Pegasus Network Services

Established Network Communications System Provider Struggles to Improve Working Capital

For more than 30 years, Pegasus Network Services has established its reputation in network communications by delivering high quality performance, reliability and innovation. Pegasus implements and supports network communication systems including data cabling, satellite and network services for some of the largest network operators and integrators in the nation including Verizon, Compucom, Insight, On Command Corp., Multimedia Games and many others. However, its primary focus has been on the hospitality sector, servicing the world’s largest hoteliers including Marriott, Hyatt, Starwood, and many independent properties.  Pegasus also provides digital signage networks for retail, banking, hospitality, healthcare, and transportation locations.

Brendan Cuff, owner of Pegasus Network Services, was no stranger to the cash flow challenges of operating a successful small business. However, as banks have continued to restrict lending, Pegasus has found it increasingly difficult to maintain a strong liquidity position.

“Over the years we used several sources of funding including a bank line of credit, a small SBA loan and business credit cards to source working capital, but they were running low,” remarked Brendan. “Our payment terms were being stretched beyond 30 days – averaging 58 to 72. While we knew our customers would pay, the delayed payments made it difficult to maintain steady cash flow.” With limited liquidity, the company struggled to bid profitable contracts and stay ahead of the competition. “We had to improve our working capital but for it to be sustainable, we knew we had to do so at a reasonable cost.” Like most small businesses, the changing credit landscape has forever altered the way they manage and fund their operations.

Maintaining Cash Flow without Access to Cash?

Brendan met with his long-time lender to explore options for improving his current cash flow situation and to secure an increase in his line of credit. The bank was unwilling to offer more credit and in fact, termed out the company’s current line. The bank then referred Brendan to a factoring company. Factoring, however, was not a method of financing that Brendan was interested in for his business – he wasn’t comfortable with the high cost of capital. But, Brendan refused to believe that options for his business to improve short-term liquidity had run out. His business and its reputation was fair motivation to not give up. “Giving in to tough times wasn’t an option, I knew there had to be a better way,” said Brendan.

An Innovative Working Capital Solution for Small and Midsize Businesses

Brendan worked tirelessly to find a solution to the company’s cash flow constraints, making little progress until he came across an article in Inc. Magazine that featured The Receivables Exchange as an online receivables marketplace for small businesses to access affordable capital. Intrigued by the concept of auctioning his receivables in a market-based exchange and being able to set all of his own price points and terms, Brendan did his due diligence on this new liquidity source. Pegasus joined the Exchange a year ago and has participated in recurring auctions ever since, selecting the strongest receivables in order to get the best bids to improve his company’s cash position. By participating in repeat auctions, Pegasus has been able to establish a reliable trading history. This transaction history translates into a lower cost of capital as Buyers continue to gain greater insight into how his past auctions have priced and when payments were remitted. In addition to a lower cost of capital, he has effectively been able to reduce his payment terms from 58-72 days down to just one day by trading his invoices on the Exchange. With greater access to cash and a lower cost of capital, companies are able to smooth their cash flows and enhance their overall financial performance.

Online Receivables Financing Solution Helps Regain Momentum

For Pegasus, its accounts receivable now serve as a valuable asset rather than a financial liability that strains its cash flow. The Exchange provides Brendan the financial flexibility and dependability to maintain sufficient liquidity on his terms.

“We have refocused our energies on our core business, bolstering efficiencies and operations throughout and planned for future growth, knowing we have the cash flow to remain nimble when the unexpected occurs,” commented Brendan. “As it has for our business, I believe The Receivables Exchange will change the economic landscape for many other companies and have a major impact on the economic revival and rejuvenation of small businesses across the nation.”

For America’s small businesses, optimizing working capital has always been a key business challenge. The new economic reality of reduced access to credit and higher costs of traditional financing have exacerbated that challenge exponentially. As a result, more companies are embracing alternative funding sources such as The Receivables Exchange as a new and affordable way to increase short-term liquidity. Learn how to become a Seller on the Exchange and turn your receivables into cash and gain quick access to the capital you need to grow your business on your terms. Find out more about Pegasus Network Services, Inc.