Letter from our Founders
Welcome to Liquidity Matters, our monthly newsletter focused on providing valuable information to help U.S. small and midsize businesses grow — one receivable at a time.
 The economy is growing and many economists believe that we have moved to a post-recession economy. While conditions might seem to be improving, this economic recovery is slow-moving and has yet to mend the cash flow issues that continue to plague America’s small and middle market businesses. In fact, according to the latest survey by Discover Small Business, the majority continue to experience significant cash flow constraints over the past ninety days.
So, what is the new reality in terms of access to capital for small business? Many economic indicators, including the Fed’s ‘Money Multiplier’ continue to depict a negative outlook and fragile banking system. With U.S. bank lending falling at its fastest rate in history and likely to increase pace as commercial real estate loan losses are realized, this confirms what most small business owners are now seeing as an obvious reality – that as conventional sources of business credit take on an increasingly conservative posture, they are not going to be the catalyst for growth among the all-important small business sector. The Receivables Exchange introduces greater flexibility and efficiencies for small and midsize companies, which is why we’ve been able to help so many grow and fund their day-to-day operations amidst the worse credit conditions.
This month’s Expert Corner contributor, Kenneth H. Marks, Managing Partner of High Rock Partners, discusses four financing sources that emerging growth and middle market companies should consider when searching for capital in today’s economic environment. The article will help you identify strategic initiatives your company can implement to alleviate cash flow concerns and attain much-needed liquidity.
Also, you’ll read in our featured Seller Case Study, how Visual Evidence / E-Discovery, LLC. (VE), a leading technology solutions provider for the legal industry serving high-profile national law firms and large corporations such as Coca Cola and American Greetings , has benefitted from The Receivables Exchange after learning that their bank was unwilling to extend their line of credit – despite their strong financials and growth record. Since selling their receivables on the Exchange, VE has increased their liquidity and decreased their cost of capital and can now reinvest those funds into their business to smooth out cash flow and refocus on the continued growth of their company.
We hope you enjoy this issue and we encourage you to share your own ideas or suggestions for future editions and discussion topics. We look forward to hearing from you and to seeing you on the Exchange.
We value your feedback. Please email your comments or suggestions to: TheExchange@receivablesXchange.com
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  Visual Evidence / E-Discovery LLC
TRE Seller Profile
After 22 years of strong growth, Dan Copfer, President of Visual Evidence / E-Discovery (VE) found the company in unfamiliar territory. The economic recession had forced their customers to extend payment terms – even longer than usual – and they began to struggle to maintain a strong cash position. "In our industry it can be difficult to be paid on 30 day terms, under normal circumstances. We bill the law firm who then bills the client who then could turn around and bill the insurance company. It’s a lengthy process with many delays, but they always pay. Our customers are good for payment – without question – but this is inherently an industry with long payment terms" explained Dan. And, as a result of banks continuing to restrict credit, the company saw its commercial line of credit pulled at a time when it needed it the most to take advantage of the tremendous growth. more »
 Four Places to Find Capital for Emerging Growth and Middle-Market Companies
Kenneth H. Marks, High Rock Partners
While there seems to be some light at the end of the tunnel for emerging growth and middle-market companies with regards to capital availability, it likely is going to be a while before we return to what we hope are “normal” market conditions. So, where do you get the funds to support growth in today’s market? This question is being asked by many CEOs, CFOs, board members and their advisors seeking money to support strategic initiatives. Many operating companies with revenues ranging from a few million to several hundred million dollars (emerging growth and middle-market) experienced tough business conditions throughout 2008 and 2009. more »
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Monetizing Accounts Receivable Into Cash
This white paper will address working capital and the opportunity for private companies to use their receivables to monetize their working capital.
Download PDF (873K) »
An Innovation in Loan Covenant Management for Midmarket Companies
This white paper demonstrates strategies companies can use to better manage their balance sheet and avoid covenant violations. For companies that relied on receivables securitization to satisfy loan covenants, reduce leverage and/or improve their credit rating, that option is no longer available.
Download PDF (284K) » |
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According to the FDIC, the number of U.S. banks at risk of failing hit a 16-year high at 702.
(WSJ, 2/24/10)
76% of small business owners are "not very confident" or "not at all confident" that the federal government and Congress can address the needs of America's small business owners, up from 62% in Feb. 2009.
(Discover Small Business Watch, Feb. 2010)
Regular borrowers (accessing capital markets at least once a quarter) continue to report difficulties in arranging credit at the highest frequency since 1983.
(NFIB Small Business Economic Trends, Feb. 2010)
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The Receivables Exchange, 220 Camp Street, 5th Floor, New Orleans, LA 70130
Toll Free: (800) 658-5880 Email: members@receivablesXchange.com |
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