Financial Planning for Small and Medium Sized Enterprises During COVID-19

Payoneer’s recent webinar focusing on proper financial planning for Indian small and medium sized enterprises (SMEs) covered a range of topics, including tax planning, government benefits during the COVID-19 pandemic and fundraising opportunities.

Here, we’ll be going over some of the webinar’s highlights, including the five steps for effective cash flow management and fundraising opportunities you can use to grow your business. For more information, be sure to watch the complete webinar!

Watch the full webinar

Five Steps for Effective Cash Flow Management

For Indian SMs, effective cashflow management during the COVID-19 pandemic includes taking advantage of governmental tax breaks and other benefits. The steps outlined below can provide you with the tools to get started.

1. TDS reductions – Tax Deducted at Source (TDS), can majorly impact your bottom line – typically, by around 10% – over a prolonged time. Governmental TDS reductions, which can bring your rate down an additional 2.5%, are a great way to help manage your cash flow.
2. Additional reductions – Entrepreneurs working with lower profit margins can also opt in for a for a TDS certificate, which can help increase cash flow for their businesses.
3. Frequent GST refunds – As a practice, many organizations can opt in for a quarterly or even a monthly GST refund, thus freeing up additional cash flow for effective business management.
4. Business expense negotiations – Especially given the current economic climate, smaller enterprises struggling with insufficient cash flow are advised to negotiate on business expenses, including office space rentals. Your rental agreement draft and the use of force majeure clause, if applicable, can also be used as negotiation tools.
5. MCA and LLP first start-up scheme – Taking advantage of the MCA and LLP first start up scheme can result in compliance at no additional cost to your business.

Fundraising Opportunities

In addition to the points mentioned above, SMEs can opt for effective fundraising opportunities under the following governmental schemes:

1. 20% additional credit for Micro, Small and Medium Enterprises (MSMEs) on already borrowed loans.
2. Subordinate loans for MSMEs with past performance records.
3. Women and SC/ST entrepreneurs can opt into the stand-up India scheme to the extent of INR 10 lakhs to INR one crore. This loan is available for green field startups.
4. Venture capital funded start-ups can avail themselves of an SIDBI loan of up to INR two crores. Please note that to qualify for this loan, you should have already received a loan through a registered venture capitalist.

Interested in learning more about cash flow management strategies for your business? View our full webinar!

Watch the full webinar