A wise banker once told me “Only companies with capital deserve to grow.” Now, I understand that this could be met with debate, but hear me out. I do believe the underlying message here is that when a company has strong controls in place to grow their capital stack and has an opportunity to grow their top and bottom lines, they should use their capital in strategic ways to grow and not based solely on opportunities that present themselves.
Your time is valuable, so we’ll get straight to the point. Find out how an alternative funding solution gave telecommunications company Utilities One the working capital needed to expand the business and increase their cash flow. Utilities One Executive Vice President and Chief Operating Officer Joseph DiMelis breaks it down in seven questions below.
We recently wrote about recessionary fears and rising inflation; to counter these fears, many business-to-business (B2B) companies are considering trade credit insurance (TCI), an important risk management tool for small to mid-sized businesses (SMBs) that sell goods or services on credit.
Since March 10, two large banks have collapsed; first Silicon Valley Bank (16th largest bank in the U.S. based on assets, and second-largest bank failure in U.S. history) followed by New York-based Signature Bank, the third largest bank failure to date.
Considering the current economic climate, the rate of inflation and a potential recession looming, preparing workable solutions to implement ahead of financially stringent times is imperative for small and mid-sized businesses (SMBs) who don’t have the resources and financial stability of larger organizations. Because of these limitations, traditional financing options from bank loans to lines of credit aren’t always accessible or sufficient.
Small to mid-sized businesses (SMBs) make up 99.9% of enterprises in the U.S., according to a report by ForwardAI, and the majority (a reported 60%) of those businesses fail due to poorly managed cash flow. It’s a challenge businesses face on a global scale, and providing SMB owners with more sustainable funding solutions begins with educating partners and local businesses on effective cash flow management and available alternatives.
A startup company needs more than just a great idea and a market of customers willing to pay for the products or services. The cold hard truth is it needs cash. Without collateral, bank loans are hard to come by. Initially, what can keep the doors open and the equipment humming is selling invoices that have been sent to their customers, known as factoring or invoice funding.
In the past, the term “factoring” has been associated with a negative connotation, a taboo word in the business funding world. The misconception developed from the idea that factoring is only leveraged when a business is in desperate need of cash or in a poor financial state – but that’s not always true. In fact, factoring is an impactful solution for companies to rely on to support a period of rapid growth.
Inflation isn’t done yet – but for small-to-mid-sized businesses, there are alternative ways to weather the storm.
Recently, Kompass Funding conducted an online poll, specifically regarding finding new workers, retaining talent, inflation, and cashflow. Unsurprisingly, one of the biggest concerns companies face today is inflation. We’ve seen record-high PMI statistics over the last two months, and it’s no surprise that owners are looking for outlets to cope with rising costs.
“The demand for subcontractors and general contractors from the crush of 5G build projects snowballs into the need for cash flow or capital to continue to run these businesses,” John Minnis, Kompass Funding Director of Operations said. A critical resource helping companies to make payroll and cover operational expenses during this time is alternative funding, a solution offered by Kompass. This engine keeps companies moving forward at full speed.