Introduction

Have you ever reached the opinion that companies, whether they are established or start-ups, are more than just the dreams of their owners and founders? They have invested their entire lives in these inventions, and their success with them acts as the yardstick by which they measure their own achievements. Most entrepreneurs devote a great deal of time in studying infrastructure investments, operational costs, employee benefits, flexible technology, and multitasking, among other topics, to make sure their business ventures are successful. As they prepare these documents, they consult their subject-matter experts, business partners, and financial consultants.

Their financial advisers and chartered accountants (CAs) are crucial in helping business owners improve their financial literacy and better understand their credit and financial options. They could also check that they are following the rules and show them the latest government plans and initiatives for their review. They will be more mindful of their credit and ready for a loan when the time comes as a result.

Many times, businesses choose to get loans via the formal lending environment because they are confused by credit misconceptions. Their financial advisor, a certified public accountant (CA), is responsible for helping them understand their credit options, separate fact from fiction, and select a safe and repaid credit line. As their certified public accountants, you may help businesses address these four main credit-related issues:

How to expedite their credit application process

When they need money the most, many businesses usually have trouble getting it in a timely manner. When creating a strategy and budgeting for spending, it is essential to take a realistic approach to the numbers, expenses, and schedule. If your client intends to apply for a credit facility, make arrangements in advance.

Work together with your client to accomplish their short- and long-term credit and company goals. Have their company’s documentation (tax returns, statements from creditors, financial statements from previous years, CIBIL Rank and Company Credit Report, etc.) available for review in addition to any other documents that might expedite the approval process. Having all of these on hand can help your clients meet their business credit needs more quickly.

Choosing to use official or informal lending mechanisms for credit

Despite recent changes in the formal funding structure, many businesses still avoid dealing with banks and lenders. Instead, they choose to use the unofficial system, which may entail local lenders asking for collateral in order to grant loans.

This is your chance to step in and help. Due to the RBI’s and the Indian government’s support of MSME owners, many banks provide business loans with competitive interest rates, making it easier and more inexpensive for MSMEs to select them. To examine these options, you may need to sit down with your consumer and go over their credit arrangements.

Insufficient knowledge of government programs

The Indian government has recognised and appreciated the MSME sector’s contribution to the country’s GDP. In response, it has implemented many initiatives for MSME owners, including as collateral-free loans and a 12-month moratorium announced in May 2020 in response to the COVID-19 pandemic. The renowned AtmaNirbharBharat Schemes are meant to alleviate the sector’s challenges.

As your client’s go-to financial advisor, it is essential that you stay current on these programs so that you can tell them how they may save money and gain.

How crucial it is to keep an eye on credit

Despite being aware of a CIBIL Score, most consumers often confuse it with a rank. Like a person’s CIBIL Score, a company’s Company Credit Report (CCR) and CIBIL Rank reveal its credit profile. A company that has a CIBIL Rank between 4 and 1 is also a strong predictor of a credit-healthy business that is less likely to miss loan or credit obligation payments. The Rank plays a crucial role in determining a company’s future credit availability in addition to highlighting its past credit performance. The credit profile and financial stability of your client’s business are actually shown by the CIBIL Rank. It may help them win project bids or perhaps help them get financing at advantageous interest rates.

Checking your client’s CIBIL Rank and Company Credit Report on a regular basis is therefore essential. With a high CIBIL Rank, you can obtain competitive interest rates and make an informed credit decision when the time comes.

Business Registration

NGO

COMPLIANCES

Change In Business

BIS & CDSCO

Government Registration

FSSAI

Environmental

Unlocking Credit Potential: A CA&#8217;s Guide to Financial Success

Shabana A

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Unlocking Credit Potential: A CA’s Guide to Financial Success