You have probably heard of the Ides of March. 

The immortal words “Beware the Ides of March” are uttered in William Shakespeare’s Julius Caesar - Julius Caesar was being warned by a soothsayer, beware of the Ides of March, which means be very careful in the middle of March or in the month of March. Julius Caesar was assassinated on March 15 and continues to live in infamy.

Julius Caesar and the Ides of March

For any business owner, the month of March is always considered to be stressful. Business owners have been facing the situation year after year and this financial year will be more challenging. As everyone is aware, we in India follow the financial year which starts on April 1 of a year and ends on March 31 of the following year e.g. when we say Financial Year 2021 (FY 2020 -21) it started on April 1, 2020, and will end on March 31, 2021.

Businessmen typically have a lot of entries, and they would ideally like to balance their books by reversing at the end of March, to avoid the balance sheet appearing bloated. Also on 15 March the final installment of advance taxes is payable for this financial year.

Business owners will be worried about and also need money this month to help them cover the month of March. Typically in the month of March, businesses face a cash crunch for two main reasons

1. Preparation of the final books for the Financial Year - Businessmen typically have a lot of entries, and they would ideally like to balance their books by reversing at the end of March to avoid the balance sheet appearing bloated. There could also be temporary loans/overdrafts that they enjoy from the bank, which they would want to clear. Therefore in the month of March, which is the last calendar month of the financial year business people are busy trying to clean up their books to ensure they also able to get higher limits the following year

2. The other thing that is unique to March is that on 15 March the final installment of advance taxes is payable for this financial year (FY 2020-21). Hence business will need money to make payments.

How can this Cash crunch be solved?

Suggest using an off-balance sheet solution for bridging the immediate cash requirements for the month of March. Use your receivable invoices as assets and receive funds. If you are suppliers to either Multinational companies/big corporates (private sector or public)/ corporates with an investment-grade rating, use the opportunity to manage your cash flow requirements of the month effectively.

Lenders will be able to help in providing financing from 75% ~ 90 % of the invoice value with quick turnaround time and collect the payments due to you on the date due as per the invoices. This will help you a lot for the month of March as well as going forward to manage your working capital effectively. This can also be done if you are a buyer from companies.

If you need help then keep the following ready:

• List of your regular buyers for the last 6 months with payment terms
• Last 3 years of your financials
• KYC details
• Last six months bank statements

Also read

7 tips for the new financial year

The secret to financial fitness in the coming year

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