Changing the Filipino mindset on financing
Credit to Author: The Manila Times| Date: Fri, 22 Mar 2019 16:25:12 +0000
I remember once being told being financially indebted is like having one foot buried. It will not do me anything good. It served me this presumption that debts should be avoided at all cost. That I should save up for something I intent to buy. This is how a Filipino archetypal consumer got used to while growing up. But will this apply in an entrepreneurial setting?
After studying how businesses work and operate, I realized debts are not inherently evil at all. In fact, it forms part of the business’ financial structure together with capital. Entrepreneurs should learn to accept having liabilities is essential for the business to thrive. That the preconceived notions about utang should not hinder the business goal – financial success and growth.
To state a few, the benefits debt provide in businesses are: 1) It augments capital for investment or long-term debt. To provide an illustration, a company contemplating on acquiring equipment and machinery for operations or even planning to expand its store to penetrate a much bigger market or a production plant necessary to improve the product and services; 2) It serves as source of temporary working capital or short-term debt. This accommodates the immediate needs of the business in its daily activities. For example, a trusted buyer’s demand for products dramatically increased but the business is operating on a tight budget. A need for financing arises that will not only benefit the operations but also strengthen buyer-seller partnerships. After all, maintaining trust with customers is one of the ingredients of company triumph.
First Circle provides fast and simple business funding for Small and Medium Enterprises (SMEs) having difficulty in bridging their working capital requirements. It offers purchase order financing, enabling businesses to take on larger demands with customers, and invoice financing that helps get the funds needed while waiting for clients to pay pending invoices. In addition, applying for a loan with First Circle only takes a few business days to get approved.
Demystifying the notion of horror in taking debts is not taking the loan itself but the part of paying off. A responsible business owner (or even consumer) should always know when payments are due and must learn to negotiate when problems arise in making payments. Obtaining a loan after all is unlike free lunch. A business concept one must put into consideration is that the benefits it provides must outweigh the costs it entails. Only then we will know when it is smart to consider the idea of financing.
Karlo Garcia is a graduate of the University of Santo Tomas with a degree in Bachelor of Science in Accountancy. He is a Certified Public Accountant (CPA) with work experience from a top accounting firm in the Philippines where he specialized in Corporate Taxation. He is currently a Risk Operations Analyst at First Circle, supporting the growth of SMEs in the Philippines. He can be reached through his email at karlo.garcia@firstcircle.com.
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