FINTECH

BEST PRACTICES TO MANAGE LOANS FOR BUSINESSES

Published

2 years ago

BEST PRACTICES TO MANAGE LOANS FOR BUSINESSES

You probably have finally landed that dream loan you have always wanted to keep your business above water or to expand your operations. You probably tendered a feasible business plan that answers all the questions that financial institutions may have, or made a great pitch to investors. Whatever the case may be, accept my congratulations.

As exciting as securing a loan for your business might be, regardless of your plan for it, the most difficult part is what you will now face: Managing it.

The importance of Business Finance Management

Let’s take back a little bit to the time when you were drafting out a unique business plan that you intend to present to financial institutions or investors. There were some aspects you were either ignorant of or had less knowledge about. This is the case for every entrepreneur. It really does not matter how much experience, knowledge, and skill you have in your chosen business, there will be a few aspects of running that business that you find difficult to understand.

This, however, is totally understandable because as entrepreneurs, you learn along the way. Most importantly, The knowledge captured along the way needs to be absorbed and implemented quickly in order to keep your business afloat. This is the place where funds reporting is critical as it helps boost your practices from the management perspective. The knowledge you have concerning the performance of your business helps you to constantly review and revise your expectations and corresponding strategies to suit.

Best Practices to manage Small Business Finances

We will elaborate on a wide variety of funding scenarios later in the article, but here are practices you can engage for better loan management.

Do a Comparison of the forecasts to actual performance

The same way you are not equipped with all the necessary answers regarding how you will invest your loans prior to launching business operations, other projections might as well be imperfect. Forecasting does not necessarily mean having a perspective of what the future holds, but making informed guesses concerning the financial performance, market conditions, and interest in your products. For a new business like yours, your assumptions will usually be based on your competitors or current industry benchmarks, rather than previous sales.

As a result, it is best to compare the performance of your business to established Forecasts rather than focusing more on outdated assumptions. Practicing this on a monthly basis contributes a lot to helping you recognize real sales and costs, as opposed to projections.

Adjust your forecast

Outside of comparing the actual performance of your business to Forecasts, doing a review of your Forecasts with current sales data is ideal. Professionals refer to this adjusting to actual, a process which help ensure your next projection will be more accurate than the previous one. Doing this secures your business from any a sudden dip in sales, supply, demand, or cash.

Review your cash runway

One of the ways you can review your Forecasts based on real performance is by assessing your cash burn rate and runway. These assessments give you a good perspective on how fast you are burning through your finances and the time you have left before running out of funds. It is vital that you focus on your projected cash flow in order to have a scope of your business’s solvency for a given period.

Create a Plan and Milestones to Link the Money Gap

For startups, entrepreneurs need to always consider that they will most likely have a massive burn rate and negative cash flow in a few months of operation. While this is natural, it is important to ensure there are milestones that serves as a way to see when your cash intake turns to a positive. Without that, you will continue burning through cash with the confidence that all is fine, until there can be no remedy.

This is enough reason for you to do a review of your general business plan all over, and make changes to prior milestones you initially created. Similar to the way Forecasts benefits from modifying to real results, the general strategic plan of your business does as well. It is vital to constantly reassess elements of your business plan over time and update them. As a result, you can use it as a management tool instead of a dormant plan that earned you a loan.

Other Tips that Help Employees Manage small business finances

Creating a functional system that will effectively manage your finances is a great first step. While implementing these strategies may seem cumbersome, the following tips will ensure a more consistent process.

Start with your business plan

While you were creating your business plan, there’s likely a part that detail how you intend to put the requested loan from financial institutions to use. It is usually seen as your report on “Use of funds”. This report provides a statement on the reasons you need the loan and how it will be invested in your business.

Given that there are numerous ways in which the funding can be invested (hiring employees, investing in marketing, buying equipment, and so on), this report can present how best your business needs can be met. It could be presented through charts, spreadsheets, Forecasts, or a few lines of text.

Since you have acquired the funding you need, you can easily concede that your business plan has fulfilled its purpose, then proceed to start using the funds. However, several entrepreneurs with this mindset have failed, since they don’t consider the ways their original plan will change with time. Without proper funds management to accommodate the changes, their business eventually meet a perilous end.

Reassess and Edit your forecasts and strategy

Startup founders need to have a strategic planning, use of funds management, and reporting. With these, you can invest time to check your actual performance and update your Forecasts accordingly. When building reports, it is recommended that you take some time everyday to check out your numbers since your Forecasts will be updated faster, than when compared to waiting for months before creating a report.

Prepare for positive and negative outcomes

As an entrepreneur, good news, as well as bad, can affect your cash flow. Having an expense that is large and unplanned may have a domino effect that leads your business to run out of cash over time. However, an up planned revenue event provides a business with a chance to invest in growth. Whatever the case may be, the faster you are aware to happenings concerning your business, the quicker your reaction and its effectiveness. Being up to date on your Forecasts allow you have a better view of the future of your business.

Remain Updated on your credit

It is a widely known concept that taking loans can affect your credit score, negatively or positively. Taking loans is almost an inevitable part of a business, however, you need to ensure you effectively keep track of your credit score when you do.

Generally, you need to be updated on:

Payment History and Repayment Terms
The amount borrowed compared to the amount of credit you have available
The time your credit has been on file
Outstanding credit inquiries
Loan type and total debt

To improve your credit score, it is vital to ensure repayments are done in a timely manner. A better credit score gives you a good chance to acquire further loans on favorable terms.

Avoid new debt

While you implement good management practices on your acquired loans, it is vital for entrepreneurs to steer clear of acquiring extra debt as much as possible. You need to be certain of your ability to transform debt into significant profit before even considering such a move. When you struggle to make repayments or you discover that acquired loans are not leading to expected growth, it is probably the time to cut costs. You will simply incur more risks if you take on more debt at this point.

Stay in touch with your lender

After loans have been acquired from like Migo, it is important to keep in touch with your lender. Doing this helps entrepreneurs provide immediate response to questions or enquiries your lender may have concerning your agreement or possible term changes. This may involve situations such as:

An extension or adjustment of the financing terms
Adjustments to your repayment plan
Interest rate adjustments
Delay of payment

Usually, entrepreneurs are required to submit reports on loan use at some point.

Are you an entrepreneur seeking short or long term loans to solve cash flow issues you may be experiencing in your business? Migo is the perfect solution made for startups and entrepreneurs like you. With Migo, you get to enjoy access to risk free loans that help keep businesses grow. Since startups, small businesses and entrepreneurs stimulate the economy of any nation, access to loan facilities is the priority of Migo, as we want to contribute our quota to helping the Nigerian economy recover and boost its growth.

If taking a loan for your business is a prospect that appeal to you, visit our website to access the different loan options we have available to help solve your personal and business needs. Want to grow your business today with the best rates and terms, visit us at Migo today!

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FINTECH

Kazang Pay launches card acquiring service in Zambia

Published

2 months ago

Christopher

Kazang (www.Kazang.com), the prepaid value-added services (VAS) and card acquiring business within JSE-listed fintech Lesaka Technologies, has launched its Kazang Pay card acceptance solution for merchants in Zambia. Kazang Pay makes it affordable for merchants to accept card payments on the same Kazang terminal they use to sell prepaid products and services.

Kazang Pay launches card acquiring service in Zambia

The Kazang Pay enabled terminal in Zambia accepts VISA debit and credit cards as well as mobile wallet payments. Payments are settled to the merchant’s Kazang wallet on the same day. It’s as easy as letting the customer tap or insert their bank card and enter their PIN on the secure scramble PIN pad.

Kazang operates around 12,000 VAS terminals in Zambia. The goal is to enable the majority to accept card payments over the next six months. Benefits to merchants include low transaction fees and no monthly terminal rental fee for those that meet a modest monthly transaction threshold as well as the opportunity to grow their business through card acceptance.

Kazang is Zambia’s largest VAS point-of-sale terminal provider, enabling mobile money payments, bank and mobile money cash in and out, bill payments, airtime, Zesco, and many other prepaid services on one platform. The addition of card acceptance makes the platform even more comprehensive for merchants and consumers alike.

The launch of Kazang Pay in Zambia follows the introduction of the solution in South Africa, where around 60,000 small and micro merchants use Kazang Pay to accept card payments. In Zambia, there are around 3.8 million debit, credit and ATM cards in issue and 41,000 point of sale (POS) terminals in place. The value of POS transactions has grown to K 111.4 billion by 2022 from less than K 20 billion in 2018, according to the Bank of Zambia.

Says Leon de Wit, managing director at Kazang Zambia: “Zambia has made enormous strides in terms of financial inclusion, with card usage and penetration growing at a rapid pace. With Kazang Pay, merchants can now easily accept card payments on the same all-in-one terminal they already use for vending of VAS products.

“Card transactions help merchants to grow basket sizes and potentially attract more customers, and at the same time, reduce the risks and costs of handling cash. Moving towards digitalised payments will also enable merchants to track sales, manage cash flow, and create a footprint that could make it easier for them to access loans.”

Ashley Naidoo, director of Kazang Pay in South Africa says: “Our Zambian merchants have eagerly embraced our card acquiring service as a valuable part of our one-stop solution. Following the launch of Kazang Pay in Zambia, we have seen higher VAS sales across our merchant base and much-improved merchant retention and with our card acquiring solution we now appeal to a broader merchant base.”

Distributed by APO Group on behalf of Kazang.

ABOUT KAZANG:
Kazang (www.Kazang.com) is a leading provider of cash and digital solutions to merchants in Southern Africa’s informal economies. Our fintech solutions include a diverse range of value-added services (VAS), card acquiring, secure cash vaults and supplier payments platforms. Operating with a network of approximately 90,000 active devices, we process approximately 2.2 million transactions daily in markets such as South Africa, Namibia, Botswana, and Zambia.

We are dedicated to helping small and medium merchants grow and succeed, through increasing their sales, making their businesses more efficient and reducing their risks with its holistic portfolio of products and services. Kazang is a member of Lesaka Technologies (https://LesakaTech.com).

ABOUT LESAKA TECHNOLOGIES, INC:
The Connect Group and Kazang was acquired by Lesaka Technologies, Inc. in April 2022. Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka’s mission is to drive true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-added services to retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa.

Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.LesakaTech.com for additional information about Lesaka Technologies (Lesaka ™). $LSK / $LSAK

Bitcoin

Binance expands crypto access in West and Central Africa with mobile money integration

Published

2 months ago

Christopher

Binance expands crypto access in West and Central Africa with mobile money integration

This new service currently supports only BUY transactions, further simplifying the entry point for new crypto users in these regions

Binance (www.Binance.com), the world’s leading blockchain and cryptocurrency infrastructure provider continues to drive innovation and expand access to cryptocurrency in Africa, now allowing users in Benin, Cameroon, Ivory Coast, Democratic Republic of Congo (DRC), Togo and Senegal to purchase crypto directly through mobile money payments enabled through local partnerships.

This new functionality further strengthens Binance’s commitment to providing simple and secure access to cryptocurrency for users across the continent, reinforcing the platform’s vision of financial inclusion.

Samantha Fuller, Spokeswoman for Binance says “We remain focused on advancing financial inclusion and delivering user-friendly solutions for crypto adoption across Africa. This expansion into West and Central Africa is a significant step in our mission to increase crypto adoption, providing millions of people with more direct access to the global digital economy”.

This new service currently supports only BUY transactions, further simplifying the entry point for new crypto users in these regions, while providing them with a reliable and secure platform to acquire digital assets.

How to buy crypto:

Log in to your Binance app and select [Add Funds] from the homepage.
Choose your local fiat currency you wish to use by selecting the currency in the top-right column.
Follow the instructions to complete your crypto purchase.
Distributed by APO Group on behalf of Binance.

About Binance:
Binance is the world’s leading blockchain ecosystem and cryptocurrency infrastructure provider with a financial product suite that includes the largest digital asset exchange by volume. Trusted by millions worldwide, the Binance platform is dedicated to increasing the freedom of money for users and features an unmatched portfolio of crypto products and offerings, including trading and finance, education, data and research, social good, investment and incubation, decentralisation and infrastructure solutions, and more. For more information, visit: https://www.Binance.com

Risk Warning: Digital asset prices are subject to high market risk and price volatility. The value of your investment may go down or up, and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. Past performance is not a reliable predictor of future performance. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser before investing. This material should not be construed as financial advice. For more information, see our Terms of Use and Risk Warning.

BANKING

Financial Analysis: A Comprehensive Study of The Well-Being of A Country

Published

1 year ago

softchris4ol

Financial Analysis: A Comprehensive Study of The Well-Being of A Country

Understanding the financial stability of a country requires a thorough understanding of financial analysis. In order to offer insights into the overall financial stability and overall wellness of the country, it entails evaluating a range of economic indicators, financial performance, and market movements.

In this article, we will delve into the fundamentals and importance of financial analysis in evaluating a country’s economic situation.

Financial Analysis: A Comprehensive Study of The Well-Being of A Country

THE HISTORY ABOUT FINANCIAL ANALYSIS

Ancient Beginnings:

The roots of financial analysis can be traced back thousands of years. The ancient Mesopotamians, Egyptians, and Greeks were among the pioneers of documenting financial transactions, creating basic records of assets and liabilities. These early attempts laid the groundwork for the concept of financial analysis through the study of financial statements and ledgers.

Medieval Europe:

During the Middle Ages, Europe witnessed the rise of merchant guilds and the emergence of double-entry bookkeeping. Italian mathematician and Franciscan friar, Luca Pacioli, is often credited with formalizing double-entry bookkeeping, publishing his seminal work “Summa de arithmetica, geometria, proportioni et proportionalita” in 1494. The concept of balancing debits and credits within financial records formed the basis for modern financial analysis techniques.

Industrial Revolution:

The Industrial Revolution in the 18th and 19th centuries revolutionized business and the need for financial analysis grew rapidly. As companies expanded and diversified, investors began demanding more comprehensive financial reports to assess the potential risks and returns of their investments. The birth of limited liability companies further accelerated the need for financial analysis, as shareholders sought transparency in the performance of their investments.

Modern Era:

The 20th century witnessed significant advancements in financial analysis techniques. The advent of electronic computing in the mid-1900s enabled the processing and analysis of vast amounts of financial data, leading to the development of sophisticated financial models and ratios.

The Great Depression of the 1930s laid the groundwork for modern financial analysis as regulators sought effective ways to prevent future economic crises. The establishment of the U.S. Securities and Exchange Commission (SEC) in 1934 brought about standardized reporting requirements, including the filing of audited financial statements. This increased transparency and standardized financial reporting provided analysts with a more accurate and consistent basis for their analysis.

The Rise of Quantitative Analysis:

In the latter half of the 20th century, the growth of computing power and the availability of large data sets propelled financial analysis into new territory. Quantitative analysis, utilizing statistical models and mathematical algorithms, started gaining prominence. Financial analysts began incorporating complex mathematical methods to assess investment opportunities, risk management, and portfolio optimization.

Modern Financial Tools:

With the advent of the internet and the digital age, financial analysis has become even more accessible and data-driven. Sophisticated software programs, data analytics tools, and artificial intelligence have revolutionized the way financial data is analyzed and interpreted. In recent years, technologies like machine learning have been leveraged to develop predictive models that can assess future trends and make accurate financial forecasts.

MEANING

Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary investment.

Financial analysis is a fundamental tool that allows organizations and individuals to assess the past, present, and future financial health of a business or investment. Through a systematic examination and interpretation of financial statements, ratios, and other key indicators, financial analysis helps in making informed decisions, optimizing resources, and improving overall financial performance. In this article, we will delve into the meaning of financial analysis, its prominent components, and its significance across various sectors.

Financial analysis involves scrutinizing financial data to evaluate the performance and profitability of an entity. It assists in quantifying the effectiveness of financial decisions, identifying trends, predicting future outcomes, and benchmarking against industry standards. By analyzing financial statements, investors, analysts, and other stakeholders gain valuable insights into the financial position, liquidity, solvency, and operational efficiency of an organization.

FUNDAMENTALS OF FINANCIAL ANALYSIS IN A COUNTRY

Gross Domestic Product (GDP): GDP is a primary indicator used to gauge the economic performance of a nation. Financial analysts analyze GDP growth rates and its components, such as consumer spending, government expenditure, investments, and net exports. This analysis helps in determining the overall strength of the economy and identifying areas of potential growth.
Trade and Balance of Payments: Trade analysis focuses on a country’s imports, exports, and balance of payments. Evaluating trade patterns helps identify sectors driving the country’s economic growth, trade imbalances, and potential risks to the economy from external factors such as changes in global demand or disruptions in supply chains.
Inflation and Interest Rates: Analyzing inflation rates and interest rates provides insights into the stability of a country’s economy. High inflation erodes purchasing power, while high-interest rates can impact borrowing costs, affect consumer spending, and investment behavior. Financial analysts assess the impact of inflation and interest rates on an economy’s overall competitiveness and economic growth potential.
Government Debt and Fiscal Policy: Analyzing a country’s government debt levels and fiscal policy is crucial in understanding its financial sustainability. A high level of government debt may lead to increased borrowing costs, reduced investor confidence, and potential risks to economic stability. Evaluating fiscal policies helps determine whether a country is managing its finances effectively and implementing sustainable economic growth strategies.
Stock Market Performance: The stock market reflects investor sentiment and provides valuable insights into a country’s economic outlook. Analysts evaluate key stock market indices, such as the country’s primary exchange, sector-specific indices, and market capitalization trends. Monitoring stock market performance allows for an understanding of investor confidence, economic growth expectations, and potential risks to the financial system.
Banking Sector and Financial Institutions: A robust banking sector is essential for economic stability. Financial analysts assess the health of the banking system by evaluating indicators such as non-performing loans, capital adequacy ratios, and the overall stability and soundness of financial institutions. Understanding the well-being of financial institutions helps gauge the potential risks to the overall economy, including credit availability, liquidity, and financial contagion.
Regulatory Environment and Governance: The regulatory environment and governance play a critical role in attracting investment and fostering economic growth. Financial analysts assess the effectiveness of regulatory frameworks, transparency in financial transactions, and the overall credibility and efficiency of institutions responsible for enforcing regulations. Evaluating the regulatory environment aids in understanding potential risks and opportunities for sustainable economic development.

SIGNIFICANCE OF FINANCIAL ANALYSIS IN A COUNTRY

Financial analysis plays a vital role across various sectors, serving the following purposes:

Evaluating Financial Performance: By conducting a comprehensive financial analysis, companies can assess their performance, profitability, and financial stability. This, in turn, helps in identifying areas for improvement, developing strategic plans, and making sound financial decisions.
Assessing Investment Viability: Investors rely on financial analysis to evaluate the profitability and risks associated with potential investments. Through detailed scrutiny of financial data, investors can determine the financial health and growth prospects of a company, aiding in making informed investment decisions.
Facilitating Lending Decisions: Financial institutions utilize financial analysis to assess the creditworthiness of loan applicants. By analyzing financial statements, evaluating ratios, and assessing the risk profile, lenders can ascertain the borrower’s ability to repay loans and make sound lending decisions.
Supporting Strategic Decision-Making: Financial analysis aids in strategic decision-making, such as expansion, diversification, or mergers and acquisitions. Understanding a company’s financial position and performance provides a foundation for evaluating the feasibility and potential outcomes of such decisions.

CONCLUSION

Conducting a comprehensive financial analysis provides valuable insights into the economic landscape of a country. By evaluating indicators such as GDP, trade patterns, inflation rates, government debt, stock market performance, banking sector health, and regulatory environment, financial analysts can gauge the overall financial health, identify potential risks, and recommend strategies for sustainable economic growth. Accurate and timely financial analysis acts as a compass, guiding policymakers, investors, and businesses to make informed decisions and contribute to the overall prosperity of the nation.