BlogMar 20. 2025
Tips to Overcome Working Capital Crunch for The Growth of MSMEs in India
The Classic MSME Struggle: More Orders, No Cash!
Imagine this: You run a small but thriving business, orders are flowing in, customers love your products, but there’s just one tiny problem—you don’t have enough cash to fulfill those orders! Sounds familiar? That’s the everyday struggle of MSMEs (Micro, Small, and Medium Enterprises) in India.
Despite contributing nearly 30% to India’s GDP, MSMEs often hit a working capital crunch that slows down their growth. But fear not! Here are some solid, real-world tips to keep that cash flowing like a Bollywood blockbuster on a Friday night.
Instead of waiting for clients to clear invoices after 60–90 days (or forever, in some cases), invoice discounting allows MSMEs to get upfront cash by selling unpaid invoices to investors or financial institutions. This means you get liquidity without taking a loan. Think of it as getting an advance salary for your hard work.
Your big clients love extending payment deadlines, don’t they? While it’s hard to say no to them, you can still negotiate better payment terms. Try:
- Offering small discounts for early payments
- Requesting part payments in advance
- Setting stricter late-payment penalties
If you’re stuck between paying suppliers and waiting for buyers to pay, supply chain finance (SCF) can help. Through SCF, banks or fintech firms step in and pay your suppliers upfront while giving you better repayment flexibility. Think of it as a friendly financial lifeline—no more juggling bills like a circus performer.
Traditional banks may give MSMEs the cold shoulder when it comes to quick loans, but digital lending platforms have changed the game. Platforms like BillMart offer fast, collateral-free financing options based on your business performance rather than a lengthy credit history.
Stocking up like a doomsday prepper? Bad idea. Excess inventory blocks your cash flow. Adopting lean inventory techniques or just-in-time (JIT) procurement ensures you only buy what’s necessary, freeing up funds for crucial business expenses.
The Indian government has rolled out tons of MSME-friendly schemes like:
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) – Collateral-free loans!
- Pradhan Mantri Mudra Yojana (PMMY) – Small-ticket loans at low interest.
- TReDS (Trade Receivables Discounting System) – A platform to get paid early for invoices.
Why waste money on manual tasks when you can automate? Investing in digital tools for accounting, invoicing, and payroll can reduce costs and improve cash flow. Time saved is money earned!
MSMEs don’t have to stay stuck in the cash crunch cycle. By leveraging smart financing solutions, negotiating better terms, and embracing technology, businesses can keep their growth momentum strong. Because at the end of the day, a business without working capital is like a chaiwala without chai—just not happening! ?
