Best Small Business Practices to Adopt in a New Financial Year

A small business owner is always striving to give his/her business the right environment to thrive. Here, the environment implies having a good workplace, hiring efficient employees, getting the right equipment, developing fruitful relationships and most important of all, gaining access to proper financing and working capital. The last point is most important because every business needs money to operate and without a proper inflow and outflow of cash, any business will eventually suffer. Incidentally, inadequate access to working capital is the reason behind failure of most small business enterprises in the country and the world today.

In this post, we are sharing some tips that will help you enact financial discipline for your SME. To tip you off, these pointers explain the advantages of good accounting practices that keep your finances streamlined and readily available for use.

1.Practice Strict Bookkeeping: The cardinal rule for running a successful business is to keep accurate records of all the transactions happening on a day-to-day basis. Financial records give you an accurate picture of your income and expenditure, debts, and, accounts receivables. Which in turn help you in tracking income, paying liabilities, and filing tax returns on time.

2. Deploy Integrated Accounting Systems: The reach of technology is extending every day and a small business owner will do well to embrace a modern accounting system to integrate his/her small business with the digital economy. Accounting software are in use by most large scale businesses toady and their benefits are time tested. As a small business owner you can also utilise these systems to save accounting costs, improve financial accuracy, and reduce the chances of theft and fraud.

3. Track your Invoices: Getting paid for the work you have done is all that matters at the end of each day as a small business owner. If you are not getting paid on time, your employees are not getting paid on time, your equipment is not being serviced on time, your rental and utility bills are not paid on time and so on and so forth. Therefore, it is important to have an active invoice tracking system in place. Moreover, generate your invoices as soon as your product or service is delivered instead of waiting till the end of month, this will speed up your invoice clearances significantly and give your working capital a boost.

4. Follow Generally Accepted Accounting Principles: GAAP are accounting techniques that are pursued by leading accounting and auditing firms and are accepted as a standard procedure in the financial world. By following these principles on reporting and disclosure of financial statements you will not only be able to draw quicker financial decisions but will also instil confidence in a lender or investor for raising funds.

5. Use Small Ticket Finance for Working Capital: As enumerated at the beginning of this post, having enough money to run daily business is one of the primary concerns of a small business owner. It is quite possible that your business will run into temporary working capital difficulties at the beginning. In such scenarios, never dip your hands into the capital earmarked for equipment or assets to use as working capital. This a vicious cycle which may never end and cause your business to lose precious competitive edge as you fail to invest in proper assets because you used up that capital as working capital. Instead, apply for a working capital loan to finance your short term needs. There are many fintech firms like Lendingkart who offer working capital loans at low-interest rates in India. These business loans are short-term, typically one year in duration, and have flexible EMI options to make repayment easier.

In conclusion, financial discipline is necessary if you want your small business to be profitable. The online world offers a lot of tools that you can utilise to bring in transparency and accountability for your small business. Furthermore, online financing options have made it way easier to get working capital loans for small business and you should utilise these opportunities pro-actively for sustained success in your venture.

To know how to apply for a small business loan from Lendingkart, click here.

5 Tax Saving Tips for Small Business Owners in India

For running your own business in India you require a string of statutory compliances and remember to pay the attached fees and taxes. Even after the implementation of GST last year, the Indian taxation system remains complex as ever and your business ends up paying a significant amount in taxes to the government.

Today, we are sharing 5 tax saving tips for Indian business owners, including best practices to help you earn more from your business venture.

Claiming  benefits on a housing loan

If you have an active home loan, you can claim its interest to be a deduction from house property and claim the principal as deduction under Section 80C (limited to a maximum of Rs. 150,000).  This will effectively reduce your overall taxable income by reducing your ‘income from house property’ in ITR.

Electronic payment of municipal taxes

You can also claim the taxes paid to your municipal corporation or municipality as deductions under income from house property. You simply need to keep a record of the payments and copy of receipts. Electronic payment of municipal taxes ensures that your bank account have the necessary proof in case you damage or lose the receipts.

Switch to smart and efficient accounting

Since most small businesses in India are labour intensive enterprises, they are used to pay wages in cash. Sometimes, as much as 40% of a small business’s manufacturing expenses may be going into direct and indirect wages. If your business fails to keep track of these expenses, then your profit margins increase because of unrecorded entries in your expenses account and you are liable to pay more taxes. So if you have been neglecting bookkeeping for a while now, it is time to take a closer look at the state of affairs in your accounts department. You can also take help of a free accounting software to make matters easier.

Claiming Additional Depreciation

The Income Tax Act allows a claim of additional 20% depreciation on new machinery installed during the year. The provision meant for the benefit of certain notified industries under the Section 35AD and it is only applicable for the first year of a new machine or equipment’s operation. By claiming the additional depreciation @20% you can claim save that amount as expenses incurred.

Deducting TDS

There are certain transactions which require you to deduct the tax at source, such as payments made as commission to your business agent or a freelance employee. If you fail to deduct the TDS the whole amount becomes inadmissible for claiming tax rebates. So make sure that you keep track of all such transactions and deduct tax @10% for them.

So these are some tips / best business practices which will allow you to save more by reducing your tax burden. In case you have been a little less prudent with accounts management in the past, it is never too late to adopt these practices. In the meanwhile, you can also apply for short term business loans to get out of current financial troubles and start your business’s recovery. To know more about fast business loans, click here.

How an Unsecured Business Loan is the Safest Bet for Growing Your Business?

When you are planning to raise short-term finance, an unsecured loan can be the best way to do so. The safety offered by an unsecured small business loan is one of its primary selling points. You are not required to put up equipment or property as collateral when applying for an unsecured loan. Notwithstanding the fact that most small businesses lack adequate collateral assets, the elimination of this requirement makes these small business loans more accessible for MSMEs.

Moreover, the entry of NBFCs has further democratised the Indian small business loan market. New age lenders use the power of internet, cloud computing, big data and AI to process loan applications faster and with higher disbursement ratios than their banking counterparts. For example, applying for a business loan online with Lendingkart can get you the money in as less as 72 hours while a bank takes at least 7 days to process the same application.

Here is how a small business loan helps in your company’s growth.

Ensures operational successes

Every business relies on operational stability to earn profits. A small business loan allows you to purchase raw materials, finished goods, or other items that you need to keep in ready stock. Furthermore, you can also utilise the loan funds to pay wages and salaries, and clear immediate bills and expenses.

A small business loan also helps you in working capital management when your bills receivables get delayed or there are unexpected operational costs to be taken care of.

Safeguards your bottom-line

By offering quick and easy liquidity, small business loans give businesses a way out from the vicious debt traps practiced by unorganised moneylenders. Now you can safeguard your bottom-line more easily with MSME loan funds without having to worry about long-drawn loan approval processes from banks.

Dynamic ticket size

An unsecured business loan is not given against a collateral, therefore its value is not tied to the value of a fixed asset. You can get an unsecured loan starting from Rs. 1 lakh and go all the way up to Rs. 1 Crore to fit your business requirements.

Flexible Repayment

Small business loans from FinTech lenders comes with another plus i.e. the option to pay EMIs on fortnightly or monthly basis as per the loan agreements. So, not only can you get the loan funds quickly but you can also repay them faster to get another loan approved. For example, Lendingkart approves and disburses the paid-up loan amount without further processing charges or additional document requirements.

Multi-purpose usage

An unsecured business loan is a short-term business loan, thus, lenders do not impose any restrictions on its usage. You can use the loan funds for any number of business activities which makes them excellent for boosting your working capital, business investment and marketing activities.

Now, after reading the benefits, the question you must be asking is that;

What if you default on an unsecured business loan?

Well, defaulting on the loan can ruin your credit score for starters. And, you might not get loan future loan approvals due to the bad credit history. Which in turn will make the loan repayment even more difficult. The lender may also file a lawsuit if all negotiations for repayment fail.

However, in most cases the lenders will consider a revised repayment plan if you let them know of your financial difficulties in advance.

Wondering where to apply for a business loan online? Click here to visit us at Lendingkart and start your first online business loan application.

Why Online Lenders are a Better Choice

Online Lenders – The Better Choice

Small businesses are increasingly moving towards online business loans and finance options for expanding their operations. Online lenders offer several benefits over financing from commercial banks, such as Flexi EMIs and quick short-ticket finance. This has made these non-banking financial institutions the choice of modern MSMEs.

For example, today, non-banking financial companies like Lendingkart Finance are disbursing working capital loans and unsecured business loans across the country whereas banks are limiting their commercial lending activities.

Here are the reasons why you should apply for a business loan from an NBFC –

Quick Turnaround Time

The one element that defines importance of finance is its timely availability. If you fail to get the requisite funds within the time frame available to you, either the opportunity will be lost or the same activity will cost you more.

Since a majority of small business owners are applying with them, banks take their own time in scrutinizing business loan applications. Thus, the process of loan approvals is slow. NBFCs, on the other hand, specifically cater to the MSME finance. Therefore, they are prompt in completing documentation, verification and disbursals.

E.g., Lendingkart Finance promises loan amount disbursal within 72 hours of documentation.

Completely Online Process

The reason why an NBFC like Lendingkart can approve loans faster is the online only loan application process of the company.

Every modern business has access to digital copies of requisite loan verification documents such as PAN, Aadhar Card, Bank Statements and ITR Certifications. An online lender can thus quickly verify the statutory status of your enterprise and disburse loans where traditional banks continue to struggle with filing and manual paperwork.

Minimal Documentation Required

In an online process, the lender can verify your business and personal information through government’s online portals, hence there is no need for excessive paperwork and documents to be submitted. For example, Lendingkart offers business loans by verifying only the essential documents for identity, address, incorporation and tax compliance of your enterprise.

Flexible Payments and More

The completely online business loan process allows lenders to cut costs associated with manual work, and they are more than happy to pass you the benefits. So, expect lower business loan interest rates, flexible EMI options and reduced processing charges when you get a business loan from an online lender like Lendingkart Finance.

If you are planning a business expansion soon or want to streamline your daily operations with a working capital loan, visit our website; www.lendingkart.com, and sign up for a quick quote.

Demystifying MSME Loans / Small Business Loan

MSME Loans – Risky and Profitable Business Types

Micro, Small and Medium Enterprises are the largest employment providers in India. Their contribution to overall employment in the country is pegged at 69%. Also, the MSME sector is responsible for almost 45% of the manufacturing industry and drive 40% of our total exports. These are significant numbers, and therefore, the growth of MSMEs has been a priority of successive Indian governments.

However, for growth, the MSMEs need investment, and the readily available source of investment to them is a business loan. Banks and commercial institutions called non-banking finance companies (NBFCs) are the two main providers of business credit for MSMEs in India. An average Indian MSME needs to pass a number of financial litmus tests before it can get an unsecured business loan or a working capital loan.

Financial institutions give priority to businesses which are considered risk-free and profitable. While it can be argued that every business can be prone to risks, there are a few benchmarks which can assuage the lender’s apprehensions.

A Registered Entity

A registered business entity which complies with the laws of the land establishes a trust in your company on the lender’s part. On the other hand, when a business lacks the necessary statutory paperwork, a lender is right to be apprehensive.

Therefore, getting a business registration will not only get you faster loan approvals, but will also remove any doubts about the legitimacy of your enterprise.

Age of Business

The second factor that distinguishes between a risky and profitable business is its age. While a short-term business idea can also be profitable, the lenders usually require at least 6 months of performance reports before sanctioning a business loan or line of credit.

If you are seeking an MSME loan, then it is better to apply for a loan after completing 6 months or more of operations. Another reason to that is because financial institutions place limits on the period within which you can reapply for a loan. For instance, if you are 5 months into the business and your loan application gets rejected, a lender policy may dictate that you can only apply again after 3 months.

That is another reason why you should never apply for multiple loans from multiple lenders at a time.

Credit History and Profitability

The bank or NBFC that provides unsecured business loans will scrutinize your business account statements to assess the risk or profitability of your venture. If you are unable to maintain a consistent cash flow and retain enough cash at bank to meet your liabilities, the lender will put you in the risky category. In case you are making a good profit, the lender will readily offer loan terms.

Also, if you have a steady cash flow and cash at bank but are not repaying your existing loans on time, it will reflect in your business credit history. Such behavior will lower your credit score and increase the risk factor in a lender’s reckoning.

Type of Business

There are certain types of businesses which are considered risky from an investment point of view. For example, dealing in real-estate, jewelry, precious metals, arms and ammunition, crackers, and other perishable goods involve a high risk-to-return ratio and therefore, given lower preference by a lending firm or bank.

If your business falls into the high-risk category, make sure that you have a solid financial report card to get a business loan.

Getting an MSME Loan for your business

A non-banking financial company is more likely to offer better loan terms for a business because of its in-depth scrutiny and flexible policies towards MSMEs. Lendingkart, a leading NBFC lender in India, offers business loans with customized interest rates along with a flexible EMI schedule.

To know more, visit www.lendingkart.com

 

Credit History – How It Gets Better Loan Amounts

Importance of Credit History and Credit Scores

When you go for a business loan, the one thing that matters the most is your credit history or business credit score. Credit history is basically a statement of your loans and repayments in the past. Credit rating is assigned by rating agencies such as CIBIL and CRISIL.

Here are the benefits of having a good credit history.

Faster and Better Business Loans

A good credit score indicates that you have been paying your dues regularly and in a timely manner. This bolsters your business’s standing in the eye of the bank or the NBFC.

When the lenders see that your business is in the green of the credit scale, they will offer better loan terms. You will be able to secure a higher loan amount, a lower rate of interest and flexible repayment options with auto renewal terms.

Leasing Premium Office Space

The benefits of credit score are not limited to getting working capital loans or commercial loans only. We all know that a premium location can work wonders for your business operations. Landlords of premium properties also ask for credit reports these days to ensure your business’s ability to pay the (higher) rent.

Attracting Investors

Apart from business loans, investments are another source of financial help for budding entrepreneurs. A good credit score indicates healthy business practices and a good ROI. Thus, having a good credit history will build investor confidence in your business.

Therefore, it is quite important for a modern business to retain a healthy credit score. There are several things that can help you achieve that such as financial prudence, asset and liability management techniques and business loans.

How a business loan can help you maintain a good credit history?

Getting a loan and repaying it in a timely manner will build up your credit history. However, you must be very careful with the terms and conditions for your first business loan.

It might be that the interest rates for your first business loan are on a higher side but flexible repayment terms can offset that disadvantage. For example, Lendingkart Finance offers unsecured business loans up to 1 crore with options to repay in fortnightly or monthly instalments. If you want to pre-close your business loan after the first EMI, there are no pre-closure charges as well.

Such loan terms make it easier to repay your working capital loans and get a higher credit score for your business. To know more, visit us at www.lendingkart.com or download the Lendingkart smartphone app.

Business Loan Interest Rates – Factors and Features to Getting an Optimal Rate

How Business Loan Interest Rates Work

Ever wonder why business loan interest rates vary from lender to lender? There are several factors based on which every financial lender such as a bank or an NBFC determines the interest rate for any loan. The same holds true for a business loan as well. The more you satisfy these factors the lower your interest rate and accordingly, a higher interest rate is the result of such criteria not being satisfactorily met.

Here are the factors which are considered by banks and NBFCs for determining the interest rate for your business loan application.

Credit Score

The most talked about of all factors which determine your eligibility for a business loan and hence your interest rate, is credit score of your organisation. Some financial institutions also account for the credit score of the business owners to gauge their temperament for repaying loans. While having a healthy credit score helps in making the loan process smoother, you can get a business loan with an average credit score if you get the other variables right. The norm is to have a credit score more than 700 to be considered eligible and more than 750 to be favourable.

Age of Your Business

If your business is relatively young/new, lenders will consider your business loan as a high-risk entity, and charge you a higher rate of interest. Then again, having a long-running business does not guarantee a lower interest rates, as is covered in the following point.

Profitability of Your Business

Everyone likes a profitable business. That is especially true when it comes to lenders. If you are running an efficient organisation with large profit margins, lending institutions will most likely discount your business loan interest rates for it.

Volatility of Your Industry

Another important factor considered by lenders while calculating the interest rate for a business loan is the prevailing market conditions in a certain industry. If the market is excessively volatile, the interest rates go up, and if there is a projection of short or long-term stability, the interest rates are likewise relaxed.

Assets and Infrastructure

While unsecured business loans do not require a collateral, having a sound infrastructure and assets help if you are applying for loans in the range of six-digit figures.

Small Business Loan Interest Rates – Fixed vs. Variable

Based on the above factors, a lender will offer you an interest rate on the loan amount. The rate can be fixed or may fluctuate based on a market model that dictates variable interest rates. Although most people prefer a fixed interest over a variable interest rate, both have their advantages. If the market prospects are looking good, a borrower can save on interest payments by opting for a variable interest rate.

Lendingkart Business Loan Interest Rates

At Lendingkart, we understand the needs of our customers and therefore have devised a smart system based on analytics and machine learning. The system allows us to offer customized interest rates to our customer, thus ensuring that every loan application is sanctioned with the lowest possible interest rate. Thus, relieving MSME loan applicants from the dilemma of choosing between fixed and variable interest rates and giving them the best of both worlds.

If you are looking for an online business loan, visit our website to get a quick quote and apply for a business loan in a few simple steps.

How Do I Choose the Best Business Loan?

Small Business Loan – Importance of Choosing the Right One

When you are considering taking a business loan, there are a lot of things that you check out, both online and offline. One might check out online EMI calculators, ask friends about online business loans, visit the websites of online loan providers and do a comparison of business loan interest rates. This due diligence is an important part of the loan application process and helps you understand the limitations and opportunities offered by different commercial loans.

At Lendingkart, we believe that choosing the right business loan is very important for MSMEs as it helps them in drawing out the full benefits of a loan. Here, we are sharing the points to look for when applying for a business loan online.

Type of Business loan

Before we being, let us have a look at the two types of business loans that you can take from marketplace lenders and banks.

Secured Business Loans: These loans are given in lieu of collateral from the borrower. So, even if the business is unable to pay the loan amount back, a lender can recover the money by selling or auctioning the asset taken as collateral. The drawback for first-time business loan seekers and startups is that generally, they do not have an asset of value to get a loan. Moreover, even if a new business has an asset of value, taking a loan against it doubles the risk for them.

Unsecured Business Loans: These are business loans without security or collateral. Here, the risk is borne by the lender. However, unsecured business loans do have slightly higher interest rates than secured business loans but not overly so. Unsecured business loans are best suited for small business owners who do not want to risk their personal assets. Moreover, with a good credit rating and financial report, a business can get unsecured business loans at lower interest rates as well.

Review Your Business Loan Requirement

Another thing that you should note before applying for a business loan is the actual requirement of capital for your business. Here’s why –

  • If you apply for a business loan in excess of the actual requirements, it may lead to wastefulness. Also, the higher the amount the greater the EMI and interest repayment. So, while you will be able to fulfill the purpose of your business loan, you will also be generating unnecessary financial strain on your company by taking an excess business loan.
  • On the other hand, applying for a business loan below the actual requirement is also detrimental for your enterprise. One, your need for investment will not be met and you will have to apply for a second business loan or you will be borrowing money at higher interest rates from a private lender. Two, by not generating the cash in time you may lose a business opportunity for which you took the loan and the whole exercise will become a lost cause.

Fulfilling the Basic Criteria

It is very important to apply for business loans that your company can easily service. When you apply for a loan, a hard query is sent to the credit rating agencies. Too many hard queries can bring down your overall credit score. Therefore, applying for a business loan for which your company is completely eligible is quite important. It will not only ensure quick disbursals but will also help you build your credit rating further up.

Getting the EMI Calculations Right

Another important factor when taking a business loan is calculating the EMIs and planning your repayments accordingly. Sometimes you might end up taking a business loan which your business can easily repay and yet miss out on EMI payments. This happens when you do not calculate the EMIs correctly.

For example, you apply for a business loan of ₹10,00,000, which your business can easily repay in 12 months. However, you erroneously opt for an 8-month EMI schedule, which stretches your resources, wasting the benefits of the loan or even leading to missed EMI payments.

Selecting the Right Lending Partner

While banks are a common source of medium and small business loans for entrepreneurs in India, opting for a modern business financing institution might be a better idea for getting working capital finance. Non Banking Financial Companies offer several benefits such as low processing fees, short turnaround times, and easy business loan renewals.

At Lendingkart, we have simplified the loan application process by making it completely online. Lendingkart interest rates are customized based on business prospects of every individual applicant, thus making it easier to get a quick personalized business loan online.

Business Loan Processing Time

The processing time or business loan turnaround time is one of the most important factors to consider when taking a business loan. Banks often have a long process for approval and disbursal of funds. Moreover, banks are still stuck in the age-old methods of filings and paperwork which delays things even more. For example, upon approval of a business loan, the bank will issue a draft in your firm’s name which you will have to deposit in your business account and wait for the credit. So. if you are looking for an instant business loan, applying with a bank may not serve your purpose. Here, selecting a lending partner which can disburse funds electronically via bank transfers will save you both time and money. For example, Lendingkart Finance disburses business loans online within 3-Days of loan application and approval.

Flexibility in Repayments

A business loan offered with the option of a flexible payment schedule is a boon for MSME loan applicants. A commercial loan that lets you choose from a variety of repayment schedules gives you the freedom to focus on business development rather than on payment due dates.

Lendingkart Finance lets you choose a customized repayment schedule so that you can repay your business loan comfortably. If you are doing great in your business, you can even prepay the full loan amount without any pre-closure charges.

Concluding Thoughts

A business takes a loan to invest in its growth, therefore selecting the right business financing product remains critical to a business’s success. Today, there are a variety of online tools which help you assess the various loan products available online and make an informed decision regarding a new business loan. Also, by selecting the right financial partner, you can grow your business exponentially.

Visit our website www.lendingkart.com for a quick unsecured working capital loan quote.

5 Clever Small Business Financing Options in India

Small Business Financing Options in India

For a new small business in India, like everywhere else globally, finance is the key to success and sustenance. Efficient and consistent fundraising is not the easiest of jobs. Still it does not have to be the toughest either. Traditionally banks tend to be the first and most preferred source of raising capital. Though they do not necessarily have to be the only option.

For a business to get to the stage of revenue generation and a profit making stage, the initial solid push is critical. That push comes from money. It might be for a brand new business starting out or a small business looking to scale up.

Here a few ways in which that money can be raised smartly.

Alternative methods to raise finance for a small business in India –

With the digital economy taking flight with rocket boosters, one has to think beyond banks. There are a number of other reliable options that can be explored. Such as:

Angel Investors

While most business owners are familiar with angel investors, in simple terms, these are individuals with interest, initiative and investing power looking to vest in businesses. They keep a close watch on sectors that they think will work best for them and will be interested to fund businesses that meet their profitability criteria. Typically they operate as part of networks where they collectively scour through proposals and business plans to finally decide which ones they are going to support. Getting the nod of an angel investor(s) to fund a business is a big deal for most businesses. Depending upon their background and expertise, angel investors also tend to take a keen interest in the business and offer advice and suggestions for improving the revenue generation. Need to know the 8 most prominent angel investors in India? Read this article on Forbes online.

Crowdfunding

Crowdfunding is already a great fundraising option albeit a fairly competitive space. Given the popularity and ease of accessibility it’s fast turning out to be a preferred method for particularly startups. Crowdfunding literally means getting individuals to invest or give money for a business idea by putting it out there on a crowdfunding platform. Of course, the idea has to have potential and the investors need to see some ROI before they commit. Even so, this one is a fairly new age method and those who know how to play it properly can get good support for their business or business idea. This link lists the top 15 crowdfunding websites/services in India.

Lending Institutions

There are a number of independent lending institutions that can help raise finance for a small business in India. The requirements to secure a loan can be exhaustive for a small business at most banks. Unlike banks, these institutions are willing to take the risk to finance a small but solid business if basic eligibility criteria are met. This is a very effective source as there are high chances that the loan will come through. These institutions exist to cater to the newer and smaller entrepreneurs who have trouble taking their proposals to traditional sources. While they don’t come with as great a repute as banks, the financial help provided by them is great for most small businesses. Lendingkart is one of such institutions in India.

Bootstrapping

While mostly explored by startups, bootstrapping can be an effective way of securing finance for smaller existing businesses as well. A small business requires capital when wanting to scale up or expand. It can also be for acquisition of equipment, logistics or payroll management. Bootstrapping involves either investing one’s own funds into the business or getting some money from friends and family at low interest rates. It’s imperative to understand that this method works if the loan requirement is not too high. As the popular saying goes, one shouldn’t keep all their eggs in one basket.

Venture Capitalists

Funding from a venture capitalist is like finding a diamond in a coal mine. It’s hard to come by, but scores incredibly big points for a business owner. Most VCs prefer to support existing small businesses as opposed to startups. If they find proof of potential and scalability, they come on board not only with money but with expertise, mentorship and a lot of guidance. They tend to stay with the business till it’s either acquired by someone or till it goes public. The only possible downsides are that they exercise control and there is a lot of accountability towards the VCs.

Why Customer Engagement is Important? Part 3 – Returns and Refunds

As an entrepreneur in today’s times, it is important to understand the value of customer engagement and how it is linked directly to the success of your business. An interactive relationship with your customers helps boost positive brand loyalty and this goes a long way in boosting the overall credibility of your business.

The advent and consequently, the rise of social media has led to customers having almost direct access to businesses and brands that they purchase from. Leveraging this channel in the most optimal possible way should be an integral part of your business strategy and planning.

While there area number of ways to connect and engage with your customers, social media handles are the most popular and effective. The ease of access and your clientele knowing that they can reach out to you with any sort of comment, suggestion, complaint or idea gives them a feeling of being heard and helps reiterate how important they are to you.

Customer engagement through social media can be promoted in many ways:

By sharing useful content: Good content is a mix of information, releases, your own product promotions and interesting articles or blogs that generate interesting discussions about your industry. Customers get bored with pages that only highlight their products. Think of variety when posting to sustain interest.

Being answerable: This is very critical as a big part of customer engagement includes making sure you reply to any and every comment, rant, review or suggestion that has been posted on your handles. Don’t let this slip and this can really have a negative effect if not taken care of.

Regularity: Find the right balance when it comes to posting. Don’t spam but post regularly enough so that your customers do not forget about you. There is a thin line and it is important to have a dedicated resource looking after your social media platforms.

Customer engagement helps returns and refunds. Here’s how:

Most customers are looking for quick resolution when it comes to returns and refunds. Including this aspect in the customer engagement strategy is a must.

Make it easy- Whether it is online or through a customer call, make it easy for your customers to return products and apply for refunds. Positive customers engagement is fuelled by not just the sale but also the returns that needs o be taken care of very sensitively. In fact, this is one thing that can prove to be the Achilles heels of many a businesses.

Define the terms clearly: Customers need to know what the terms for refund and returns are and this needs to be very clear, transparent and out there through the entire sales process. Find ways to get the information to your clients in advance so that there are no rude surprises for them. This will count as a credible point when it comes to rating your customer engagement.

Staff: Nothing can be more critical to your customer engagement than your staff. And this means both online and offline or via phone. Your staff needs to be knowledgeable about your products and return policies and be able to handle your customers in the utmost polite manner. A bad experience with a staff member can damage the reputation of a business immensely and this is especially true during returns as customers are already on the back foot and anticipating problems. Alternatively, a positive experience here can lead to a very healthy and long customer association.

Evidently, customer engagement cannot be treated as a by the way, one the side kind of activity. It has to be a full blown, thought through process that involves methods that are effective, innovative and garner successful results. There is no running away from this. This concludes our series on Customer Engagement. If you haven’t read the previous articles, you can visit Why Customer Engagement Is Important? Part 1 – Rave Reviews and Rants and Why Customer Engagement Is Important? Part 1 – Revenue Impact. We’d love to know your thoughts in the comments.