Technology Adoption Challenge for SMEs in India

SME’s- Their significant role in the Indian economy and the challenges they face.Small and medium-sized enterprises (SMEs) at a global level, all over the world, have become the backbone of struggling and developing economies. These are constantly in search of a solution for recession and unemployment. Governments are encouraging entrepreneurship at a great scale for providing multiple benefits, including job opportunity creation, increasing the productivity, increasing industrial output & exports, the development of entrepreneurship, developing rural economy, healthy competitiveness, gradually eradicating poverty and achieving various societal goals. One of the universal concerns is to facilitate the creation of such enterprises.In spite of playing the key role in the Indian economic development, Indian SME’s have to deal with major challenges such as inadequate credit facilities, unavailability of proper technology and skilled manpower. Meanwhile, facing competition from both, national as well international sectors of their respective industry or the organizations associated with them.India’s technology sector, inclusive of the large Indian Corporation, also small and medium organizations have aided companies worldwide. An evaluative look at technology adoption by SME’s would present that the manufacturing and service sectors are comparatively slow in technology adoption. They still depend heavily on the traditional non-technical systems for the purpose of sales, marketing, and finance and for maintaining interaction with customers.India’s ambitious growth targets and economic goals can be achieved by providing, proper support, training and for the SMEs. Technology adoption may be the single most important factor in this growth strategy.

Some major challenges faced by SME’s are discussed below:Limited Equity FlowMostly SME sector is formulated by individuals getting in their own expertise and manpower with limited capital.The workforce is comprised of mostly family and friends also the same for general support and capital source. Owners, financial institutions could only incorporate limited equity investments. There is a lot of pressure on revenues and profit margins for SME’s. All these further create extreme competition amongst them.The landscape of Indian businesses is rapidly changing. Not just for large enterprises but also for the SMEs. One of the biggest drivers is technology and communication for this long-lasting and rapidly developing change. If the adoption of technology by SMEs in India is evaluated, it is clearly evitable that they have multiple barriers that come in their way. The most significant hurdles to technology adoption in SMEs are as follows• Lack of awareness of beneficiaries• Unfamiliarity with technology• Lack of proper guidance• Lack of credible support from Governmental institutions• Very poor technology adoption.The technology is extremely important in every sector like selling an online marketplace, management of inventory, post-sales support, financial reporting etc.SMEs, somehow do not give technology adoption the attention that it deserves. SMEs are not enough convinced about the return on investment in technology and cost is the biggest obstacle.IT policiesSeveral rules and regulations are established by governments, that guide business. Organizations normally change the way they function when the government changes policies. Economic policy and market regulations by the government have an influence on the business profitability. Regulations established by federal, state and local governments must be compiled by the owners. As technologies are rapidly changing, it’s important for organizations to innovate.Technology challenges for SME can be dealt easily by IT consultants. They consult and integrate new technologies, particularly in mobile, for app development, and in cloud computing.Dependence on physical IT resourcesEnabling employees to work productively and ensuring the security of the IT network and data is one major challenge for SME’s. Systems should be actively working to aid employees to work effectively. Cloud computing and IT Managed Services have helped enterprises enormously. Some organizations also outsource IT services.Not staying up with changing technologyRapidly advancing technology demands these organizations to keep up with its pace. Purchasing latest smartphones, tablets, routers and other such utility devices for an entire team could be expensive. It is very expensive to subscribe to Software-as-a-Service applications that are very important for much functionality like accounting, customer relationship management, invoicing etc. Because of budget constraints, SMEs can’t upgrade technology frequently, hence technology budgeting is one of the biggest technology challenges for SME.Upgrading technology is very crucial as it helps businesses to be competitive and enable employees to work better and efficiently. Establishing a precise annual budget is essential to keep technology up to date.

Inappropriate backup systemsPower outage, server crash, files getting deleted accidentally, or any such data disaster can demolish important data in the system. SMEs don’t have massive budgets to spend on data backup, storage, and protection. They do not have a plan for backup and disaster recovery. The appropriate backup solution and disaster recovery steps can help to deal and overcome these events thus eliminating the expenses that come along with them. There are various data solutions available.Unclear device policiesThe security of Information technology systems is one such duty for which every employee is responsible. Policies should be implemented and precisely communicated to the employees.To make SMEs aware of all the resources available for technology adoption, it is important that the Government of India, private sectors and training institutions and other such stakeholders must work together to develop the SME’s an effective communication program.The government today is highly concerned for the growth of SMEs like never before. Subsidies and other cost benefits are being offered to SMEs. With increasing awareness about these benefits including reduced costs, our Indian economy will see more advanced technology adoption. A realization must be brought in amongst these organizations that technology is not just an option but a necessity.

Who’s Financing Inventory and Using Purchase Order Finance (P O Finance)? Your Competitors!

It’s time. We’re talking about purchase order finance in Canada, how P O finance works, and how financing inventory and contracts under those purchase orders really works in Canada. And yes, as we said, its time… to get creative with your financing challenges, and we’ll demonstrate how.

And as a starter, being second never really counts, so Canadian business needs to be aware that your competitors are utilizing creative financing and inventory options for the growth and sales and profits, so why shouldn’t your firm?

Canadian business owners and financial managers know that you can have all the new orders and contracts in the world, but if you can’t finance them properly then you’re generally fighting a losing battle to your competitors.

The reason purchase order financing is rising in popularity generally stems from the fact that traditional financing via Canadian banks for inventory and purchase orders is exceptionally, in our opinion, difficult to finance. Where the banks say no is where purchase order financing begins!

It’s important for us to clarify to clients that P O finance is a general concept that might in fact include the financing of the order or contract, the inventory that might be required to fulfill the contract, and the receivable that is generated out of that sale. So it’s clearly an all encompassing strategy.

The additional beauty of P O finance is simply that it gets creative, unlike many traditional types of financing that are routine and formulaic.

It’s all about sitting down with your P O financing partner and discussing how unique your particular needs are. Typically when we sit down with clients this type of financing revolves around the requirements of the supplier, as well as your firm’s customer, and how both of these requirements can be met with timelines and financial guidelines that make sense for all parties.

The key elements of a successful P O finance transaction are a solid non cancelable order, a qualified customer from a credit worth perspective, and specific identification around who pays who and when. It’s as simple as that.

So how does all this work, asks our clients.Lets keep it simple so we can clearly demonstrate the power of this type of financing. Your firm receives an order. The P O financing firm pays your supplier via a cash or letter of credit – with your firm then receiving the goods and fulfilling the order and contract. The P O finance firm takes title to the rights in the purchase order, the inventory they have purchased on your behalf, and the receivable that is generated out of the sale. It’s as simple as that. When you customer pays per the terms of your contract with them the transaction is closed and the purchase order finance firm is paid in full, less their financing charge which is typically in the 2.5-3% per month range in Canada.

In certain cases financing inventory can be arranged purely on a separate basis, but as we have noted, the total sale cycle often relies on the order, the inventory and the receivable being collateralized to make this financing work.

Speak to a credible, trusted and experienced Canadian business financing advisor as to how this type of financing can benefit your firm.