Business Idea - Evaluation
Problem Statement: 6 of 10 MSME default in bank loan, If MSME is not able to pay to lender, surely vendors are affected too. (Reason: Bad business decisions leading to bankruptcy) Every year vendors lose 100s of 1000s of crores every year cumulatively
Solution: This solves part problem not to the fullest
Autopay E-mandate Context: UPI introduced E-Mandate, where you give authorization to the system to deduct the amount automatically every month on a selected date
This system can be converted to SAAS or plugin in your Accounting management system to make sure you never miss a payment!
Thoughts...
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6 of 10 defaults. You mean MSME NPA is 60%. Which multiverse is this data from?
Lending would stop if a loan product has 60% default rate. Op is high
UPI autopay can be cancelled by the user. Or if there is no money in the account it fails. In my opinion, UPI autopay or e-NACH (much more effective for loan repayments) are meant for ease of repayment. But defaults happen because of lack of intent to repay or the borrower is out of cash.
The problem to solve for defaults is figuring out intent and capability.
When the business is nit making enough money to survive what will this achieve. Rather than looking from the prospective for a bank look form the prospective of a business owner, interview a few failed MSMEs and understand their pain points as to why are they failing. Vendors just don't have a single client to lean on, established vendors have a huge market. They will always earn some or the other way. But about about the founder who just failed ? That is a problem that needs a solution.
Why you need a SaaS?
Especially when you understand UPI auto payment has a mandate setting capability. If you are concerned about reconciliation, any accounting system would be able to handle it.
Think of payment return flows, payments are done and reconciled within the accounting system.