Credit management plays a vital role in the success of SMEs: Winny Patro, Recordent India

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of the Indian economy, contributing significantly to employment generation, industrial production, and export growth. However, as MSMEs navigate the dynamic business landscape, they often grapple with various challenges, especially in managing their credit and payment processes.

This is where credit management systems play an extremely important role, as delayed payments can pose challenges and lead to cash flow issues, especially for smaller enterprises with limited financial resources.

Express Computer spoke with Winny Patro, CEO & Co-Founder of Recordent India, who shares with us the  key challenges of this sector and how technology can help in meeting the unique needs of the MSME sector in India

Some edited excerpts:

Can you give us a brief introduction about Recordent and how it is helping the MSME sector grow in India?
Recordent is India’s first credit & payment reporting fintech platform for non-banking transactions. The platform is helping businesses to improve cash flows, manage customer risk & collections through intelligent credit risk management features complementing with data analytics and business loans. Recordent’s data aggregation engine helps businesses make informed decisions before offering credit or a loan by providing credit reports on individuals and commercial entities. These reports provide information on customers’ payment behaviour towards loans and credit availed recently.

Why does a company need a credit management system and how can they benefit from it?
Cash flow management is essential for companies’ smooth functioning, especially SMEs & MSMEs that operate on credit terms. Delayed payments can lead to significant challenges; for instance, many SMEs extend credit to their distributors and buyers to push their products into the market. While this can help boost sales, they may face delayed payments, impacting their cash flow.

SMEs typically have limited financial resources and may need access to significant lines of credit, making it challenging to cover operational expenses when payments are delayed. Poor credit management practices, such as not properly evaluating the creditworthiness of customers or setting appropriate credit limits, can lead to increased risk and cash flow problems. Not to miss, SMEs are often more vulnerable to changes in market conditions and economic downturns, which can affect customer buying behaviour and payment patterns.

Credit management plays a vital role in addressing these challenges. It involves making informed decisions about extending credit to customers and determining appropriate credit limits. By implementing sound credit management practices, SMEs can better navigate cash flow challenges and reduce the risk of facing financial difficulties that could jeopardize their business. Maintaining a healthy cash flow ensures the company’s stability, growth, and ability to meet its operational obligations on time.

How is Recordent helping its client deliver not only relevant but the best business outcomes through adopting the company’s technological innovations and credit management?
When any company uses the Recordent platform to manage their credit and collections, the company will, first and foremost, save time and effort. This shall be coupled with improved collections and better cash flows and can lead to increased operational efficiency and financial stability. So, we have seen manufacturers who are using our platform continuously over time, have seen an improvement of 50% off their bad paying customers started paying on time. The platform’s data analytics empower businesses with valuable insights, allowing for smarter decision-making and a deeper understanding of their customer base. By leveraging Recordent data insights, businesses can position themselves for long-term success and growth.

What do you think are some of the most important fintech trends that MSMEs should be aware of? And how can MSMEs benefit from these trends?
Indeed, the FinTech space is witnessing fascinating trends that can significantly benefit SMEs this decade. The two notable trends are invoice discounting and the open credit enablement network, which hold significant potential for SMEs’ growth and financial management.

Under Invoice discounting, SMEs can avoid waiting for customers to make payments and have readily available funds to reinvest in their business operations, expand, or meet their financial obligations. While the open credit enablement network is aimed at making it easier for SMEs to access loans and credit quickly. SMEs can benefit from faster and more efficient access to capital, enabling them to seize opportunities, fund growth initiatives, or address temporary cash flow challenges without delay.

As these trends continue to gain momentum over the next 5 to 6 years, we can expect a significant transformation in the financial landscape for SMEs. The adoption of innovative financial solutions through FinTech platforms will play a crucial role in empowering SMEs and driving their growth and success in the evolving business landscape.

Recently Recordent launched a special platform for the MSMEs called the MSME Knowledge Centre. What was the idea behind launching this platform? What was the idea behind launching this platform?
Recordent Knowledge Centre was launched to provide comprehensive information related to MSMEs. It addresses a significant pain point for small and medium enterprises, as navigating the various government schemes, benefits, and subsidies can be challenging. By centralizing all this information in one place, we are simplifying the process for MSMEs to access and stay updated on the latest developments in the MSME space across the country. This will undoubtedly contribute to increased awareness and utilization of the available opportunities and resources.

The inclusion of various tools for MSMEs to enhance their business processes is also a valuable addition. By compiling these tools and facilitating easy access, we empower MSMEs to improve their operations, efficiency, and competitiveness. The blog section helps effectively utilize the various tools and resources. By offering a one-stop hub for information and knowledge, we are creating a powerful resource for MSMEs to thrive and grow in today’s dynamic business landscape.

The Recordent Knowledge Centre has the potential to be a game-changer, supporting the success and sustainability of MSMEs across the country. As it evolves and continues to publish valuable content, it will undoubtedly become a go-to platform for SMEs seeking guidance and support to propel their businesses forward.