1) Cash Flow
2) Cash Flow
3) Uncertainty about health care (and how this will affect cash flow!)

Every day I scan the headlines and read the news affecting America's millions of small business as they work tirelessly to emerge from this country's worst recession in recent history. And, while I'm encouraged by the recent spate of news and commentary showing reports of tempered optimism I am dismayed by the ongoing lack of credit flowing to small business. Other than the uncertainty around health care, cash flow continues to the leading concern for small business.

As most would agree, cash truly is King. It is impossible for a company to exist if it can't manage cash flow. And, in an era when customer requests for extended payment terms are the rule rather than the exception, we must find a way for business to protect liquidity. A recent small business website reported that most companies that were rejected by banks had intended to use that money to balance cash flow.

The Administration would certainly say it's doing its part. We keep hearing about the millions (or is it billions?) of dollars that have been funneled into the "system" to alleviate America's cash flow concerns. But, that doesn't seem to be the answer either. CNN reported last week that, while banks are indeed flush with cash, they will not be the answer to America's liquidity gap. In fact, CNN interviewed a regional bank executive who clearly stated that he does not need more cash funneled to his bank; what his bank needs are more small businesses that they will approve to lend to. And, you can't blame him - these banks have their own stakeholders to answer to and their own balance sheets to protect. They certainly aren't eager to lend to a company that, while they may have a spectacular product with significant pent up demand and even a strong, reliable track record, they're not going to be the one doling out the dollars to get it through in this economy. Only the small businesses with the most stellar of balance sheets are going to get the bank funds. But, then, what good is that going to do?

But, there is a bit of good news: regulators circulated an idea that they believe will move our great country forward. Last Friday, they put out a statement strongly encouraging banks to get to know their small business customers. Regulators said banks shouldn't curtail credit based on negative trends in an industry or location. Instead, they should evaluate each business on its own ability to repay. Now that's an idea.

Thanks for reading. We'd love to hear your thoughts on cash flow issues and why small businesses aren't growing.

Laurie Azzano, SVP, Head of Corporate Communications, at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable. 

In light of the credit crisis and limited options available to help small and mid-sized businesses access capital, The Receivables Exchange was recently featured as a creative and real financing solution in The Blog of Financing Growth by Kenneth Marks, Managing Partner of High Rock Partners, Inc. Kenneth is a frequent speaker and expert resource in financing, turnarounds and growth of companies. His blog and his ideas are a valuable resource for any businesses. In addition, he is the lead author of the Handbook of Financing Growth published by John Wiley & Sons www.HandbookofFinancingGrowth.com.

The blog entitled, "Creative Financing Sources," said this about the Exchange: "Taking from the framework of the stock exchanges, The Receivables Exchange has created a trading platform that... allows a company to sell their accounts receivables on an as-needed basis to an open market in a controlled and confidential way. I really like it because it may augment your existing line of credit and possibly increase overall availability."

The blog went on to say that "I've concluded that The Receivables Exchange is for real and will likely be a major player in the years ahead."

Read The Blog of Financing Growth and let us know what you think about The Receivables Exchange as a working capital solution and how we can help your business.

Amanda Potashner, Associate, Marketing Communications at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable. 

After showing signs of distress for 24 consecutive months, Reuters recently reported that "defaults by small and medium-sized U.S. businesses on loans, leases and credit lines to finance capital equipment investment fell for the first time in two years. The drop snapped a two-year increase in defaults which crept up steadily along with other measures of borrower stress as the economic downturn and the shutdown of the credit markets put the squeeze on businesses."

This is certainly an encouraging trendline fueling the hopes that prospects are improving among the nation's small and midsize businesses (SMBs). Not to sound like the naysayer, but while things may not be getting worse we're not out of the woods yet. The Small Business Lending index still indicates that traditional lenders remain reluctant to finance small business and unemployment is holding steady at 10%. What is encouraging is that everyday more and more of America's SMB community are turning to alternative solutions such as The Receivables Exchange to gain flexible and fast access to competitively priced capital and even more so to have the necessary liquidity to position themselves for growth as the economy turns around.

After you read the article in Reuters, "Small business loan defaults down in December" , let us know what you think about The Receivables Exchange as a working capital management tool and how we can help your business.

Amanda Potashner, Associate, Marketing Communications at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.
 

The steady growth of asset based lending is taking market share from the traditional lenders. Last year, a period when syndicated commercial lending sagged by 39%, according to Dealogic Inc., asset-based lenders were on track to dole out almost $761 billion, or 30% more money than they did in 2008. According to Federal Deposit Insurance Corp. data, the dollar volume of C&I loans in banks' portfolios fell by 15.4% between the third quarter of 2008 and the third quarter of 2009, to $1.2 trillion - the largest year-over-year drop since the FDIC began keeping statistics. While the overall share of the ABL space is smaller than traditional C&I loans, the significant gains in market share cannot be ignored.

While statistics are lacking directly from the factoring industry, anecdotal evidence that we hear from our peers in the industry, point towards the factoring industry also taking share from the banks. The shift is consistent with what we see here at TRE as pervasive loan burnout pushes more and more companies to seek alternatives. Asset-based lending is moving quickly into the mainstream consciousness of the nation's small and midsize businesses that now consider alternative sources of finance to be a viable, flexible and competitive tool for securing critical working capital. The current environment and the palpable shift towards alternative asset based finance products make this an exciting time for the Exchange and our customers.

Bill Siegel, CFA, is Vice President, Head of Liquidity Desk at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.  

Last year we were fortunate to help hundreds of America's SMBs gain access to affordable capital - at a time when the world saw record closings of financial institutions, both large and small. In 2010, with the major investment and partnership of Bain along with the additional commitments from RedPoint Ventures and Prism VentureWorks, we look forward to scaling our efforts even further to deliver billions of dollars of competitively priced capital to millions of small and midsize businesses across the nation. After all, as the engine that drives this economy, we know that what they need most to succeed is the fuel - affordable working capital - to keep their businesses running at the pace of opportunity.

Due to our launch in the midst of the credit crisis, people often wonder whether the genesis of the Exchange resulted from the advent of the Credit Crisis. Not at all. The idea for this company came to me many years ago when I was trying to figure out how small businesses could have access to capital in the same way that large companies have access to NYSE and NASDAQ and the commercial paper market. What SMBs needed , I decided, was their own version of the commercial paper market. In April 2007, we formed The Receivables Exchange. In November 2008, we launched the world's first online marketplace for trading accounts receivable.

What the credit crisis did was make more visible cracks in the overall system that resulted in the crisis. The mechanisms for procuring working capital simply had not kept up with the pace of innovation in the broader economy, and more specifically, the speed of business and the velocity of money. In today's business world the second most valuable commodity is time - after cash. Just think about how many tools you use to free up more time so that you can do more business. Email is the obvious one. But there are many others. Do you use e-invoicing? Do you pay your bills online? Do you use a PDA? Do you book travel online? If you are like most business people I know, you probably do multiple meetings via cell phone, between driving to meetings. Again, time, as commodity. That is what The Receivables Exchange is about, synchronizing 21st Century American business with a 21st Century mechanism for procuring working capital through innovation.

The result: fast and flexible access to working capital when you need it at a speed that keeps up with the speed of your business. As you have read here before, receivable auctions often get funded within 5 to 10 minutes from going live.

If there is one thing that this investment confirms it is that a new era for small and medium business finance has arrived. To that end, you have our firm commitment to continue to innovate and strive to make accessing working capital for your business easier and faster, and at the best price that a transparent, competitive marketplace can generate.

• View a short video overview of The Receivables Exchange
  

Nic Perkin is Co-founder and President of The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.
 

According to a recent article in The New York Times, businesses shouldn't expect banks to begin lending more freely anytime soon.

Many banks will not really have the motivation to lend more aggressively until the Federal Reserve starts raising short-term rates, The New York Times said Thursday. "The trouble is, higher interest rates over all tend to cause the value of credit assets to fall.

"That in turn would generate fresh losses for banks, depleting their capital and reducing their capacity to lend. It's a conundrum for the banks as well as for the Fed as it tries to set monetary policy."

So for the foreseeable future, small and midsize businesses should continue to seek alternative forms of financing, such as the innovation in receivables financing offered by The Receivables Exchange.

Matt Konigsmark is Sr. Director of Interactive Marketing at The Receivables Exchange, an accounts receivable financing solution. The Exchange is the the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.

For the past few months, it has been pretty easy to forget about this issue given the performance of the stock market and other commodity assets. Unlike these assets, the collateral that belays loans has not experienced a similar rally. As we trudge into 2010, small bank failures continue and several of the government sponsored programs that are supporting liquidity are set to end this spring.

Without the Fed's support, there is a real chance we could see materially higher interest rates that stem from a sell-off in the U.S. Treasury market. In the absence of a labor driven inflation, there is no easy way for the Fed to exit its quantitative easing. The combination of an end to the Fed's liquidity programs and the prospect of a rising dollar may put even more strain on the U.S. economy.

Our current situation seems tenuous at best. For banks, this spring could be a time of reckoning. Should interest rates rise, collateral values will come under additional stress. The mere scent of such a situation curtailed new lending in 2009. Nothing about the current indicators suggests that will change in 2010.

Bill Siegel, CFA, is Vice President, Head of Liquidity Desk at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.  

The importance of optimizing working capital management and improving cash flow not only affects large companies, but is vital for small business as they look to the year ahead. In order to remain nimble in times of uncertainty and take advantage of growth opportunities as the economy improves, small and mid-size businesses (SMBs) will need to explore new ways to improve their influx of cash. Businesses - SMBs in particular - need alternative ways to fund their operations and drive sustainable growth. 

With all of this discussion of cash and large companies stockpiling the stuff away, I began thinking about the credit dichotomy that exists between these large well capitalized companies and the nation's SMB community that struggle to maintain healthy liquidity. Historically, SMBs have been limited in their options to access affordable capital, but all hope is not lost as innovative alternative solutions have emerged. There is more cash sidelined today than ever before in history. While traditional funding sources have remained all but closed, alternative sources stand ready to assist SMBs in gaining access to much needed capital. 

We see it every day, SMB survivors. I call them survivors because while other businesses were forced to close their doors during one of the worst economic recessions since the Great Depression, they managed to survive - even grow. These companies found a way to succeed in the face of adversity and regain control of their cash flow. At last, by selling their receivables on the Exchange they are in the driver's seat, gaining access to capital when they choose a price they are willing to pay. With a healthy amount of cash, a business can withstand not only poor sales, but also the uncertainties of economic cycles. 

After you read the Big Fat Finance Blog, let us know what you think about The Receivables Exchange as a working capital management tool and how we can help your business. 

Amanda Potashner, Associate, Marketing Communications at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.