The Indian small and medium enterprise (SME) sector holds about 8 percent share in the country’s GDP, with 45 percent contribution to India’s manufacturing GDP and 40 percent to exports from India. This makes an important contribution to India’s economic growth.
Since long, the Indian SME owners have been conducting their business the conventional way, be it their core enterprise operations, marketing or high dependency on cash. Whether it is about making payments to their vendors, suppliers or receiving payments from their customers, cash has been the preferred (and in many cases, the only) mode of transactions.
However, cash transactions have their own drawbacks - there is a lack of transparency, need extensive bookkeeping work and reconciliation of cash takes time. Also, there is room for errors due to extensive manual work involved. Business processes take more time to complete as the physical movement of cash takes time, and this can impact cash inflow drastically - a pain area for small businesses.
In the global business ecosystem, Indian SMEs should jump on the digitalisation bandwagon to reap the benefits that come along. This will not just establish them as greater contributors to the Indian economy, but also open new business avenues for them to leverage.
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