The 2019-’20 budget has shaken people by introducing its new payment platform for India’s small and medium enterprises. Enterprises whose investments fall in the budget of Rs 10 crore in manufacturing or Rs 5 crore in the service units will have to abide by this new rule.
According to survey data, it has been concluded that MSMEs have and will be suffering in the near future. The payments pending with the MSMEs rose from 8.61% in 2010-11 to 9.5% in 2015-16. It is emerging to be the second most severe issue faced by the MSMEs, first is the fall in demand. These institutes are ridden with a lot of problems resulting in the financial crisis.
What is the primary source of cash flow? The answer is the government that has to make payments to the suppliers and contractors, being the only significant source of cash for the MSMEs. These delays cause a delay in appropriate investment decisions.
All the 36 states, as well as the union territories, have constituted the Micro and the Small Enterprises Facilitation Council for resolving the disputes getting intense with delayed payments.
A sign of relief
MSME ministry has launched a delayed payment portal named as MSME Samadhaan. This is a step to empower micro or small enterprises, allowing them to register delayed payments by the government organisations directly.
27,693 applications related to the due payments have been filed thus far. The net worth of the due is approximately Rs 7,212.23. Some applications have been accepted while some have been declined.
Schemes to resolve the issues
PMEGP (Prime Minister’s Employment Generation Programme) is a well-publicised scheme which is to promote its growth. It is basically to address the delayed payment issue. Remedies for the injury are available it’s just that the right people need to discover the right path, which leads towards resolving their issue. There is a need for a campaign which spreads awareness about this scheme existing for the people in desperate need of it. It will be the best possible solution if it works best, and the registration is speedy and simple for the people.
Pick a debt-reduction strategy
The best hack to pay down business debt will depend on how much you owe. It also depends upon your current cash flow and, in many ways, your willpower.
Two common debt reduction strategies include:
The spartan strategy. The trick is to create an essentials-only spending plan and outline what you won’t spend money on until your debt is paid off. Hard to stick to if you’re more of a “spender” than a “saver”. The percentage strategy. Dedicate X per cent of your profit to paying off extra debt.
These strategies can be used for paying down all types of small business debt, but they’ll only be effective if you have your small business finances dialled in as that is the situation where the budget comes in handy.
Set a “get out of debt” timeline
With your budget and debt reduction strategy in place, you should be able to calculate when you’ll have paid off all of your debts (provided you stick to the plan, of course). Plotting the end date, plus a few other “debt repayment goals” in your calendar, will keep you motivated and help you measure how well you’re doing with your loan repayments.
