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As per a recent survey conducted in the financial year 2020, almost 71.31% of businesses in India suffered from irregular cash-flow because of the global economic crisis. Hence, business owners need to be careful about their organisation’s operational cost daily. It helps to keep a check on the unnecessary drainage of funds and ensure sufficient funds availability.
Even after that, if they still suffer from low business funds or inadequate working capital, they can resort to a business loan. They also need to meet the business loan eligibility criteria to avail of such funds.
Besides this, business owners need to follow some tips to protect the financial state of their operations. Some of them are listed below.
1. Protect liabilities with insurance policies
Irrespective of the size of a business, it is vital for any business owner to protect the brand image at any cost. They cannot afford to get embroiled in litigation, which would lead to substantial financial loss or even insolvency.
To avoid such circumstances, they need to protect their liabilities with suitable insurance coverage plans like an indemnity insurance policy.
On the other hand, with growing businesses, individuals can protect their property or commercial vehicle with such plans and avoid liquidating the working capital if the need arises. Click here to know more about the professional indemnity insurance quote
2. Clear existing debts
Business owners often opt for a business loan to tackle business liabilities. Hence, it becomes necessary for them to repay their loans on time to avoid debt traps. To ensure such precarious situations, borrowers should avoid servicing multiple debts at a time. Furthermore, they should also assess their repayment capacity before applying for the fund. It will help them to clear their debts and pave the way for new business loans in the future.
3. Keep the balance sheet updated
The balance sheet of a company contains all the details of current assets and liabilities. Hence, you can check for any discrepancies there and manage accordingly. You can also consult this sheet to determine the risk and return. Based on liabilities, you can also check your business loan eligibility criteria and improve the same, lowering the FOIR.
It is one of the effective financial habits to better manage business growth that you can adopt to safeguard your business finances.Â
4. Cut unnecessary expenses
After consulting the balance sheet, perhaps you can infer the expenses that are not required or can be reduced with little planning. For example, if your employees use business credit cards, try to evaluate the expenses if they are at all required.
Similarly, a substantial amount may go towards business travel expenses. You can limit them to increase available working capital funds.
To tackle this situation efficiently, you can follow some tips on how to manage international business travel expenses.
5. Maintain an exigency fund
Most financial experts advise keeping an emergency fund to tide over any sudden expenses that a business may require. It will help you keep your financial health intact by protecting your cash reserve.
Besides providing financial assistance during an emergency, such funds also ensure peace of mind knowing that you have additional funds to address immediate liabilities.
However, even after adopting these practises, your business may fall short of funds. In such cases, you can opt for a business loan from selected NBFCs like Bajaj Finserv.
They also provide pre-approved offers to their existing customers that speed up the loan availing process. Such offers are available on a range of unsecured funds like business loans, personal loans, credit cards, etc. All you have to do is enter your name and contact number to check the pre-approved offer instantly.
Hence, following these tips diligently, individuals can protect their business finances to a great extent. Along with that, they should also consider the business loan eligibility criteria in case they require immediate funds to address any short-term or long-term business requirement.
