Manage Loans and Credits in Business with These Tips
Article / 12 July 2018
How do you manage money is different when you do it for business or for your own. In business, you're not only doing it for yourself, but also for everyone else. It's more about taking notes of every transaction since you also have to see if you're getting profit or not and if you're running out of money or not. Money management is a must thing to do in business.
Many companies can do the good selling and made a good profit but they can't protect their business from going bankrupt. One of the reasons is because they can't manage their money well, especially about loans and credit. Of course, you don't want this to happen to your company, right? To prevent doing such thing, here are some tips on loan and credit management.
How to Manage Loan
Not only looking at your cash flow, as a business owner you also have to look at your loan too. Managing loan is a crucial thing to do, especially for businesses that start because of a loan from the bank or other people. Even though it has a long due tenor, but you still have to manage it well. If loan can't be managed, you'll face your doom in the future.
Managing loan in businesses includes some steps, such as:
a. Loan Plan
To expand your business by taking a loan is a normal thing to do, especially when you're a home-based business owner with minimal fresh money. But you still have to think twice before making a loan so you won't get stuck in the loop. You have to be able to manage loans before sending your loan proposal to the bank. This will help the bank to determine whether you can pay for the loan later or not.
After you understand your business financial position, you also have to prioritize some things that should be paid with the loan. Make a precise and detailed calculation, think about the risk and return that your business could get. With the good plan, you will be able to convince the lender easier than before
b. Must be Made For Now and the Future
You have to make sure that the loan you take is the last resort for your business. In fact, if you can, don't take a loan at all, but if you have to, then you have to consider it as last resort, not the first option. Your loan must be based on your needs for now and the future, not about what you want. You must refrain to take the loan to buy things that you don't actually need. Don't forget to discuss with the financial manager on your company to do this.
c. Understand Your Paying Capability
There are two loans in business that you can do, short-term loan and long-term loan. You must never take the short-term loan when you need the long-term loan and vice versa. this can make financial disrupt in your company if you don't have enough money to pay the loan. You have to understand your paying capability, besides there are many places that allow you to choose how much you can pay each month.
d. Do Loan Simulation in SME D-Financial App to Know How Much Loan/Credits that You Can Take
Using technology, now you can do loan simulation to know how much loan or credits that you can take. PT Bank Danamon Indonesia Tbk, for example, as one of the conventional bank that gives credits to a small-medium enterprise (SME). They have this Danamon Financial (D-Financial) app that you can use to do loan simulation. Before you take your loan, it's advised to do this.
Not only giving a loan simulation, SME D-Financial also can make a cash flow report for you if you use the App. So you don't have to worry much about managing your money.
Read More: 4 Successful Indonesian Business who Turn Something Ordinary to Extraordinary
How to Manage Your Credit
Credit is one of the current assets in your company balance sheet that could appear because of the transaction of a product or credit given to the debtor. In other words, credits are your demand to another party in form of money, product or other else that is sold with credits. But sometimes giving credits to a customer can be a bad thing. If you can't manage it well, you will be on a brink of bankrupt.
Knowing that credit in business is a business' treasure that's quite hard to control and liquid, managing loan has to be done in a good procedure. Such as:
a. Make Conditions and Promises That's Clear Enough Before Giving Credit to Customer
Of course, you want to give the best for the customer, like giving the credit facility. But you also have to think that you have many things to consider before giving the credits. You have business to run and workers to pay by the end of the month. So, you have to make a clear condition for you and your customer when you want to give them credit so you won't get any financial crisis.
At least, you have to know where do you need to take the money from your customer so they can save some money for you. You also need to print a letter with a stamp on it so if any of you broke this promise you can send it to the legal path.
b. Be Selective on Which Customer you Gave Credit to
Bank's not the only one that can be selective about giving credit to customers, but you also have to do it. Since this is about your business. Make sure you know their address, ID, and phone number, at least, before giving them credits. Since in the end, it's you that will feel the loss when they are not able to pay the credit.
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c. Make Reminder Schedule for Every Credit
You have to remember to remind every customer you give credit to about their payment, and it's a normal thing to do. Don't feel bad for it since it's them who do it in the first place. You have to make a reminder schedule for every credit given, or you can do it by the end of the month or every first day.
d. Do Billing as Schedule
You must not give extra time for the customer, especially when you already remind them ahead about the money that they need to pay. To make it more effective, you have to do the billing schedule. You don't have to feel bad for pressing the money for the customer since they're the one who takes the credit from you.
These are some effective way to manage loan and credit in business. Do you want to get more benefit in doing business? Use Danamon Cash Connect that can help you with your payment and risk management in doing business with many variations of Trade Product.