Receivables Financing
Under-capitalized small and mid-sized businesses are turning to receivables financing for much-needed liquidity in the midst of the nation’s worst credit crisis in recent history. Moreover, once they try receivables financing, more than 80% of those businesses become repeat customers. Recent data shows that month over month, more mid-market businesses are selling receivables as a means to increase cash flow and maintain the viability of their business through the downturn.
In a recent study1 nearly 60% of companies surveyed reported that insufficient cash flow is their greatest obstacle as banks cut off lines of credit and raise rates. Challenged to make ends meet, many once thriving businesses are finding it difficult, if not impossible to gain access to capital. Recent data from the Liquidity Desk of The Receivables Exchange indicates that these cash-strapped businesses are turning to receivables financing to monetize their outstanding invoices to increase short-term liquidity.
As a sign that businesses are embracing receivables financing, The Receivables Exchange, the world’s first online auction marketplace for the buying and selling of receivables, has seen a tremendous increase in month-over-month trading volume since its November 2008 launch. On the Exchange, small and mid-sized businesses (Sellers) can gain access to capital in as little as 24 hours, a significant reduction from the typical 50+ day payment cycle that the majority of America’s businesses wait for payment on outstanding invoices.
