A highly underrated tool with tremendous potential for managing working capital usually lies dormant in the business owner's pockets – the Credit Card. The main reason for the hitherto untapped potential of this credit line has been the lack of a means to transact without a(Point of Sale terminal (POS) being offered by the Seller or Service Provider. This severely impacted the ability of the card holder to transfer money to bank accounts that were not linked to such POS systems.
Not anymore though !
BharatNxt platform allows the SMEs to transact with any other business party using the Credit Card to transfer money to any bank account. All one needs to do is download the app from the Play store and register. The user-friendly interface allows you to manage multiple cards within the app and also earn attractive cashbacks.
As of now, the majority of transactions on Credit Cards are personal in nature, but soon that is about to change. A number of banks are now actively pushing commercial Credit Cards as a key offering. It is advisable to use business or commercial Credit Cards for business expenses since higher limits are allocated to them based on the income and credit profile of the company. These cards can also be issued to the employees asking them to use it for the company's business expenses in place of cash. There is hardly any process required for taking a Credit Card, especially with a bank where one holds a salary/current account. Documentation is minimal and timelines for securing a Credit Card are quick.
Even banks prefer this as a product as it gives them end to end visibility over the transaction flow (incl. end use), as opposed to vanilla current or CC accounts. Given the fairly mature Credit Card platforms, reconciliation of transactions for both buyers and sellers becomes a lot easier. Commercial Credit Cards can also be issued in closed ecosystems, helping de-risk the credit profile of the borrower. This allows for rapid penetration and better pricing in companies where the bank already has a presence.
Usage and repayment of Credit Cards helps improve the credit score of the person and / or company. This can be helpful at a later stage while applying for large loans. With a Credit Card, the bank does not require any collateral as opposed to a business loan. Further, as the usage of the Credit Card improves, banks will proactively provide higher limits for utilization. In addition, usage of a platform like Bharatnxt that curates rewards specifically for SMEs and startups, ensures rewards such as discount vouchers from relevant partners which businesses can monetise.
Next time you have a buyer asking for credit extension, ask them to download the BharatNxt App and pay you using their Credit Card to obtain hassle free, on the spot credit. As a buyer yourself make use of your personal or commercial Credit Card to pay your sellers and get more credit extension over and above the free days offered by them.
Paying GST, utility bills, vendors and salaries has never been this seamless!