(BPT) – Liquidity is the “it” financial term of the moment as businesses brace for a potential slowdown. Without sufficient cash or the ability to borrow funds quickly, many companies could face tough business decisions and struggle to cover costs or seize growth opportunities.
Banks are now in a situation where they need to keep more cash on hand — which means tighter lending conditions than businesses have seen in some time. Companies needing working capital face additional scrutiny and limited options to access vital funding.
This scrutiny disproportionately impacts newer, smaller businesses that don’t meet traditional markers for bank-backed funding options. Even if a company can secure lending, climbing interest rates increase the bottom-line cost of those loans, deepening the cash flow crunch many businesses face today.
Traditional sources of capital aren’t keeping pace with today’s business needs
The Federal Reserve reports that only 53% of small employer businesses receive all the money they seek when they apply for a loan, line of credit or advance, and about 1 in 5 get nothing. Because the lending risk increases, banks often can’t lend to younger companies, even if they’re fundamentally healthy.
The options businesses typically turn to come with drawbacks that make obtaining funds out of reach for many businesses. Banks, online lenders and factoring come with red-tape challenges, higher costs, hidden fees or simply aren’t reliable sources of funding for the long term.
New options help businesses take control of their cash flow
A new generation of working capital solutions allow businesses of all sizes to access more capital without the need for risk-based underwriting. In many cases, this can be done without taking on debt, giving away equity or jeopardizing customer relations.
There’s an increasing trend of large enterprises working with banking and technology platforms to offer early payment programs for their supply chains. These programs allow businesses to offer a small discount on their approved invoices in exchange for early payment, making it a win-win solution without high costs or unfavorable terms.
The benefits of early payment programs and technology-driven working capital solutions make these excellent strategic choices for many businesses looking to diversify their funding sources:

• Faster cash flow. Lower costs. Early payment on discounted invoices without exorbitant fees and unreasonable restrictions means greater control and often lower costs by eliminating lending risks.
• More reasonable standards for lending. Loan programs that look at the whole health of a business, including growth and leadership — a critical element for small businesses that are succeeding but might be too young to qualify under existing rules — give more businesses access to funding.
• Rapid deployment of working capital. Funding should move at the speed of business. A partner that can deliver working capital quickly and reliably instead of taking multiple weeks to resolve is vital.
• More flexibility and control for small and medium-sized businesses. Because they are working with large companies, smaller suppliers often have less leverage when negotiating payment terms. A solution that offers smaller businesses the flexibility they need and the control they desire will create a healthier supply chain.
• Multiple solutions, one partner. A partner that brings multiple solutions to the table to fit a company’s unique business needs and the ebb and flow of its business is critical. Every business is unique, so “one-size-fits-all” solutions might not work.

One company on the cutting edge of working capital and supply chain financing is C2FO. C2FO is the world’s largest on-demand working capital platform, helping businesses tap into the large amounts of capital locked up in accounts receivable. The company powers the early payment programs used by some of the world’s largest enterprises and their supply chains, delivering over $275 billion in funding to supplier customers to date.
Maintaining liquidity and diversifying with a dependable cash-management strategy is essential for all businesses, especially for small businesses facing market fluctuations. To learn more about C2FO’s suite of working capital solutions, visit c2fo.com.