Current State of the Industry Amplifies the Importance of Funding
Telecom companies, including general contractors and subcontractors, have found themselves stuck between the tier-one carrier slowdown and rising interest rates that pressure bank financing. The deceleration of 5G deployment not only puts projects on hold, it can also delay payment cycles on work that has been completed, ultimately causing cash flow issues.
John P. Minnis, CEO and Managing Partner at Kompass Funding, first noticed that the combination of rising interest rates and the tier-one carrier “build out pause” was causing stress in the tower industry in early March 2023.
“Higher interest rates have made access to capital more difficult for all industries,” Minnis said. “As a result, the financial institutions are tightening their belts, and it can really hurt a client.”
During this period, telecom companies have to cover their operating costs; in order to do so, they may need to shift to different customers and markets to meet the changing demands in the industry. “They have to stay strong, so when the uptick comes, they are prepared to ramp up to meet the demand,” Minnis said.
Kompass Funding provides solutions that help these organizations maintain their workforce and pay operating expenses. The Kompass 24 solution purchases accounts receivables, which gives companies immediate access to capital, and can relieve the stress of waiting 30, 60, 90, 120+ days for approved invoices to get paid.
“It serves as the ideal alternative to debt. With Kompass 24, clients get access to capital, which can improve their financial stability in a time of uncertainty,” according to Minnis. “As a result, they can meet their financial obligations every day in payroll, paying suppliers and operational expenses without disruption.”
Kompass Funding works with companies with a revenue range of $5 million to $250 million, and they have experience across several verticals with small and medium sized businesses that have fewer than 500 employees, which account for 99.9 percent of all U.S. businesses.
“Our biggest differentiator in the telecom industry is our experience within the industry,” Minnis said. “We have relationships with the accounts payable departments for many of the large carriers, which allows us to secure timely payments.”
Just last year, Kompass Funding began providing Kompass 24 to a utility client that had $4 million in revenue. In less than a year, that company grew its revenue by six times to $24 million.
“Were we the only reason for that growth? No,” Minnis shared. “They have great leadership, they have great staff, and they do great work. You can have all those things, but if you don’t have the access to capital, you’re not able to grow your business.”
Minnis expressed optimism for the future, saying certain telecom clients are already eager to ramp back up, anticipating an active Q4 and beyond.
This article originally appeared in Inside Towers
