Industry Insights

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.

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.

The Situation: A startup company specializing in 5G underground boring, a method of installing underground utilities including pipes, conduits, or cables, was winning numerous new projects and were in high demand; however, they struggled to come up with the capital to purchase new equipment and hire additional employees, two necessary components in order to continue to scale their business. As a startup that opened its doors in early 2022, the company did not attempt to seek out traditional funding such as a bank loan.

And our team continues to grow! We are so excited to have another Kansas native join us, Will Downey! Will is an avid Kansas City fan who is the type of guy you would want on your team during trivia night.

We are so excited to welcome our newest team member, Rece Dawson! Rece will be joining as a credit portfolio manager and focusing on due diligence for new investments and funding opportunities, as well as managing our current portfolio.

For this week’s blog post, we feature a team spotlight on our newest member, Ben Hagenkord! Ben recently graduated from Kansas State University (Go Wildcats!) and joined Kompass Funding as our account executive. In his role, Ben will be focusing on building and managing client relationships across our factoring division, while also assisting with portfolio management and underwriting new opportunities.

Kompass Funding, based in Overland Park KS, recently added Ben Hagenkord to the team. Ben will serve as their lead account executive.

Covid-19 changed the landscape for small businesses around the country and especially in Kansas City. “The Payment Protection Program (PPP) was a good band-aid, but now small businesses are really looking for that growth capital and it’s been a challenge for them to find that,” according to John Minnis, CEO of Kompass Funding.

As members of a large industry, we want to help clients find the right financial partner with the right solutions to ultimately help their business grow. With hundreds of different options out there, we are often asked by potential clients “what should I be looking for in a lender?” As a lender ourselves, we want clients to look for 3 key characteristics before entering a relationship: curiosity, mutual benefits, and multiple funding options.

Applying for an invoice funding program can seem like a daunting task, especially if you do not know what information and documents you need to apply. From the first interaction all the way to initial funding, we compiled every action and documents required during each step below. Keep in mind, some applications may be different but generally request the same information.

In the trucking world, there are lots of moving parts (literally and figuratively). Literally in the sense that goods are being shipped across the country and figuratively because shippers and carriers are constantly being matched to determine optimal routes for shipments.

Another important moving part is cash. For many carriers, sometimes it can take a couple weeks for brokers to pay for their loads. This can cause a buildup in invoices and a gap in cash flow, especially if truckers are hauling every single day.

A key tool for success for small and mid-sized businesses is an aging report. But what exactly is an aging report and why is it so important?

An aging report is often referred to as account receivables reconciliation, which is essentially a compilation of all your invoices.