Digital Technologies key to the survival of SMEs in India amidst COVID-19

Despite contributing about 29% towards India’s GDP through its national and international trade, SMEs in India are fighting a battle to survive in such unprecedented times. The compulsory lockdown all over the country has hit this sector hard. The country’s supply chain management has also shifted upside down affecting day-to-day business operations.

Uninterrupted access to credit and adequate liquidity for businesses might help them survive and sustain during the pandemic. Also, it has become difficult to physically manage the day-to-day operations due to the risk of COVID-19 spread like raising paper invoices, keeping track of receivables and payables on pen paper, managing inventory by headcount, etc. Businesses can address these issues by embracing the technological advancements available in the market. There are many tech-driven digital solutions available in the market that can help business owners automate their business operations. Adopting digital technology can smoothen business operations and help businesses become self-reliant. 

Many SMEs in India have already started incorporating digital technology into their business operations. But there is still a considerable chunk of this sector left behind. Here’s how businesses can use digital technology in their business operations and how it will help their growth. 

Raising invoices and maintaining adequate stock-level

SME owners can raise invoices digitally and send them to retailers, vendors, and customers on their mobile phones. Unlike traditional methods where businesses maintained invoices and party-wise balances on pen paper, businesses can now automate invoicing in a matter of clicks. Many solutions offer stock/inventory management along with invoicing for SMEs. This feature helps businesses keep a close eye on their stock level and maintain an adequate inventory level whenever needed. 

Managing receivables and payables on-the-go

While digitalising invoicing and automating stock management, businesses must keep track of receivables and payables. If receivables (inflow) and payables (outflow) are recorded and accounted for accurately, it helps business owners to measure liquidity easily. Higher the liquidity, the easier the access to capital. 

Taking data-driven decisions based on reports and insights

Business owners can make data-driven decisions based on the insights and reports auto-created by digital solutions available in the market. These decisions help them determine their business plan strategically, like procurement decisions, increase liquidity, decrease account receivables, etc. 

Another benefit of these reports and insights is that it gives a clear picture of the business to bankers or financial institutions and gives them the confidence to give credit access to businesses. Working capital loans allow businesses to infuse immediate, short-term cash without pulling it from owners’ assets. When a business is no longer worried about covering its cash needs, it can focus on growing exponentially. 

To conclude, the adoption of digital technology will improve business efficiency to make operations effective and easier for business owners, leading to a ‘substantial change’ for the SME sector. 

The author of the article is Rahul Raj, Co-founder & CEO, FloBiz