Working Capital for Businesses Struggling with Receivables

As large companies continue to extend payment terms, find out how US Capital Partners is structuring and providing optimal financing for smaller businesses in need of working capital.

Access to liquidity can make the difference between simply enduring a sluggish recovery and taking full advantage of attractive opportunities for growth. Increasingly, larger companies, especially in the consumer goods industry, have been lengthening supplier payment terms significantly—sometimes to as long as 120 days or even longer. While this obviously improves cash flow at the buying company, it puts significant financial strain on smaller suppliers, making it difficult for them to meet operational needs or invest in their own growth.

Smaller Businesses Struggle with Fluctuating Cash Flow

Cash-flow forecasting remains as difficult as ever for small to lower middle market suppliers. Not getting paid on time by clients and customers is one of the biggest challenges these companies face when managing their cash flow. According to a recent survey by Pepperdine University, as many as one in three companies (34%) has reported an increase in the time it takes to collect receivables compared to twelve months earlier.

Getting the Working Capital Your Business Needs

This strategy of delaying payments to suppliers began in the recession and has worsened in recent years. It places enormous stress on smaller businesses, which often don’t have the bargaining power to address the problem. The good news is that these businesses actually have more financing options available to them than ever before to help them mitigate prolonged collection periods. US Capital Partners specializes in providing intelligently structured financing—either cash-flow term loans, asset-based lines of credit, or both—to provide help quickly for businesses in this situation.

How US Capital Partners Has Helped Clients

Recently, for instance, US Capital Partners structured and provided a $2 million accounts receivable line of credit for Tandon Digital, which develops and manufactures high-performance flash and other memory storage products under the brand name Monster Digital®. US Capital Partners similarly provided a $1.5 million accounts receivable line of credit scalable to $5 million for Hans Drake International, a leading producer and distributor of nutritional products for enhanced workout performance and weight loss.

“We are extremely pleased with this intelligently structured, scalable financing, which was designed specifically to support our business growth,” said David R. Garcia, President and CEO at Hans Drake International. “Recently, there has been a strong increase in demand for our quality product lines from new domestic and international retailers and distributors. This new credit facility will provide the additional working capital we need to increase our inventory and fulfill new orders.”

Jeffrey Sweeney