Clients seem to always wrestle with the fact that they don't really understand the differences between this type of business financing and banking as opposed to a ‘regular' operating facility with the bank. The differences could not be more dramatic. While a bank facility (by the way, we are all for them also, when they work!) focuses significantly on your balance sheet ratios and over all profitability, etc. the ABL revolver solution hones in on one issue only - your assets and their overall quality and size. It is on that quality and size that the ABL business line of credit is structured.
Borrowing power is what business lines of credit are of course about. When you utilize the ABL approach you in effect leverage all the power of the assets, which certainly isn't like what we like to call 'traditional bank borrowing'.
So, why would a business such as yours want to unlock that borrowing power? The reality is there are some very recurring needs for firms which choose this type of business financing. First of all they either can't get or can't get enough working capital borrowing power against their inventory, receivables and equipment. Secondly, all sorts of other problems, challenges, and yes opportunities can be overcome with an asset based line of credit.
Many examples exist of firms who have doubled and in some cases tripled their business financing access via this type of finance. The answer is simple - it's based on asset size, not ratios and covenants and external collateral.
Those include firms which have large seasonality issues, companies who which to merge with or acquire a competitor on an asset financing basis, and, most commonly, firms that view themselves in turnaround or restructuring mode when it comes to where they are at in their life cycle - i.e. coming out of a challenging economic time or negative business event (operating losses, etc).
Did we just say 'operating losses'? Yes, the reality is that even firms who are experience operating losses and could otherwise not achieve maximum operating cash flow are excellent candidates for ABL financing. We should mention that the type of facility you get, the pricing on that facility, and how the facility works vary within ABL revolver financing depending on your overall transaction size and asset coverage.
We must never forget also that these type of facilities never bring debt to your balance sheet, you view them similarly as an operating line, in that you are just monetizing your assets for working capital and cash flow - the only difference is you've got tremendous flexibility around borrowing power - because you are borrowing against a base of receivables, inventory, unencumbered equipment, and in some cases real estate also.
We’ve put together a comparison guide that covers over 40 of the top call center software options, providing details on pricing, features, support, and integrations. If you want to save time and still make a great investment, this guide is a must read. more
It was a painstaking process, but to help B2B companies start 2017 off on the right foot, we recently compiled a comparative list of the top 43 small to midsize business phone vendors. more
A good VoIP provider will offer additional benefits as well, but many first-time buyers find assessing each option to be difficult. Nevertheless, this is an important step in the buying process because a substandard provider can easily waste both your time and money. more