The Federation of Indian Chamber of Commerce and Industry (FICCI) and Indian Institute of Foreign Trade (IIFT) have identified a strong accounting system as the key to overcome the financing issues of small and medium enterprises (SMEs), in a joint knowledge paper. As reported in a FICCI press release, the paper, titled ‘Innovation Readiness of Indian SMEs: Issues and Challenges’, provides a 20-point strategy for innovative financing of SMEs in the face of bias by banks against lending.
The paper goes on to outline the significance of developing a detailed business plan, urged SMEs to reduce opacity. “The more detailed the plan, the better the chance of a loan getting sanctioned. It also shows your understanding and analysis as well as depth of knowledge in vetting various aspects of the business. It works in resolving a certain amount of information asymmetry," stated the paper.
Mandatory disclosure of information, the importance of a strategic business partner, outsourcing part of the process, strong organisation structure, the significance of succession planning, debt management and co-creation of products are a few of the suggestions that the paper makes.