Hyderabad based Fintech start-up and India’s first credit bureau for businesses, Recordent hosted a discussion on importance of data and technology in credit management with guest speakers Mr. Sanjay Shah, President at Bombay Industries Association (BIA) & Mr. Satish Shetty (Anna), President at Taloja Industries Association (TIA). The discussion was with an aim to shed light on the current situation of ongoing credit collapse in India and the importance of finding a solution to bridge the cash flow gaps that MSMEs at large face in the country.
MSMEs are the most important element for India’s economy, and that comes from the fact that they contribute heavily to the country’s GDP and also offer large employment opportunities. However, the MSME sector faces tremendous cash flow gaps and often has a long list of default payments that pull back their performance, leaving them in a state of loss or even shutdown. A report suggests that over 7 lakh MSMEs are shutting down every 18 months owing to bad cash flow. The COVID-19 pandemic has further accelerated the problems for MSMEs as the cash flow was further disrupted and led to massive business loss.
A large part of the MSMEs work on credit yet has little to no knowledge of their buyer’s credit history. The gap in cash flow owing to a lengthy cash flow cycle leads many businesses to opt for loans with high rates of interest that further disrupt their growth. As India is set to become a 5 trillion economy, MSMEs are going to make a huge impact on helping the country reach the goal, and thus it makes it crucial to provide valuable solutions to keep the MSMEs sector flourishing.
Recordent’s technology-driven credit management platform incentivizes customers to make timely payments using historical payments data. It works like a credit bureau for MSMEs as Cibil works for lenders. In the B2B sector, businesses could take yearly Membership on Recordent, reporting their entire B2B transactions on the platform. Members can avail credit reports, advanced collection services, trade credit insurance, invoice reconciliation services as per their need. Currently there are 15,000+ businesses on the platform, submitting more than 2500+ cr dues.
Mr. Sanjay Shah, President at Bombay Industries Association (BIA), shared their experience with Recordent. He said, “We have 1500 MSME members with us, and MSMEs are good at marketing, sales, production, manufacturing, but collections are a pain for almost all of them. Recordent has been able to solve the problems for our members. Recordent’s approach is scientific, technology is used, and it solves a huge problem for MSMEs. Their revenue model and concept are unique. I have been using Recorden’t services for my industry, and we have definitely seen success in payments that were due for over 15 months. One or two notifications from recordent, and we were able to recover some stuck payments.” “We are delighted to be associated with Recordent and will continue our association for coming years.”
Mr. Satish Shetty, President at Taloja Industries Association (TIA) said, “It was rather exciting when we first met Recordent as we were at a realization that the MSME sector too must opt for digitization to taste success. With Recordent’s credit report features, one can easily check a buyer’s complete payment history before offering a line of credit. It is key for MSMEs to check their buyer’s credit history to make better financial decisions and contribute to business growth”. “Even today, banks do not finance a customer till his/her credit history is checked. Checking the payment history of a customer is very important even for MSMEs, as timely payments will greatly benefit the sector’s growth. Over 1622 carved Industrial plots function in Taloja MIDC have benefitted from Recordent, and we will continue to engage with the platform.”
Mr Winny Patro, CEO & Co-Founder, Recordent further shared, “Associations play a key role in the growth of MSMEs as they work for their business well-being. We are glad to have received an opportunity from leading associations like that of Bombay Industries Association & Taloja Industries Association to let Recordent have an opportunity to perform and help some businesses recover their payments, and maintain a healthy balance for business growth.”