A company needs to properly manage its resources, stabilize its cash flow, adopt good financial habits to operate a business, grow and sustain in this ever-growing, competitive world.
Below stated are the 5 financial habits a company needs to undertake to achieve the desired business growth:
1. Stabilizing the cash flow
It is essential for a company to maintain and stabilize the cash flow to operate its business effectively. Owing to companies not getting payment against the sale of their products, a time-lag is created. This time-lag puts a strain on the company leading to a shortage of funds. To overcome this temporary shortage of funds and stabilize the cash flow, the company may take a business loan.
Poor cash flow may affect the chances of getting a business loan as it lowers the credit score.
2. Maintaining liquid savings:
It is crucial for a company to maintain and manage liquid savings. Liquid savings are the emergency funds that can be used by the company to meet any unexpected expenses and also to take care of business opportunities.
3. Managing expenses and maintaining strong documentation:
Periodic analysis of the expenditures of the business can help a company to work upon the unnecessary expenses of the business and generate funds that can be used to repay the small business loan taken by the company. It is also recommended to keep a close eye on business expenses and maintain strong documentation as all lending institutions do ask for various documents when it comes to approving a business loan.
4. Financial solutions:
A company need to keep abreast of the financial solutions available to expand its business. A small business loan can be taken by the company to create a new line of business, buy machinery, etc.
5. Setting financial goals:
For a business to be successful, it is required for a company to set a realistic financial goal attainable in the designed timeframe. Setting a financial goal and keeping a track of the progress is necessary for a business to grow.
Moreover, If you plan to expand your business and wish to apply for a business loan, you should ideally have a good CIBIL score. You can check your CIBIL score check free online. There are also a couple of loan apps available where you can find your CIBIL score. To maintain a good CIBIL score, it is recommended to repay your previous loan in a timely, regular and in disciplined way.
Nevertheless, Lending institutions may also offer a discount on business loan interest rates if your CIBIL score is good.
To conclude, most of the problems faced by a business is related to its finances and hence, it is important to adopt and practise good financial habits to have successful and sustainable business growth.
Frequently Asked Questions:
What is a Business Loan?
A Business Loan is a financial help required by a company to begin a new venture or expand its business. It can be a secured loan which is a loan against collateral or an unsecured business loan which is a loan for a business without security.
What is a business loan EMI calculator?
A Business Loan EMI Calculator can be used to determine the monthly payable instalment in a business loan.
What is the business loan interest rate?
The business loan interest rate depends upon the nature of the business, the business loan amount, credit score, etc.
What are business loan requirements?
The business loans requirements, be it a new business loan/small business loan are basic whereby a company needs to provide identity proof, address proof, agreement copy, business registration copy, bank statement copy, passport-sized photos, etc.