BET Information Systems, Inc.

Technology Company Controls Cash Flow During Rapid Growth

BET Information Systems (BET) is a Boston-based high-growth technology company that builds informative aggregate websites targeting local markets. These websites allow users to view search results for local services, events, relevant articles and more, all aggregated on a single, easy-to-navigate page. BET's clients are large companies like AT&T and Google who buy ads on these local sites. The company also partners with a number of successful media brands, including Car and Driver and Kiplinger, to make information easy to find on sites consumers already frequent.

Since its founding in 2007, BET has aggressively sought new customers and partnerships, and has worked hard to control working capital as it seeks out new customers.

"Our biggest challenge is figuring out how to take advantage of and fund our rapid growth," says Larry Andler, BET's vice president of finance, "The more cash we can get quickly, the more we can build our businesses."

"I was impressed by how easy it was to use the Exchange to get capital" Andler says. "We were looking for financing that would allow us to grow, and not hold us back with all of the usual constraints. The Exchange turned out to be the perfect solution for us."

According to Andler, the economic downturn that began in 2008 did little to affect BET's growth - which until recently has been largely self-funded. Success has created its own cash flow problems, however. As has become common with large companies, BET's customers are extending their payment terms further as they try to keep more cash on their balance sheets. Because of this, BET often experiences cash gaps which make can make it challenging to pursue new business.

"In order to execute our growth strategy of adding new partners, we need more cash on hand to support the day-to-day operations of business development," Andler says. "We have a presence in 10 countries and are trying to establish more. That takes time and it takes money. My job is to make sure that we have enough cash on hand to cover growth, and with our partners extending terms, it can be difficult."

Asset-Light, Cash Tight

In early 2010, Andler and company executives decided that, in order for BET to continue growing, it had to find an external source of affordable capital. The company could no longer rely on self-financing to fuel its growth. Andler approached a bank for a line of credit, but as an asset-light business, BET did not have much tangible collateral to back up the credit line. What's more, the bank wanted to conduct an audit on the company's finances that would have pulled focus from growth. Then Andler, a CPA, heard about The Receivables Exchange from a continuing education course.

"I was impressed by how easy it was to use the Exchange to get capital" Andler says. "We were looking for financing that would allow us to grow, and not hold us back with all of the usual constraints. The Exchange turned out to be the perfect solution for us."

After submitting an application and going through a one-time approval process, BET posted its first receivable on the Exchange in the summer of 2010. Now the company trades at least one auction a month and uses it as a flexible and affordable way to source working capital. Andler is most impressed by how quickly he can get working capital on the Exchange, typically within two days.

"Most of the time when I log on to see that the auction is live, my invoices have already sold," Andler says. "It's amazing to see how quickly my receivables are selling. And, I can immediately reinvest that capital into our growth."

Taking Control of Working Capital

Andler also appreciates the amount of control he is able to maintain over his working capital by selling receivables on the Exchange. He can use the Exchange when he needs it, selling only the receivables he chooses. Other forms of receivables-based financing, such as factoring, would have required him to sell all of his receivables, but The Receivables Exchange is not factoring. When one of BET's biggest customers extended its payment terms to 45 days from 30 days, Andler was able to sell receivables from that client on the Exchange and turn them into cash almost instantly. Also, because the Exchange does not require him to notify his customers that their receivables are for sale, he is able to preserve those valuable relationships and focus on growth. The rates that BET gets on the Exchange are competitive, Andler says, and getting lower as the company builds up a consistent trading history.

"We will definitely keep using The Receivables Exchange, even as revenue increases," Andler says. "The Exchange allows us to access working capital almost instantly, at competitive rates, whenever we need it. Without the Exchange, we would not have been able to grow as fast as we have."