Interesting idea- one reason banks don't look through business plans and financial statements for SMEs is because many don't have them, or else they are in widely different formats and standards that they can't be quickly reviewed and compared, and it costs too much to have a loan officer spend hours trying to read through them and try to make sense of it all. So if you are able to organize that info. in a standardized and systematic way, it would allow funders to quickly generate a set of metrics about the business finances for loan analysis.
But another bigger reason banks don't consider SMEs reported financials and business plans is its verifiability. How can you get around this problem? What if SMEs are overstating their revenues on your system to make themselves seem more profitable to potential funders? Or understate them to reduce tax liability? How can you verify that the info they have up on the system is accurate, without having to resort to the same high-cost verifications that banks do now (which are too expensive to scale up lending in this segment)? Low-cost verification of the info is the key challenge. If the economy weren't so cash-based you could maybe cross-check reported transactions with payments data in the banking/credit card systems. But in a cash-based economy its a tough nut to crack. Would be interested to hear your ideas...
Dear Bailey,
The SME Records Bank project will try and erase all these risk-factors that are associated with the SME Sector in relation to proper record management. Your points above are very much appreciated.
On the standardization of financial reports and business plans, the Cloud Platform will be rolling-out proven ERP Solutions such as SAP Business Suites towards a standardized reporting of financial statements as well as business performances among others.
On the accuracy of data provided by the SMEs, our data collectors (i.e. Cloud Employees) together with our team of certified Auditors and Management Accountants will be tasked to ensure information collected on SMEs attain the highest accuracy rate as possible. There will be other measures in place to prevent over/under stating of performances. To make life easier for our Cloud Employees as well as the SMEs themselves, we will institute standard formats to collecting data on SMEs' performances. We also plan to get the Banks in the Host Nations to join the Cloud Platform to facilitate online payments (EFT) for goods and services in a secured environment (i.e. the Cloud Platform) - as we gradually move away from CASH-based transactions.
Thanks very much for raising these points. It is our hope that we can, in our small ways, transform the SME sectors globally for speedy growth by employing new technologies and innovations. I will be glad to read again from you on the subject.
Regards,
Lonlon Tekpa
President & CEO
Hypersoft Ghana Limited
TEL: +233-241-765084
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Hi Lonlon-
Interesting idea- one reason banks don't look through business plans and financial statements for SMEs is because many don't have them, or else they are in widely different formats and standards that they can't be quickly reviewed and compared, and it costs too much to have a loan officer spend hours trying to read through them and try to make sense of it all. So if you are able to organize that info. in a standardized and systematic way, it would allow funders to quickly generate a set of metrics about the business finances for loan analysis.
But another bigger reason banks don't consider SMEs reported financials and business plans is its verifiability. How can you get around this problem? What if SMEs are overstating their revenues on your system to make themselves seem more profitable to potential funders? Or understate them to reduce tax liability? How can you verify that the info they have up on the system is accurate, without having to resort to the same high-cost verifications that banks do now (which are too expensive to scale up lending in this segment)? Low-cost verification of the info is the key challenge. If the economy weren't so cash-based you could maybe cross-check reported transactions with payments data in the banking/credit card systems. But in a cash-based economy its a tough nut to crack. Would be interested to hear your ideas...
Dear Bailey,
The SME Records Bank project will try and erase all these risk-factors that are associated with the SME Sector in relation to proper record management. Your points above are very much appreciated.
On the standardization of financial reports and business plans, the Cloud Platform will be rolling-out proven ERP Solutions such as SAP Business Suites towards a standardized reporting of financial statements as well as business performances among others.
On the accuracy of data provided by the SMEs, our data collectors (i.e. Cloud Employees) together with our team of certified Auditors and Management Accountants will be tasked to ensure information collected on SMEs attain the highest accuracy rate as possible. There will be other measures in place to prevent over/under stating of performances. To make life easier for our Cloud Employees as well as the SMEs themselves, we will institute standard formats to collecting data on SMEs' performances. We also plan to get the Banks in the Host Nations to join the Cloud Platform to facilitate online payments (EFT) for goods and services in a secured environment (i.e. the Cloud Platform) - as we gradually move away from CASH-based transactions.
Thanks very much for raising these points. It is our hope that we can, in our small ways, transform the SME sectors globally for speedy growth by employing new technologies and innovations. I will be glad to read again from you on the subject.
Regards,
Lonlon Tekpa
President & CEO
Hypersoft Ghana Limited
TEL: +233-241-765084
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