At Terkar Capital, we specialize in helping businesses facilitate working capital solutions tailored to unique needs. Our expertise and customized approach ensure that you have the financial support necessary to thrive in today’s competitive market. So, Let Terkar Capital work with you in achieving optimal working capital cycle management and propel your business growth.

 

Achieving business growth is a common aspiration, but purchasing the necessary machinery to support that growth can be financially challenging. Conventional loans often demand collateral, which puts your business assets at risk. However, an innovative solution exists which is machinery loans without security. 

This financing option caters to businesses like yours, providing access to equipment needed for expansion without collateral.

Understanding Machinery Loans Without Security

Unlike secured loans, which require you to pledge assets like property or equipment as collateral, unsecured machinery loans rely solely on your business's creditworthiness. This eliminates the risk of losing valuable assets if you encounter financial difficulties.

Discover how Machinery Loans help in Business Growth.

The Power of Machinery Loans without Security for Businesses

Machinery Loans without security are a game-changer for businesses of all sizes and types. It allows you to:

• Get the necessary equipment without disturbing the existing property

• Enjoy a faster approval process

• Invest in a wider range of machinery 

• Seize growth opportunities

• Secure financing for future endeavours 

Why Choose Machinery Loans without Security?

The advantages of unsecured machinery loans are undeniable:

• No Collateral Risk

• Turnaround time is about 3-4 days.

• Flexible Financing

• Preserved Assets

• Tenure varies from 3 to 5 years.

• Improved Cash Flow

Learn How Machinery Loan Refinancing Can Fuel Business Growth.

Eligibility and Requirements

While unsecured loans offer greater flexibility, lenders still have eligibility criteria. Here's what you can expect:

• Should be above 21 years of age

• Business vintage of 3 years or more

• A healthy track record and positive financials are crucial.

• A good CIBIL (Above 720)

Machinery Loans without Security at Terkar Capital

At Terkar Capital, we understand the importance of streamlined and hassle-free financing to drive business growth. We collaborate with corporates to facilitate fund acquisition through various debt instruments including machinery loans without security. 

Our primary objective is to assess your business growth potential and creditworthiness, to expedite the loan approval process. We are dedicated to helping clients acquire the needed machinery to meet their specific requirements, fueling their growth and expansion aspirations.

Conclusion

Unsecured machinery loans offer a powerful and accessible path to growth for businesses of all sizes. By freeing up your valuable assets, streamlining the funding process, and providing flexibility in equipment financing, these loans empower you to invest in your future.

Remember, a well-informed decision is key. So, carefully assess your needs, compare loan offers and choose a lender that matches your goals. With the right financing, you can unlock new possibilities and drive your business to lasting success.

So, don't let a lack of collateral hold you back. Explore the potential of unsecured machinery loans and watch your business thrive!

How Machinery Refinancing Can Fuel Business Growth?

 

Machinery Refinancing

In today's competitive landscape, staying ahead requires constant innovation and efficiency. For many businesses, particularly those reliant on machinery, this often translates to acquiring the latest equipment. Machinery loans offer a powerful tool to achieve this. However, a potentially overlooked opportunity exists which is Machinery Refinancing.

What is Machinery Refinancing?

Machinery refinancing is a financial strategy that allows businesses to leverage their existing equipment to potentially improve their cash flow and business operations. It can be defined in two perspectives. 

1. One, where there is no loan on the machine - in this case, the machine itself will stand as the collateral and the funding can be arranged against it. 

2. The second one - is in a condition where the machine is mortgaged with any other financial institution with unfavourable terms or with low exposure. In this case, the funding can be arranged by taking over the loan from the existing lender and adding extra exposure. Here the loan-to-value ratio may vary. 

This can translate to lower interest rates, extended repayment schedules, or even securing additional funds for unexpected upgrades.

Learn how Machinery Loans help in Business Growth.

Benefits of Refinancing Machinery:

⦁ Reduced Costs

Introducing the new lender by taking over the existing machine will always help in term of reducing the cost. Cost in terms of interest rate, some bullet payments, increased tenure etc. 

⦁ Lower interest rates

Lower interest rates free up significant capital that can be redirected towards growth initiatives like marketing, hiring, or expanding your product line.

⦁ Improved Cash Flow Management: 

Generally, the tenure of a machine loan will be around 36 to 60 months. However, wherever we replace the existing lender, we can get an extension in the repayment tenure. So higher the tenure, the lower the cash outflow. And lower the cash flow for EMI (interest + Principal ), the higher the support to working capital.

⦁ Unlocking Additional Capital: 

In some cases, refinancing can allow you to access additional funds for minor upgrades or maintenance on your existing machinery, maximizing its lifespan and productivity.

⦁Enhanced Financial Flexibility: 

Whenever the promoters of the company /firm take up the new machine, the machine will have its own capacity to absorb the raw material. So when there is new/additional machinery you always should have the additional working capital. Then only the machine can be used at its capacity. Mortgaging the machine and getting the funds against it will always help to maintain a good financial position. 

The Case for Machinery Refinancing

For manufacturers and industrial businesses, machinery is a fundamental asset for production. However, financing this equipment can create long-term debt obligations. Machinery Refinancing offers a strategic approach to managing this debt and unlocking potential financial benefits.

Imagine a scenario where a company secures a machinery loan at a specific interest rate. Over time, market conditions may change, leading to lower prevailing interest rates. Refinancing allows the company to replace their existing loan with a new one from a different lender, ideally offering a lower interest rate and potentially more favourable terms. This can significantly impact a company's financial health.

Learn through a case study on how to get a machinery loan at Terkar Capital.

Before You Refinance:

Refinancing isn't a one-size-fits-all solution. Here are some key considerations:

⦁ Loan Terms: Carefully analyse the new loan's interest rate, repayment schedule, and any potential fees. Ensure the long-term benefits outweigh the short-term costs of refinancing.

⦁ Market Rates: Shop around and compare offers from multiple lenders to secure the most competitive rates.

⦁ Prepayment Penalties: Some existing loans may have prepayment penalties. Factor this into your calculations to determine if refinancing is truly advantageous.

Conclusion:

By strategically leveraging Machinery Refinancing, businesses can unlock the hidden potential within their existing equipment. The additional capital and improved cash flow can fuel growth initiatives, enhance efficiency, and ultimately propel your business forward. 

⦁ Remember, consulting with a financial advisor can provide invaluable guidance throughout the refinancing process. So, don't let your existing machinery loan hold you back. Explore machinery loan and refinancing options with Terkar Capital and unleash the full growth potential of your equipment!

A Guide to Tailor-Made Loans for CAs, CSs, and Healthcare Professionals

 

A professional loan is a type of financing specifically designed to help professionals, such as chartered accountants, company secretaries, and medical professionals (doctors), grow their practices. Let us take a closer look at an example to understand how this works.

Purvi has been practising as a chartered accountant for more than five years. Her client base is growing and many more are approaching her since she has a strong hold on her practice and she was able to build a positive reputation among her existing client base. Now, she wants to hire more personnel to accommodate the growth of her clients. She therefore desires to expand her practice. Because of this, she intends to apply for Tailor-made financing for professionals to open a larger office that can meet all of her financial needs.

So, If you are a CA, CS, or healthcare professional looking to expand your business, there are tailored financing options available to meet your specific needs. These options can help you get the funding you need to take your practice to the next level.

Key Benefits of Professional Financing

Attractive Interest Rates

Professional loans are often offered at competitive interest rates, which means you can borrow maximum funding at a lower interest rate. This makes them a more affordable option for consumers than other unsecured loans. If you have a credit score of 720 or higher, you can easily qualify for a loan with favourable terms.

Loan Amount

They might range in size from 25 lakhs to 2 cr and beyond. Your qualifications, Year of practice, Financials and professional profile will determine this. 

Easy approval and basic documentation

Applying for professional financing is a straightforward process that requires less documentation. Instant disbursement ensures that you have the funds you need when you require them the most.

Application Process

You can apply for a professional loan online without having to visit a bank. Almost all financial institutions now allow you to submit an online loan application. However, you can connect with executives at Terkar Capital who can help you simplify your efforts to secure the necessary funding.

Get funds without any collateral

Professionals are able to apply for funding without having to provide any collateral. 

Flexible repayment plan

It is popular because of their flexible credit terms. In accordance with your comfort level and ability to repay, you can budget and select the duration. The repayment period may be anything from 12 to 96 months.

When requesting a professional financing, it would be prudent to keep in mind that the terms and conditions may vary amongst lenders. Before they disburse the loan, they could have requirements like a minimum wage, employment experience, age, credit score, etc.

Eligibility for Professional Financing

• The application requires a minimum annual income of 1 lakh INR and two years of profitability. 

• The applicant must be a self-employed professionals

• The applicant must have been in practice for at least three years.

• The applicant should be in the age group of 25 to 65 years.

• The borrower is eligible for a professional loan related to the following capacities:

• Sole Owner(Proprietory firm)

• Registered Partnership Firm

• Private Limited Company

• Small and medium hospitals/nursing centres, pathological labs, and diagnostic centres.

Documentation required for Professional Financing

Business proof – Practice Certificate, Partnership Deed (in case of partnership firm), Degree Certificate. (In the case of a private limited company) Shop Act Licence (only for Maharashtra), MOA, AOA.

Address proof – Aadhaar card, passport, Sales deed, Driving Licence, Ration Card, Telephone Bill, Electricity Bill, or Property Purchase Agreement (If the purpose of the loan is to purchase a property).

Photo Identity proof –  It includes an Aadhaar card, passport, driving license, voter ID, and PAN card.

Income Proof – It includes Bank statements of the previous six months to check your present-time financial position, the latest filed ITR, and audited financials (including the balance sheet and profit/loss account for the previous 24 months).

How to apply for Professional Funding?

The requirement of immediate funds is crucial for any business or profession to thrive, however, availing funds for your business is a complex and time-consuming process.

Hence, Terkar Capital and our team of experts can be a great help to you. We understand that you need assistance to reach your financial goals, and we offer no-collateral funding to professionals from banks and NBFCs. Our funding solutions and loans are designed to be flexible and cost-effective. Additionally, our professional financing offers a variety of attractive benefits, such as quick disbursement, a flexible repayment schedule, and no foreclosure fees.

Why Terkar Capital for professional funding? 

We are investment bankers who offer tailor-made financing for professionals and take a client-centred approach. We provide fast turnaround time and collaborate with all major debt players in the Indian economy. At Terkar Capital, we specialize in finding the financial instruments that work best for professionals or businesses of all sizes.

Conclusion

Professional financing is a great option for professionals who look for growth, buy equipment, or expand their operations. They are availed with competitive interest rates, substantial loan amounts, easy processes, collateral-free funding, and flexible repayment options. Hence, Terkar Capital is a reliable resource for professionals seeking tailor-made financing solutions.

A Guide to MSME Loans for New Business: Advantages, Eligibility and Application Process

The Micro, Small, and Medium Enterprises (MSME) sector is a key driver of economic growth in India. So, financing the MSME sector for new business helps a country grow. MSME loans, for that matter, are a financial instrument designed to meet the needs of existing or new businesses classified as MSMEs. These loans can be used as a source of working capital, expansion, technology adoption, and more. 

We will provide here an overview of the secured/unsecured financing options, including the eligibility requirements, and the application process.

Advantages of MSME loans

MSME loans are available to businesses of all types and sizes, making it easy for entrepreneurs and new businesses to get the funding they need. It offers high loan amounts and flexible repayment terms, and they have competitive interest rates (ROI).

Msme loans for new business without collateral

Getting an MSME loan without collateral can be challenging, However, there are options available that cater to the specific needs of startups and small businesses. Here are some insights for obtaining an MSME loan for a new business without collateral:

Government Schemes:

Many governments offer specific schemes and programs to support MSMEs, including loans without collateral. CGTMSE is one such government-backed scheme tailored to meet specific requirements of MSMEs. Hence, we explore various government initiatives designed to promote entrepreneurship and small business development.

• Credit Guarantee Funds:

Some financial institutions provide collateral-free loans to MSMEs with the support of credit guarantee funds. These funds act as a guarantee for the loan in the absence of collateral, making it less risky for lenders.

• Start-Up Loans:

Financial institutions and government agencies often have special loan programs for startups with good financial ratios. These loans may not require collateral, but they may have specific eligibility criteria related to the startup vintage, the nature of the business and others.

• Non-Banking Financial Companies (NBFCs):

NBFCs are more flexible than traditional banks and may be willing to provide unsecured loans to MSMEs. However, interest rates might be higher compared to secured loans.

• Microfinance Institutions:

Microfinance institutions specialise in providing financial services to small businesses and entrepreneurs, often without the need for collateral. They focus on supporting the growth of micro-enterprises.

For businesses with collateral

Securing MSME loans with collateral has its challenges. However, it provides a valuable avenue for obtaining the financial support needed to get your business off the ground. So, one effective strategy is to consider pledging collateral when applying for these loans. 

By offering property or equipment as security, businesses not only enhance their chances of loan approval but also stand to benefit from more favourable interest rates. This approach is a wise and sensible way to secure funding, aiding your business growth. Terkar Capital stands out as a reliable firm to explore MSME loans with collateral, ensuring a seamless and supportive path to business growth.

Eligibility Requirements

To be eligible for an MSME loans, you must meet the following requirements:

• Citizen of India

• at least 3 years of business continuity.

• Healthy credit history when opting for unsecured funding

• Or sufficient collateral when secured funding

These are typically offered for terms of 1 to 5 years. The interest rate on an MSME loan will vary depending on the lender and the creditworthiness of the borrower. 

Application Process

Here is Terkar Capital’s process to avail MSME loan

• Understanding the client’s requirement

• Financial SWOT analysis

• Documentation

• Soft approval from a financial institution

• Actual submission of documents

• Disbursement

• Funding as required

Conclusion

MSME loans can be a great way to finance your business growth. So, at Terkar Capital We make sure that, by following the necessary steps, you can increase your chances of being approved for an MSME loan and getting the funds you need to scale or grow your business.