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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.

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.

One FinTech Company Hopes To Help SMEs Solve Cash Flow Challenges That Even Banks Have Problems With

SME and start-ups owners will be familiar with the challenge. Your business is doing perfectly fine but you need a short-term loan or a credit facility to tide over some cashflow matters.

You turn to your regular banks but are not familiar with the loans they are offering. They are covenants you need to adhere to, collaterals you need to put up for them, an existing credit history and other business documents that you may or may not have.

It’s a hassle and you only have two choice. Comply or walk away.

Funding Societies Bolt To Provide Fast And Secure Loans For SMEs

Local FinTech Company Funding Societies aims to solve this common headache of SME owners and fellow entrepreneurs by launching an app that allow users to apply for loans in just 2 minutes, through their mobile phone.

The app, called FS Bolt, is now available on both iOS and Android devices.

FS Bolt uses an automated credit assessment process that enables it to approve or reject loan application in just two hours. Once a loan has been approved, money will be disbursed within 24 hours of the loan application. This makes FS Bolt one of, if not, the quickest source of working capital loans that SMEs can tap upon in Singapore.

Read Also: 8 Things To Ask Yourself Before Applying For A Business Loan

Keeping It Flexible For Singapore’s SMEs

To keep it simple and flexible for SMEs, FS Bolt also provides loan tenor flexibility. Borrowers can repay their loan anytime they wish without incurring penalty for early repayment. This is a feature that many loan products in the market do not have. Such a feature provides incentives for borrowers to repay their loans quickly, with borrowers only paying the interest during the time the money was borrowed.

Different Products For Different Needs

Funding Societies is of course no stranger to supporting SMEs in Singapore. The company’s flagship product is its peer-to-peer (P2P) lending platform that helps connect SMEs borrowers to a pool of willing lenders who lend them money in return for higher interest rates.

The company has a rigorous credit assessment process and also practices what it calls “skin in the game” by having its founders and team investing alongside lenders in every crowdfunding opportunity.

Read Also: Three Key Risks Of Peer-To-Peer Lending

Investing in Invoice Financing vs. Investing in Term Loans

Some of our investors may have already heard of our new product: Invoice Financing. But perhaps some questions remain on why it is a worthy addition to our list of products, how it is different from our regular peer-to-peer loans, etc. We hope this post will alleviate and dispel any confusion.

To start, it may help to understand what invoice financing is and why a small business may need invoice financing. Invoice financing is a product where sellers (“Borrowers” in this case) sell the future receivables or invoices they issued to their customers (“Debtors”) to get immediate cash, at a discount. When the debtors pay their invoices, investors who bought these future receivables would receive full payment and make a return.

A small business, no matter how profitable or healthy, needs constant cash flow. Credit terms of invoices (usually between 30 to 90 days) result in a time gap between delivery of goods/services and receipt of payment. Invoice financing bridges this gap by providing immediate cash up front. Certain businesses need running cash flow more than others. Wholesalers are a good example – they always need to buy more stock inventory. If most of their income is in accounts receivable, then their cash cycle will be negatively impacted.

Compare invoice financing to the more ubiquitous term loan. Invoice financing and term loans have visibly different tenures. Our term loans’ tenures range between 3 to 24 months whilst terms of payment (i.e. tenure) for invoice financing listings range between 30 and 90 days, typical of invoice cycles – this is a great difference, and some investors are fond of invoice financing because it takes much less time to get their full principal and interest back.

Another key difference would be the risks involved. As invoice financing listings are secured against the invoices, lesser risk is involved. Furthermore, an invoice financing institution would not advance 100% of the borrower’s invoice to buffer against any unforeseen circumstances. This reserve amount (as we call it), will push the Seller to chase the Debtor for timely repayments as any borrower woul want 100% of his invoice back rather than 80% the maximum amount Funding Societies will advance payment for.

The repayment and fee structures differ between the two products as well. For term loans, repayments are on a monthly basis, while service fees are charged at 1% of the monthly repayment. For invoice financing listings, repayments are only made on the invoice due date, while service fees are charged at 15% of the interest earned.

Of course, certain things stay the same here at Funding Societies. Our credit assessment of borrowers will remain rigorous. In fact, for invoice financing listings, we’ll extend our assessments to the debtors as well. We will continue with our monthly reminders and strong infrastructure in place to collect repayments in case of payment delays. As per term loans, for each invoice financing listing we put up, investors have access to a detailed factsheet to evaluate the listing.

The returns you can earn from invoice financing is comparable to term loans as well, at around 8% to 15% per annum. So if you are interested in investing in our new product, click here to access your “Browse Loans” page if you already have an account with us. If you don’t, click here to sign up now!

How Invoice Financing Can Help Business Owners

Funding Societies is happy to announce the launch of our newest product: Invoice Financing. As an introduction, invoice financing is a product where sellers (“Borrowers” in this case) sell the future receivables or invoices they issued to their customers (“Debtors”) to get immediate cash.

Simplifying the concept further, say there is a business owner and a buyer. The buyer purchased goods or services from the business owner and was issued an invoice with a credit term of 60 days. This means the business owner will only receive payment after 60 days, at the earliest; but what if the business owner needs immediate cash? This is where invoice financing comes in. Business owners can sell their invoices at a discount, in exchange for immediate cash, thus enhancing cash flow.

Utilised wisely, invoice financing can be a fantastic tool for business owners. The process of getting upfront cash through invoice financing is significantly quicker than applying for a loan from a traditional financial institution. This is especially useful for business owners who need a quick cash flow fix. Perhaps he has the opportunity to fund business growth but most of his short-term assets are tied up in accounts receivables – he can apply for invoice financing and does not have to wait till the end of the credit term to get cash.

Here at Funding Societies, we can advance an immediate loan of up to 80% of the invoice value at interest rates as low as 0.67% a month. We charge no processing fee for the loan application and approval process, only a competitive fee upon successful disbursement.

For first time Funding Societies borrowers, it would take three to seven business days from application to disbursement – a process that is relatively quick and already includes a compliance check. Repeat borrowers are in luck: the assessment, approval, and disbursement process takes merely one to two business days.

Interested in learning more about our invoice financing product? Refer to our infographic below, or contact us to find out more!