Recordent Hosts Discussion on the Importance of Technology in Managing Credit for MSMEs

Mumbai, India – Recordent Pvt Ltd, a Hyderabad-based Fintech startup and India’s first credit bureau for businesses, hosted a discussion on the importance of data and technology in credit management with guest speakers Sanjay Shah, President, Bombay Industries Association (BIA), and Satish Shetty, President, Taloja Industries Association (TIA). The discussion aimed to shed light on India’s current situation of ongoing credit collapse and the importance of finding a solution to bridge the cash flow gaps that MSMEs in general face in the country.

MSMEs are the most important component of India’s economy because they contribute significantly to the country’s GDP and provide a large number of job opportunities. However, the MSME sector faces huge cash flow gaps and frequently has a long list of default payments that drag down their performance, leaving them at a loss or even shutting down. According to one report, over 7 lakh MSMEs close down every 18 months due to a lack of cash flow. The COVID-19 pandemic has exacerbated MSMEs’ problems by disrupting cash flow and resulting in massive business losses.

A large portion of MSMEs operate on credit and have little to no knowledge of their buyers’ credit histories. The cash flow gap caused by a long cash flow cycle leads many businesses to opt for loans with high-interest rates, further disrupting their growth. As India prepares to become a US$5 trillion economy, MSMEs will play a significant role in assisting the country in reaching that goal, making it critical to provide valuable solutions to keep the MSMEs sector thriving.

Using historical payment data, the company’s technology-driven credit management platform incentivizes customers to make timely payments. It functions similarly to a credit bureau for MSMEs, as Cibil does for lenders. Businesses in the B2B sector could sign up for a yearly membership on Recordent and report all of their B2B transactions on the platform. Credit reports, advanced collection services, trade credit insurance, and invoice reconciliation services are available to members based on their needs. Currently, there are over 15,000 businesses on the platform, with over 2500 crore in dues submitted.

Delighted to be associated with Recordent and looking forward to continuing the collaboration in the coming years, Shah added, “We have 1500 MSME members with us, and MSMEs are good at marketing, sales, production, manufacturing, but collections are a pain for almost all of them. Recordent has been able to solve the problems for our members. Recordent’s approach is scientific, technology is used, and it solves a huge problem for MSMEs. Their revenue model and concept are unique. I have been using Recorden’t services for my industry, and we have definitely seen success in payments that were due for over 15 months. One or two notifications from Recordent, and we were able to recover some stuck payments.”

Recalling initial meetings with the company and recognizing that the MSME sector, too, must embrace digitization to thrive, Shetty stated, “With Recordent’s credit report features, one can easily check a buyer’s complete payment history before offering a line of credit. It is key for MSMEs to check their buyer's credit history to make better financial decisions and contribute to business growth. Even today, banks do not finance a customer till his/her credit history is checked. Checking the payment history of a customer is very important, even for MSMEs, as timely payments will greatly benefit the sector's growth. Over 1622 carved Industrial plots functioning in Taloja MIDC have benefited from Recordent, and we will continue to engage with the platform.”

Against this backdrop, Winny Patro, CEO & Co-Founder, Recordent, shared, “Associations play a key role in the growth of MSMEs as they work for their business well-being. We are glad to have received an opportunity from leading associations like that of Bombay Industries Association and Taloja Industries Association to let Recordent have an opportunity to perform and help some businesses recover their payments and maintain a healthy balance for business growth.”

Image Source: Recordent Pvt Ltd

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