If you are in these industries, consider Digital Escrow to safeguard your money!

Every business venture relies on a consistent flow of funds. Business plans and strategies are properly executed when monetary transactions are timely, smooth, and convenient. Any hindrance to this cash flow can compromise an enterprise’s growth and impede its future plans. Furthermore, any fraudulent or inauthentic activity can threaten a business’s security. Such hurdles and more that can adversely affect a business can be tackled or avoided with digital escrow.

Digital escrow services act as a neutral third party that holds and releases funds as agreed upon by the parties involved in the transaction. This can provide an added level of security and protection for both the buyer and the seller, as the funds are held in a secure, regulated environment until all terms of the transaction have been met. Additionally, digital escrow services can also facilitate and streamline the transaction process, making it more efficient and convenient for all parties involved. A digitised escrow service utilises technology, expertise, and innovation to make escrow services more accessible and convenient for both enterprises and consumers. The service has immense scope across use cases, and listed below are 5 industries where you can safeguard your assets with the help of digital escrow:

Real Estate 

There are several malpractices that real estate buyers have to deal with, including fraud, breach of contract, delayed construction, substandard materials, and unforeseen charges. Real estate fraud is not limited to typical buyers, as many prominent personalities have also fallen victim to it in recent years. In India, it is crucial to improve the trust between buyers and sellers in the real estate ecosystem.

Digital escrow can be used in a variety of real estate transactions in India to facilitate secure and efficient transfer of funds and documents between buyers and sellers. Some examples of transactions where digital escrow can be applied include Property purchases, Resale transactions, Auction sales, Property development, Lease contracts, and Property Sales by Banks, among others. Overall, digital escrow can be applied to a wide range of real estate transactions in India, providing a secure, efficient and transparent way for funds to be transferred between parties and for transactions to be completed.

Digital escrow services ensure sellers that buyers have the financial means to undertake the transaction. In addition, buyers can be rest assured that their hard-earned savings are secured in the escrow account and that their money will be released in parts by the escrow agent after each agreed phase of the real estate contract has been verified.

Micro, Small and Medium Enterprises(MSMEs)

Micro, Small and Medium Enterprises (MSMEs) form the foundation of the Indian economy structure and can mitigate the impact of global spillovers and help tide over a possible recession. These homegrown businesses which constitute a significant portion of the Indian economy, are in dire need of better finance solutions and tech infrastructure. As India aspires to become a $5 trillion economy by 2026-27, it is imperative that we safeguard the interests of over 63 million MSMEs and its 110 million plus employees against threats such as fraud, a money crunch, and lack of trust between its players.  Given the crucial role they play in buffering the economy from global economic shocks, it is imperative that we address the challenges that hinder their growth and development. Liquidity is a significant challenge that MSMEs face. Despite delivering goods and services, some MSMEs do not have funds to even credit salaries at the end of the month because money is stuck with buyers who routinely delay payments.

Despite the existence of laws in India to protect suppliers from default and late payments, the legal process itself is time-consuming and expensive. MSMEs in India can vastly benefit from escrow-as-a-service by receiving their payments on time. Digital Escrow can help build a trust-based transaction ecosystem for MSMEs by introducing much-needed transparency aiding in their growth.

Contract manufacturing

Contract manufacturing is when one company agrees with another to produce components to assemble finished goods or even manufacture the product over a specific timeframe. This is outsourcing on a manufacturing level, and like outsourcing employees, it lets companies reach previously untapped markets or open new avenues of growth in existing markets. Contract manufacturers are third-party providers; most only work as subcontractors or sell their products to other businesses. A major challenge faced by companies in the sector is that some unethical contract manufacturers have been known to give away product ideas from one client to another favoured client or to produce their own similar product with only a slight tweak or two.

Digital Escrow can play a massive role in securing their ideas and funds from such fraudulent activities as a third party controls payments between two parties and releases the funds only when the contract’s terms are met.

Creative Agencies

Creative Agencies should consider using digital escrow because it can provide a secure and efficient way to manage funds transfer between clients and the agency. By holding funds in a secure and regulated environment, digital escrow can help to protect both the client and the agency from fraud or other financial risks. Furthermore, it can make the payment process more convenient by allowing clients to transfer funds online securely.

Digital escrow can also provide flexibility by allowing agencies to set up different payment schedules and milestones, which can help to manage the project’s cash flow. Overall, by using digital escrow, agencies can provide a more secure and efficient way to manage the transfer of funds with clients, which can help to protect both parties and ensure the successful completion of projects.

Franchisor and Franchisee

For achieving scale, franchising is a highly sought-after option for entrepreneurs, as they offer a low-risk avenue for expansion. However, it does require a significant initial financial investment and the franchisee, often a corporate investor, typically plays an advisory role while the franchisor manages the day-to-day operations. In this business partnership, there’s often a shared fear of failure in terms of meeting sales numbers, growth projections, etc. hindering potential success.

Digital escrow can build trust between a franchisor and a franchisee by providing a secure and transparent way to manage the transfer of funds and other important documents related to the franchise agreement. It ensures that financial obligations are met on time and reduces the risk of fraud or misuse of funds. It also helps to facilitate clear and efficient communication between the parties.

(The author is Mr. Vineet Singh, Co-Founder & CEO at Castler. and the views expressed in this article are his own)

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