I wanted to talk a little today about why the World needs a flexible, transparent and efficient marketplace for the buying and selling of receivables.  In my opinion, the answer is straightforward. Think for a moment about how much has changed in the last 20 years, specifically all that has changed in the way that people do business. It wasn't too long ago that the fax machine seemed like an amazing concept. I can remember showing a managing director at an investment bank where I worked how to attach a Word document to an email. He thought it was the most amazing thing he had ever seen.

Now fast forward:  cell phones, PDAs, total and complete connectivity. Then, ask yourself these questions. What has changed in the way that small and medium businesses secure working capital over the last 20 years? What about going back to your parent's generation? Or your grandparent's generation? It's not a trick question. The answer is nothing. Nothing has changed. Think about that statement for a minute.

In today's electronic and connected world, a Wichita business can source, contract and do business with a Moravian company that is selling a product with parts from Singapore. And yet, the way the Wichita company secures its growth capital hasn't changed in more than 100 years.

Innovation and associated productivity gains have affected nearly every aspect of life. Working capital management, in our opinion, should be no different. In today's complex and often intertwined financial markets, The Receivables Exchange returns business in its most basic form by providing a marketplace where businesses can convert their receivables into competitively-priced working capital. In fact, the largest source and use of capital for businesses around the world is trade credit. Trade credit is the standard push and pull between businesses - the push of payables and the pull of receivables. It's what working capital management is all about. Companies need cash to create their goods and services, so they push out what they owe (payables) as far as they can and pull in as fast as possible what they are owed (receivables). In doing this, they manage the cash position of their business, hopefully in a manner that allows for growth. 

The number one reason companies go out of business is not lack of market opportunity. It is poor working capital management. Turn on CNBC and you can see how critical working capital management is. The lock down in the commercial paper market is causing all kinds of problems and is putting our economy at risk. Commercial paper as a short term financing mechanism is really only available to the largest of players, and even they can't get the funding they currently need.  It's become so bad that the government has had to step in and insure paper so investors would begin doing business again. But what about the 70% of the GDP that doesn't have access to the commercial paper market? Credit card limits are getting halved as rates skyrocket, and other options are either getting more expensive or quickly evaporating.

I could go on and on about all the pressures that SMBs are under currently, which brings me to a conclusion that we, at The Receivables Exchange, believe is solid. A centralized marketplace where Small and Medium-size companies can get competitively-priced working capital - if and when they need it - will create productivity gains for SMB owners and managers.

Nic Perkin is co-founder and President of The Receivables Exchange. The Exchange is the world's first online marketplace for real-time trading of accounts receivable.