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Why Invest in P2P Lending?

Many people are new to peer-to-peer (P2P) lending as an investment option. Questions arise. Is it trustworthy? Does it fit my needs as an investor? Who else have invested in it?

All valid concerns. Nearly no one wants to jump in blind when it comes to investing hard-earned money. Not billionaires, not angel investors – even they do extensive research prior to investing. People want examples of successful P2P investors and whether P2P lending works for their portfolio.

However, you’d be surprised by how flexible this form of alternative investment is.

Flexibility

Let’s start with individual or retail investors. Why is a relatively new investment opportunity so appealing to this segment?

The financial market can strike one as tangled, complicated, and unpredictable. Where does one even begin? P2P lending can feel like a breath of fresh air as it offers a much simpler concept. Basically, it is a form of alternative investment where investors collectively fund loans and earn interest-based earnings in return. Think of P2P lending as profitable crowdfunding! Where crowdfunding projects usually support charities and artistic ventures, P2P lending lets you collect attractive returns.

Due diligence and credit assessment guides your choices

Also, compare P2P lending with stock investment. Navigating the stock market requires expertise and research. Credible P2P lending platforms perform all the necessary due diligence and credit assessment to guide your investing choices, which saves time.

You still need to do some of your own research though, so you can decide for yourself which businesses you want to invest in. But overall, P2P lending jargon is more accessible compared to other investments.

Read Also: Three Key Risks of P2P Lending

alternative and affordable

Other bonuses? The affordable entry. At Funding Societies, you can invest in each small business with as little as SGD 100. P2P lending is also a profitable, with returns up to 14% per year.

It’s easy to see why individual investors are seeking alternative investments like P2P lending. Through it, you make passive income with ease and you earn higher returns from lower capital.

Read Also: 3 Alternatives To A Dividend Portfolio

More and more, P2P lending is gaining popularity. Respected media outlets such as Forbes have talked about its benefits. P2P infrastructure is thriving and all the indications point to one conclusion: P2P lending is here to stay!

This article was first posted on the blog of Funding Societies (Malaysia). Click here for the original article.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Life At A Fintech Startup: 5 Interns Share Their Lessons Learned

At Funding Societies this summer, we welcomed a diverse group of interns from various universities in Singapore. To conclude their internship journey at Funding Societies, we had organized a HTHT session consisting of Kelvin Teo, co-founder & CEO and the summer interns of 2017:

  • Sherman Lim, BSc (Economics) and 2nd major in Strategic Management, Singapore Management University (SMU)
  • Clarissa Poedjiono, BSc (Information Systems), SMU
  • Eugene Ng, BBM (Finance), SMU
  • Victor Tan, BSc (Economics & Finance), Singapore Institute of Management – University of London (SIM-UOL)
  • Martin Indrawata, BA (Political Science), National University of Singapore (NUS)

Why intern at a FinTech Startup?

Victor: Like many of my peers, I work at a large company during summer break. However, after reading about Singapore’s startup culture and how the economy is primed for a startup ecosystem, I was certain that I wanted to work for a startup. As a finance student and someone who would use Fintech such as cashless transactions, virtual wallets and crowdfunding, I knew I wanted to learn all about what goes on behind the scenes in a FinTech startup.

Clarissa: As a major in Information Systems, I wanted to join a tech firm. After reading about the FinTech disruption in the banking sector, I realised that perhaps the best learning ground for me would be to join a tech start-up.

Sherman: Having interned at a traditional corporate set-up before, I thought it will be interesting to find out what it will be like to intern at a startup. Of course, I have heard many stories and read case studies in classes that working in a startup will be really hectic and challenging. I also thought this will be a good chance to explore what I wanted to pursue as a career. As to why FinTech, this is the latest trend in the financial sector and is sure to disrupt the business models of traditional financial institutions. I figured, why not join a FinTech startup to learn more about it.

Read More: My Greatest Takeaways From The 12-week Internship At Funding Societies

What was the job seeking and interview process like?

Clarissa: I found out about FS through SMU’s career portal. I found the background of the company and the job description attractive. I went through 2 rounds of Skype interview and 1 assignment submission.

Martin: I met Ishan (Head of Data Science) during a talk at NUS and he shared about the opportunity. The interview process was great as I got to learn more about the team dynamics and leadership of the company (as positively reflected by Xin Ying and Vikas, Head of Business Development and Marketing respectively). What I was heartened about was that my interviewers asked me on things non-related to the job, which I feel was a positive valuation of me as a potential contributor to the company.

Eugene: I got to learn about Funding Societies through a friend of mine who was going to work at Oliver Wyman, who was in turn told how one of the seniors at Oliver Wyman had left the company to join Funding Societies, a startup. The 2 co-founders are also from Harvard and consulting background. It goes to show the caliber of people who run the company, they hail from some of the best institutions around.

Oddest question during interview?

Sherman: Right at the start of the interview – “Do you have any questions for me?”

Victor: “How would your family describe you?”

Martin: “Why do you think Trump won the elections?”

Eugene: “Don’t you want to spend your holidays travelling instead?” (I did, but I definitely didn’t wanna travel for 4 months straight)

What were your most memorable moments during your internship?

Sherman: Definitely the karaoke session during the company retreat! I had a really enjoyable time with the entire company (including our Malaysian colleagues) unwinding and playing hard after an extended period of crazy and intense work. It was also funny seeing our bosses (Not Kelvin) doing the Macarena & Gangnam Style dance.

Victor: I recall all the nights the team spent together watching Game of Thrones which the company airs weekly. It’s really cool that the team stays back after work for dinner and watch TV together. Fun fact: The company even has a Slack channel dedicated to the discussion of our favorite TV show.

Eugene: The most memorable moments for me were all the small chats and hangouts with the colleagues in the office. They went pretty deep into personal viewpoints and philosophies, and I got a really good feel of the diversity in the office from these chats.

What have you learnt that you can apply in school or life?

Clarissa: As an Information Systems student, I’ve always strived to improve my technical skills and this internship has given me insights on how IT projects  solve real business problems. I got to run a flagship project with Sherman and was given freedom to explore the possibilities of executing the project. I was inspired by the leadership skills of the leaders in FS who were gifted yet very kind and helpful.

Victor: I think my biggest takeaway is the need to start broadening my scope and venture into skills beyond my own field. Especially in a startup, you have to make sure that you have multidisciplinary skills as you might be called upon to do a task that would require a skill set that is different from what you learn in school. For instance, I’ve witnessed how some basic coding skills can really help to accomplish certain tasks more efficiently as well. In a company sharing session, I remember Kelvin sharing about the need to learn as much as possible but also ensuring that you have a unique specialization to set yourself apart from others.

Eugene: Technically I’m already a graduate, so I’d say adaptability. The dynamism and pace in the workplace far exceeds that of school life, especially so in a startup like Funding Societies. It’s great to get used to being able to operate and thrive in such a charged up environment.

Has this internship met your expectations?

Sherman: Honestly this internship has exceeded my expectations. We were given full autonomy to initiate and drive projects in the company with the full support of our mentors and the teams. I even commenced my investment journey here by investing into loans on the platform. I have seen how detailed the SME assessment is and that gives me the confidence to earn handsome returns.

Clarissa: It has exceeded my expectations in every way. I’m thankful for the people I got to work with and the skills that I got from this internship.

Victor: Definitely. I didn’t expect to learn from so many brilliant individuals. (The team consists of alumni from various local universities and from different disciplines, including NUS, SMU and SIM as well as alumni from Ivy-league universities including Harvard, Stanford and LSE. I had the opportunity to learn vastly different skill sets from the best and the brightest people.

Martin: Exceeded expectations. The amount of smart and driven people crowded into a 15m by 10m room (old office at Raffles Place), plus my wonderful mentor (Xin Ying) made my 7 weeks there an amazing one.

Kelvin: Yes, FS would be a full step slower, if not for our interns. It’s amazing what one can achieve, if you put a little faith in them. All our interns in the previous batch has joined us full-time. We’d be delighted to have our star interns onboard too before or after their graduation, including Eugene even if he’s joined the ‘dark side’.

Read More: This New App Can Help You Kick Start Your Investment Journey

Weirdest thing you’ve done in FS?

Sherman: Doing the Macarena & Gangnam Style dance with the bosses. It was weird but still fun.

Victor: I literally designed the toilet signs. The Game of Thrones fans in office (probably half the office) was upset that we couldn’t name the meeting room after the locations in Game of Thrones and Lord of the Rings, so as consolation we named the toilets Hodor for ladies and Mordor for men.

Martin: I used Kelvin’s nerf gun (Sorry Kelvin) and had a nerf battle with some of the team members after work!

Advice for future interns?

Sherman: Be a sponge and absorb as much as you can during your internship. Always be ready to learn and accept challenges even if you think you do not have the skills required. The FS team is always ready to guide and support you along the way.

Martin: Come in with an open mind. Be prepared to accelerate your learning, because the learning curve will be steep. Talk to everyone, especially someone from a function you don’t know much about. Ask, ask, ask; but also ask the right questions – questions you cannot find the answers for in Google. If your reaction to topics like UI/UX or Software Engineering is “eeeh, so difficult”, then FS is not the place.

Eugene: Don’t be choosy about what you do, there’s no place for picking and choosing in a startup. Nobody can silo themselves off as just “Business Development” or “Tech”, everybody has to synergize with each other in order for the company to thrive. If this means doing something outside of your own job scope or your initial expectations, just embrace it! It’s another chance to learn.

Kelvin: “Don’t let anyone look down on you because you are young, but set an example for the others in speech, in conduct, in values, in faith and in conscience.”

Investing in an Uncertain World

Here’s an example of how uncertainty can affect the average investor: prior to the 2016 US Election Day, most polls had projected a Hillary Clinton victory. The eventual result was different, not to mention unexpected. The shock impacted the markets even before the official winner was declared. As Donald Trump’s victory became more and more assured, gold prices soared; the metal is generally seen as a safe asset and a hedge against inflation. Meanwhile, emerging market stocks tumbled and the US dollar reached its highest point since 2003.

In the immediate aftermath of the 2016 USA elections, the markets certainly reacted and the fluctuation reflected anxiety for the future. Investors asked: is long-term market stability still possible? Will the markets continue on this volatile streak? Will they calm after a while? Given a situation of financial instability, what should the typical investor do?

Donald Trump’s victory was a catalyst for financial swings, but the reality is, market instability often happens and investors need to prepare accordingly. Certain (but not excessive) precautions should be taken to buffer against unexpected upheavals. How to do so? Diversify your portfolio, hunt for new investment opportunities, and stay calm even during choppy times.

Diversify Your Portfolio

Political events often upset both the markets and investor confidence. Some investors choose to behave in a more conservative manner (see the spike in demand for gold immediately after the 2016 USA presidential elections). Others choose to try and time the market in the middle of insecure times by pulling their assets and getting back in later when the markets stabilize.

But timing the market is a very risky affair, even for experts. If you want to fortify your portfolio in anxious times, you should diversify across different asset classes and rebalance your instruments periodically to maintain your risk profile.

Telling investors to diversify is very basic advice, but think about it. Diversifying your investments is something you can control in the midst of uncertainty. You get to choose which instruments to purchase and how much money you are comfortable allocating into each asset class.

The main idea here is to balance the potential for risk and reward. For example, let’s say your portfolio consists of company stocks and precious metals. Your stock value may have been erratic over the USA election season, but the value of your gold has gone up. As you can see, with a well-diversified portfolio, you remain in the clear if the stock markets fluctuate for the long-term, as your returns aren’t determined by the performance of a single asset class.

Don’t overload yourself with real-time market information, but do look at all asset classes and see how they will fit into your portfolio and your risk tolerance. The bottom line is: if your overall portfolio is doing fine, then geopolitical situations matter less.

Read Also: This Infographic Will Tell You All You Need To Know To Defend Your Investments

This Is a Good Time to Hunt for New Investment Opportunities

If you think your investment portfolio is already well-balanced and you have covered the basics (fixed deposits, bonds, gold, stocks, etc), you can research new places to invest your money. There is an advantage to routinely looking at all the available options and seeing how they fit your portfolio because over time, asset classes produce different results. So to maintain your preferred risk profile, an investment portfolio needs periodic rebalancing.

If the current market climate is rendering you a little skittish, you can try investing small sums into alternatives. Technology, for instance, can be a promising sector.

Internet stocks are obvious suspects. Think about how essential brands like Google have become. But note that unless you are an early investor in these tech companies, your returns won’t be spectacular. Also, if you already own company stocks, other areas in technology can answer the gap in your portfolio.

Innovative and profitable technology companies are not exclusive to Western markets. One technology-based investment opportunity that’s growing in Singapore is peer-to-peer (P2P) lending, which utilized online platforms to match borrowers and investors. Borrowers take out financing for working capital or other business necessities, while investors who had collectively funded the financing opportunities gain interest-based earnings in return. Investing in P2P lending has several benefits: good return rates higher than deposits or bonds, a low entry barrier suitable for those wanting to try the business model first, and a streamlined online process.

Despite being a relatively new instrument, a study by the UK Peer to Peer Finance Association (P2PFA) stated that so long as investors are educated and the regulatory framework is sound, P2P lending does notcreate systemic risk. In fact, defaults would need to increase at least threefold from current levels to whittle down investor interest rates to below zero.

These days, certain apps can give you real-time updates on your favorite investments or even figure out the best investment mix for you. New opportunities are out there. Take the time to research and find new investments you can be confident in. Look for instruments with good growth that you can feel secure in.

Stay Calm and Don’t Make Rash Decisions

Yes, it can be difficult to enact this advice when your portfolio contains your hard-earned money, future hopes, and retirement plans. Investing can be as emotional as politics, making it difficult to stop watching the market’s every move. Yet it is counterproductive to overanalyse the current situation; there are too many variables. All the information overload can induce panic and cause you to “sell low, buy high” instead of the other way around. Additionally, don’t succumb to the temptation of making speculations. Impulsive decisions can change your portfolio drastically and at the moment, you need a balanced and stable portfolio.

Read Also: Invest Based On Your Investment Objectives, Not What Others Are Saying

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

5 Useful Tips To Keep Your Business Finances Healthy

A good financial condition holds your business together. Without the right financial management, a business is as good as doomed. Healthy finances allow your business to function smoothly. The thing is, not everyone is a financial guru. Chances are you’re not one either. But you don’t need to be a math genius to keep your company finances in check. Here are a few quick tips to help keep your finances healthy.

Track Your Expenses, Including Hidden Costs

What do you use your business money for? Whether it’s for office supplies, travel, employee meals, you need to track all your expenses. This applies for any hidden costs, too. For example, maintenance, upgrade, and training costs are not included in the price tag of new equipment, but they are costs nonetheless.

Once all the numbers are in front of you and you have taken the time to tally up total cost, you can easily make a proper financial plan, including a budget.

Read also: 5 Steps For Better Cash Flow Management

Establish a Routine

One of the most important habits to keeping your finances healthy is by staying organized. But you won’t be able to do that without a system or routine to keep you on track.

It doesn’t need to be complex, but having a designated time every day or every week to go through your bookkeeping will help you stay organized. After all, it’s better overall to keep an eye on your accounting once a week rather than letting everything build up over a few months.

Don’t Forget About Your Taxes

All businesses must pay tax on their income. Period. You need to start paying taxes from the time you make your first earnings. But the amount of tax you need to pay might vary, depending on your business and where you run your business.

Invest in Accounting Software

You might have already hired an accountant, but it’s always a good idea to invest in reliable accounting software. It can help you effectively track your finances and help you get an accurate picture of your profit, loss, and income statements. If possible, pick a cloud-based accounting software so that you can access your business financial data anytime and anywhere. This allows you to collaborate with your accountant or bookkeeper regardless of everyone’s current position.

Read also: Growing Your Business Without Breaking The Bank

Build and Maintain an Emergency Fund

An emergency fund is money prepared solely for emergency purposes. The money is intended to help you pay for things that wouldn’t be normally included in your regular budgets, such as an economic downturn or large increases in facility or material costs. Ideally, you need to save three to six months’ of expenses in an emergency fund, but we think it’s better to save more.

A healthy finance indicates a healthy business. To keep your business finances healthy, you can start with the five quick tips above and don’t forget – good accounting and bookkeeping habits are the basic foundations for your business financial health!

Find out more about SME Business Loans through crowdfunding via the Funding Societies.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Starter’s Guide: 6 Different Types Of Investments For You To Consider

If it is long-term financial security you are after, you will have to start investing – and better sooner than later. In this post, we will focus on the types of available. Major instruments include:

  1. Time deposits

A time deposit is a bank deposit with (i) a higher interest rate than a regular savings account, and (ii) a clear date of maturity. There are penalties for early withdrawals but once the account reaches maturity, you can withdraw funds without any fines. Or you can choose to leave your funds for another term. The longer you leave your money alone and the higher the amount of funds, the more interest you earn.

Time deposits are considered a low-risk, safe form of investment. It’s also easy to set up and is not complicated to grasp – so much so that time deposits are considered a beginner’s investment.

There are disadvantages, however. You can’t touch your funds during the term’s duration, so make sure you can afford to have your money locked away for the time being. Also, while a time deposit’s interest rate may be higher than a regular savings account, the same interest rate is lower than other types of investments and is in fact so low that time deposits’ rates often lose out to inflation rates.

  1. Precious Metals

Gold is a classic investment that remains popular throughout Asia. There are differing opinions on whether or not gold is still a viable investment. For your reference, we will include three varying arguments: from Investopedia, from CNN Money, and from the Daily Telegraph.

In general, gold and precious metals preserve wealth against rising inflation. For a long time, they have been considered safe investments during political and economic upheavals.

However, gold prices are actually very volatile. Also, gold pays its owner no income, unlike say, bonds or dividend stocks.

  1. Property

Property serves a similar function to gold: it is seen to preserve wealth against rising inflation. The value of property generally appreciates overtime, making property a popular long-term investment.

However, the main disadvantage of investing in property is glaringly obvious: entry cost is high. You need a lot of money to buy property. Additionally, property is not liquid and requires plenty of upkeep.

If you do have the resources to invest in property, you have options. You can hold on to your property and wait for its value to increase before selling it off for profit. Something else you can do is rent your property.

Renting your property is a great way to generate steady, passive income. However, you run the risk of ending up with a bad, destructive tenant. Or worse, no tenants.

  1. Bonds

When companies and governments need funds – perhaps to expand, perhaps to build infrastructure, they can choose not to borrow money from banks. Instead, they can issue bonds. Basically, bonds are a form of debt where a corporation/government is the borrower, while you – the bonds buyer – are the lender.

For example, if you buy a bond with a face value of $1000, an interest rate of 6%, and a maturity of five years – that means you’ll consistently receive $60 of interest per year for the next five years. When your bond matures after five years, your $1000 will be returned to you.

Bonds are lower-risk investment, but provide lower returns than, say, stocks. However, bonds’ fluctuations are also less dramatic than stocks. In addition, like time deposits and unlike gold, bonds provide a stable passive income.

  1. Stocks

Stocks are arguably the most well-known of all investments. Stocks are shares in the ownership of a company. When you own a company’s stocks, you have a claim on the company’s earnings – also called dividends. Stocks are popular for a reason: they offer higher returns than other instruments like bonds and time deposits. However, stocks are higher-risk investments, with prices rising and falling dramatically.

Ultimately, there are two types of stocks: dividend stocks and growth stocks. A growth stock is a stock in a quickly growing company. However, growth stocks pay back none of the company’s earnings as the growing company would rather use their earnings to expand their business. The only way you can make money from growth stocks is by selling off your stocks. Dividend stocks are the opposite. They pay stockholders part of the company’s earnings. The more dividend stocks you own, the larger your dividend portion.

While you can make money selling off excellent growth stocks, there is no guaranteed return. Meanwhile, dividend stocks replaces your income by paying you back in dividends. It all depends on your risk tolerance.

  1. Alternative Investments

Traditionally, alternative investments include investments that are not in the traditional forms of stocks, bonds, and cash assets. Artwork, antiques, and precious jewelry are all considered alternative investment.

Once upon a time, alternative investments were more intended for the wealthy. After all, you need money to build a painting or jewelry collection.

However, the status quo is changing thanks to the development of financial technology. Forms of alternative investments are increasing. A notable example is peer-to-peer lending.

Peer-to-peer lending platforms match investors and borrowers via digital technology. Borrowers get loans with competitive interest rates and investors are consistently paid back in installments.

Compared to other forms of alternative investments, the entry cost to investing in peer-to-peer lending is low. Like bonds and dividend stocks, peer-to-peer lending is a good source of passive income. While it does carry risk because borrowers can default, a good peer-to-peer lending platform will have performed the necessary due diligence.

Find out more about Alternative Investments through Funding Societies here.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

The Myths and Misconceptions about Peer-to-Peer Lending

Over the past couple of years, peer-to-peer (P2P) lending has become an excellent alternative source of business financing, especially for SMEs and start-ups. With peer-to-peer lending, SMEs and start-ups can gain the funding they need for business development. Not only that, peer-to-peer lending is attractive to investors too, with its high returns and easy concept. However, with the rise of peer-to-peer lending, some myths have attached themselves to the concept. Want to separate fact and fiction? Here are some myths and misconceptions about peer-to-peer lending, along with the reality.

“You need a lot of money to get started”

False. In fact, one of peer-to-peer lending’s key advantages is its low entry barriers. Take our investment product, for example. With a S$1000 minimum first deposit at Funding Societies, you can start investing – and for better diversification, you can invest S$100 into ten loans each. You don’t need much to get started at all.

As a P2P investor, you also have flexibility as you are able to choose from the loans provided. You get to pick whichever loan has the tenor and interest rate that appeals to you most.

“It’s not a mainstream investment”

It depends on what you think of as “mainstream.” Yes, P2P lending as a concept has gained traction only recently, but there’s really nothing new about a business model where investors pool together the amount needed for a loan requested by a borrower. But these days, P2P lending activities are easier to facilitate thanks to online platforms and digital technology.

 

“There are no regulations for peer-to-peer lending”

One of the typical misconceptions about peer-to-peer lending is that the model is not yet regulated so investing in P2P lending or borrowing from a P2P platform can be risky. But it really depends on the region and country. In Singapore, MAS (Monetary Authority of Singapore) has issued a framework for the P2P lending model. Look for a local P2P lending platform that has been licensed!

 

“Peer-to-peer lending is crowdfunding”

Not really, but it’s easy to make the mistake. After all, peer-to-peer lending is a category of crowdfunding. Certain principles are the same, but there are a few differences between the two concepts. Crowdfunding pools resources from multiple individuals to gather financing for a particular project, perhaps a creative project or the creation of a product. Sometimes the individuals who help pitch in money for a crowdfunding campaign get rewarded with gifts and sometimes there are no physical rewards, similar to a donation.

Peer-to-peer lending, in the meantime, operates more like a lending and borrowing model. Investors and borrowers are connected through an online facilitator. Together, investors pool together finances for borrowers. The borrower will use the disbursed loan and repay his investors with interest.

 

“If you lend money on P2P platform, it will be locked for a fixed period”

Well, yes. A P2P investor is asked to commit funds for a fixed period, but for a shorter period than most other investments. On our platform, loan tenures range from 3 to 24 months, which compares favorably to other instruments.

We hope the above have dispelled some of the tangles and confusion. With its advantages, P2P lending is an attractive solution for both investor and borrowers. Do you agree?

Find out more about the peer-to-peer loan at Funding Societies here.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

5 Steps for Better Cash Flow Management

Financing is the most important aspect of any business and smart entrepreneurs know that well-managed cash flow will prevent unnecessary costs and charges. Most business owners are aware of the importance of cash flow management, yet many have no idea how to do so. Whether you are a complete beginner or you want to get some more tips, read on for five steps to better cash flow management.

Read also: Growing Your Business Without Breaking The Bank

#1 Never expect quick payments

Have you ever had an experience when a customer did not pay you on time? It may not necessarily be because they are unable to pay the invoice. If your customer has ordered your product, it means that they are likely to have enough funds to pay for your goods. But unforeseen circumstances happen. Perhaps your customer has guidelines on extending payment terms. So it’s best never to expect quick payment on your sales. Instead, determine if you have enough working capital to keep your business running well in the event of payment delays. Remember the saying: hope for the best, but prepare for the worst.

#2 Read the details of your agreement

It’s rare to have a completely accurate invoicing process. However, understanding your customers’ payment processes or at least using the right purchase order numbers on every piece of communication can help you get paid on time. Carefully study the details of your payment agreement. Make sure you prepare everything you can so that your customers have no excuses to delay payment.

#3 Forecast your cash flow

Doing business without forecasting your cash flow is like driving a car in the rain without windscreen wipers: you can drive but you can’t see where you are going. Account for all expected incomes and expenses in the future.  Being aware of every completed transaction and updating your records accordingly can also help in managing your cash flow.

#4 Find the root of your cash flow problems

Analyze the root causes of your cash flow problem. Late payments are the most common cause of cash flow problems and financial mismanagement. You should also consider potential problems such as inaccurate invoicing, inconsistent pricing, lack of customer contact, or misunderstanding your customer’s payment cycles.

#5 Make use of technology

Ease your financing by using technology. Several software programs are available to help you manage your cash flow. This includes reminder notifications to help you ensure timely payment from your customers. Some software programs even help you to create consistent and professional invoices.

By having well-managed cash flow, you will be able to determine if you need financing support. Even beginners can improve cash flow management by simply incorporating these steps into their business practice. So, start working towards an optimised cash flow position today!

Find out more about the peer-to-peer loan at Funding Societies here.

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Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Growing Your Business Without Breaking The Bank

Do you know that 99% of businesses in Singapore are small and medium-sized enterprises (SMEs)? They employ 7 out of every 10 workers and contribute over 50% towards the National GDP.

Yet only 1 in 20 SMEs gets bank financing. Why? Insufficient collateral and track record, staggering interest rates, or all of the above. The reality is that every business starts small and raising capital is a challenge. And in addition, startups are expected provide collateral, afford high interest rates, and have a proven track record, just to be able to get funded.

While traditional banks may be appropriate for big, established corporations, small businesses may be better served by a less traditional route, but one that has gained popularity and traction over recent years. Consider peer-to-peer (P2P) lending, also known as “social lending.” P2P lending allows for individuals to lend and borrow money directly from each other, doing away with the middlemen, financial intermediaries like banks. Just as it offers borrowers loans with low interest rates, P2P lending also benefits lenders (investors) with deserving returns.

How It Works

In a typical P2P lending scenario, you sign up to become a member at a P2P marketplace website. We at Funding Societies are among the first of such marketplace platforms in Singapore and South East Asia. Serving as the platform between borrower and lender, we take care of your borrowing and investment needs.

Borrowers

Before you can borrow from our pool of lenders, we first take some time to get to know you better. We look into business and credit records along with a personal interview to understand your business. Because we want to make sure everyone goes home happy, we only accept quality applications.

Let’s say you’ve been accepted (yay!). Our pool of lenders will see your approved application and make the decision to lend the funds to you. Once your loan is fully funded or funded to your satisfaction, the amount will be released to you.

Lenders

As a lender, you get to choose which ventures you wish to fund, and you can even spread your funds among several borrowers, spreading your risk. Because of the information transparency on our site, you’ll know what kind of business you’re lending to and to what end. You may sympathise with a particular industry’s story or venture, and the future success of the borrower and related industry can give you a sense of personal satisfaction knowing you contributed.

Getting Started

Whether you are a borrower or lender, you may look into P2P lending for your next venture and consider Funding Societies. We are a marketplace lending platform that facilitates funding objectives of SMEs who hit a roadblock when it comes to getting financing. From the borrower’s end, one business borrows from many lenders. From the lender’s end, one person lends to many small businesses, spreading and minimising risks. Investors or lenders get high returns (in comparison to most investment instruments) and borrowers get the loans they need at reasonable rates. And fast. All in all a win-win situation.

While we are confident in our mission, we realise that this operation comes with inherent risks and work with caution. In our efforts to mitigate any inherent or potential risks, we differentiate ourselves in that we work with a safer and less risky SME segment. With an interest rate of 10-20%, lenders can expect lower loan default. Being a marketplace platform, we are able to secure funds from not only retail investors, but also high net-worth individuals and institutional investors. From application to cash disbursement, the process time is short, with SMEs being able to immediately secure the minimum funding within days.

Our team is comprised of predominantly Southeast Asians, with a vision of making a positive contribution to the Southeast Asian societies, hence our name Funding Societies. Within three months since our incorporation in February 2015, we have put together a team of professionals, raised funds, and received large commitments from lenders. With access to the largest and most innovative marketplace lending players in the US and world-renowned thought leaders, and bringing into play the essence of the Silicon Valley startup culture, we work collectively to continually learn, deliver, and reinvent ourselves in this market.

Our customer service is rooted in our relationship with you. We are investing in our community and education to encourage discussion on relevant topics within the world of SMEs, safe borrowing, and investment, which is why you’ll see regular articles posted on our site blog. We have a dedicated team towards client service, ensuring that you will always be served and responded to in a timely way. Making the most of today’s technology, we operate efficiently to connect and facilitate the conversation among our community of borrowers and lenders (investors).

We understand that everybody starts somewhere, and it doesn’t matter where you are, our focus is to get you (the SMEs) the funding required to grow and for lenders (investors) the boost in returns you deserve. With your partnership, you’ll be helping us deliver our mission of serving local businesses and aspiring entrepreneurs. This is our social promise.

The thriving of our national economy is measured by the growth and success of its enterprises, small, medium, and big. Let’s work together not just for our individual accomplishments, but also for our collective progress as a community.

Read also: 8 Things to Ask Yourself Before Applying for a Business Loan

Find out more about the peer-to-peer loan at Funding Societies here.

Choosing the Right Crowdfunding Product

Interested in raising capital through crowdfunding? We’re not surprised. After all, crowdfunding comes with some pretty sweet advantages. The crowdfunding process is cheap, quick, easy – often entirely online. Because crowdfunding requires no collateral, it is a great alternative to traditional funding such as secured loans.

As we discussed in our last article, there are three major forms of crowdfunding: rewards-based crowdfunding, equity crowdfunding, and peer-to-peer lending. To learn more about them and compare the different forms, click here.

Each form serves a different purpose and targets a different demographic, so it is crucial that you pick the right crowdfunding product. Which crowdfunding product is your match? Below, we have provided a handy list for you to use. Read on!

Rewards-Based Crowdfunding

  • Rewards-based crowdfunding is for you if you are trying to pitch a project. It is meant to raise capital for products or services. Its purpose is not to fund your overall business.
  • Rewards-based crowdfunding is ideal for those in the creative or artistic field, or those developing new products and technology to get market validation and pre-orders before starting production.
  • Most rewards-based crowdfunding campaigns expect to raise around $10,000 – $100,000 according to this article.
  • This is a crowdfunding form that requires effort on your part. You need to create a business plan for your brand and your project, you need to do research, think about legal and tax issues in advance, plan the rewards you will offer your supporters, and craft a compelling story or video to market your project and entice new backers. For more details, check out this Forbes article.
  • Costs include: reward and shipping costs, income taxes, and platform fees.
  • Key platforms include Kickstarter and Indiegogo. Coincidentally, Kickstarter has opened new branches in Asia, including Singapore.

Equity Crowdfunding

  • Equity crowdfunding’s primary purpose is to fund startups with strong growth potential.
  • Because equity crowdfunding is essentially a barter of company shares for funds, ask yourself: are you willing to part ways with your company shares? Are you someone who likes to be in control of your company? If you are indeed willing to let go of company stocks and are looking to raise a large amount of funds, then equity crowdfunding is for you.
  • Equity crowdfunding campaigns expect to raise somewhere between $250,000- $3,000,000.
  • Like rewards-based crowdfunding, equity crowdfunding requires effort on your part. Your startup may be very promising, but you still need to pitch its worth to potential investors on your chosen platform.
  • Costs include platform fees and of course, partial ownership of your business.
  • Key platforms include: AngelList and CircleUp.

Peer-to-Peer Lending or Debt Crowdfunding

  • Peer-to-peer lending provides loans with competitive rates and no collateral. Depending on your chosen platform, you can crowdfund personal loans or business loans.
  • However, peer-to-peer loans are especially useful for SMEs and the underbanked segment.
  • Ideal for small businesses searching for short-term credit to strengthen cash flow, to expand their companies, to finance a newly secured project, or just for operating expense.
  • Here’s an example: businesses with income tied in accounts receivable are a great target segment for peer-to-peer lending as they can have quick loans through invoice financing to start new projects while they wait to get paid.
  • A good option for younger, smaller, and revenue-generating companies, but with no suitable assets for secured loans.
  • Peer-to-peer lending campaigns expect to raise around $20,000-$500,000.
  • Requires less effort on your part compared to rewards-based crowdfunding and equity crowdfunding. Your chosen platform will do credit assessment to see if you are suitable for a loan and take care of the rest. You don’t need to market your funding needs.
  • Costs include platform fees and loan interest.

If peer-to-peer lending sounds like the crowdfunding product for you, you can learn more here and apply for a peer-to-peer loan at Funding Societies here.

How Crowdfunding Is Making the World a Better Place

Let us begin by telling you a tale.

Once upon a time, in the not-so-distant past (2008, to be precise), a young writer started a crowdfunding experiment called The Omikuji Project. She needed earnings to supplement her household income between novels and wanted to thank those supporting her budding career. So each month, she wrote a new story for paying subscribers. The Omikuji Project became “a unique way for you to read stories unavailable in any other venue, in any other way” and ran for five years.

Perhaps emboldened by her project’s outcome, she started a crowdfunded novel. New sections were added to her website every Monday and eager readers donated to read more.

That novel, The Girl Who Circumnavigated Fairyland in a Ship of Her Own Making, became the first online, crowdfunded book to win a major literary award: the Locus Andre Norton Award. It was also picked up for traditional publishing.

Catherynne M. Valente herself is now famous, with critical accolades and commercial success. Her work has made it to the New York Times bestseller and she has been nominated for the most prestigious science fiction and fantasy awards.

Let us continue by telling you a different tale.

Once upon a time, in the not-so-distant past (2009, to be precise), a crowdfunding project called Floating Doctors launched on the platform Kickstarter. The project was completely funded in less than a month.

Floating Doctors is a sea-faring medical group that provides free health care and medical supplies to needy communities in remote coastal regions. It is the brainchild of Dr. Benjamin LaBrot. He first came up with the concept after running out of supplies when treating villagers in Africa. He resolved to bring a bigger backpack next time. Today, LaBrot’s “backpack” is a sailboat named The Southern Wind, capable of carrying 20,000 pounds of medical supplies.

The Kickstarter campaign paid for The Southern Wind’s maiden voyage to Haiti in 2010. The money was used for the sailboat’s final prep, along with medical supplies and equipment. Today, Floating Doctors has expanded their mission to Honduras and Panama. Their operations are still currently running.

Witness the magic of crowdfunding. Many creative projects by promising yet unknown artists were born thanks to this mode of alternative financing. Crowdfunding has also funneled funds to social causes and charities.

Here at Funding Societies, we have translated the concept into a peer-to-peer lending platform meant to help grow and strengthen local Small and Medium Enterprises (SMEs). Did you know that according to The Singapore Department of Statistics, 99% of Singapore enterprises are SMEs? SMEs are the backbone of our economy. And yet a Visa and Deloitte Digital SME Banking Study shows that four in ten SMEs in Singapore lack banking support – this despite a Singapore Business Federation National Business Survey that shows 72% of Singapore SMEs requires funds to better manage their working capital and aid cash flow.

Here at Funding Societies, we dream of achieving three goals: empowering SMEs, providing new investment opportunities in Singapore, and growing the economy.

This may sound like a fairy tale, some of you might think. Indeed, there is a touch of rags-to-riches in most success stories. Some stories are so breathtaking that one can get suspicious. Great. We are not here to tell you “let your guard down.” Be aware. Be sensible. Beware of fraud. These are good rules to keep in mind. Once crowdfunding, peer-to-peer lending, and alternative financing have better regulations, they will be easier to trust.

Let us end these tales simply.

Grounded in sound checks and balances, crowdfunding and alternative financing are forces for good. In fact, as evidenced by many examples, they are helping to make the world a better place.

So do your research, ask questions to your heart’s satisfaction, and start crowdfunding when the answers are positive. You’ll play a role in growing the arts, growing the community, and growing the economy.