Why is a digital finance alternative for your startup more convenient than a bank loan?

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Traditional loans offer fixed amounts with a fixed rate for a fixed term that is paid in fixed installments. This rigidity forces companies to borrow more than they need to, and therefore pay more interest than they owe.

June 21, 2021

4 min read

This article is translated from our Spanish edition using artificial intelligence technologies. Errors may exist due to this process.


The most recurring problem for company today, the main reason for bankruptcy is the lack of cash flows. In other words, when entrepreneurs run out of money to work, it is a common mistake to turn to SME loans from traditional banks.

Traditional loans offer fixed amounts with a fixed rate for a fixed term that is paid in fixed installments. This rigidity forces companies to borrow more than they need to, and therefore pay more interest than they owe.

That’s why Higo’s platform, which allows you to pay, collect and fund all of a company’s accounts in one place to maximize cash flow, recommends digital alternatives that keep them running, reduce the risk of bankruptcy, and don’t impose even more debt.

The main reason for using these financial alternatives is that they can ensure that your company always has liquidity. It’s worth mentioning that even the most profitable industries can have operational flow problems because you never know when a market might turn 360 degrees.

This is why entrepreneurs should look to funding alternatives that can help them pay their suppliers with one click when they don’t have the money to do so, with the ability to make the specified payment within 60 days. …

The above gives the company confidence when the capital flow stops flowing due to some external factor, and also prevents it from falling into debt and having to resort to regular credit, which can help it at the moment, but affect it in the long term.

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Another factor is a sudden and unplanned drop in sales. There are products and services that sell more during certain seasons of the year, depending on their industry and the needs they serve, so entrepreneurs should be aware that there is no one-size-fits-all formula for managing resources in their company. on the contrary, they must always remain flexible and adaptable to changes caused by the context.

Another problem that companies face is that it takes too long for customers to make a payment to the company. For this reason, companies need an alternative that increases the amount of invoices the company receives. This prevents them from being affected by a lack of liquidity while they are waiting to receive money from a client who is delaying the payment of their funds.

Thus, the entrepreneur has money and can subsequently pay the platform for an early payment.

“It is important for companies in the country to have a financing alternative that will help them avoid the fact that the lack of operational flow will lead to the closure of operations. Moreover, in Mexico, a country where the life expectancy of companies is from 7 to 9 years in the center of the country, and in some regions in the interior regions of the republic it is reduced to 5 years, according to data Inegi data, “says Rodolfo Corquera, CEO and co-founder of Higo.

Cash in and out is the oxygen of startups. Without cash flow, businesses are at high risk of negative impacts, even if they are profitable. Entrepreneurs need platforms to help them avoid red numbers and simplify processes quickly and easily with one click, instead of resorting to traditional methods that, in addition to providing them with credit, can be the start of a long journey of paying off debt and interest.

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