SOURCE: The Receivables Exchange

March 10, 2010 07:00 ET

Small Businesses Find Alternative Funding Option for Growth Capital

Data Shows Businesses Are Improving Cash Flow by Selling Accounts Receivable as Online Marketplace Provides Access to More Than $20 Billion in Capital

NEW ORLEANS, LA--(Marketwire - March 10, 2010) - The Receivables Exchange, the world's leading online marketplace for real-time trading of accounts receivable, announced today that its market-based working capital solution experienced 100% quarter-over-quarter growth in receivables sold as of the end of 2009. With access to competitively-priced capital at their fingertips, many businesses are gaining access to capital for ninety-eight to ninety-nine cents on the dollar, on average.

As reported in the Federal Reserve's recent survey of senior loan officers, lending is expected to remain tight through the second half of 2010. As a result, small businesses are starting to settle into the new economic reality of reduced access to credit and are embracing alternative funding sources such as the Exchange. The Receivables Exchange's market-based approach to selling receivables has helped it to broaden the reach of receivables finance to growing companies that would have never before considered the age-old form of business financing. Data from The Receivables Exchange indicates that businesses are embracing this new model of receivables financing as an affordable way to increase short-term liquidity and fund growth, without the constraints and high costs of traditional financing.

The Receivables Exchange has seen the amount of receivables sold double quarter-over-quarter, with an average auction size of $52,000. While most auctions last one day, the shortest auction closed in only 16 seconds. More than 750 companies representing more than 40 different industries and based in 47 states are registered to sell receivables through The Receivables Exchange. As other sources of business financing continue to dry up -- or come at a very high price -- the Exchange brings more than $20 billion of competitively-priced capital to the businesses participating in its online marketplace.

"We continue to see tremendous demand from companies looking to improve cash flow and position themselves for sustainable growth," said Justin Brownhill, co-founder and chief executive officer of The Receivables Exchange. "By bringing receivables financing into an open, competitive marketplace, we're able to bring affordable capital to companies that would have never before used their receivables to increase their liquidity and improve their financial performance."

Optimism among small business has remained low. According to data released from the National Federation of Independent Business (NFIB), the Index for Small Business Optimism has been below 90% for 18 months, falling to 88% in December. With little to no access to funding, plans to make capital expenditures fell to 16%, revisiting the 35-year record low.

Small and midsize businesses are the engine that drives the American economy. Yet, for most companies, accounts receivable represent the most under-utilized asset on the balance sheet, with more than 60% of working capital tied up in outstanding invoices. The average turnover of receivables is 58.9(1) days, meaning most businesses wait nearly two months before collecting cash owed to them by their customers -- essentially extending them a free loan that they could otherwise reinvest into growth. By selling their receivables on the Exchange, businesses free up cash to accelerate re-investment into their businesses such as hiring more employees, expanding operations, investing in infrastructure and delivering more goods and services, all as a result of their strengthened liquidity and financial position.

Benefits of accounts receivable financing through The Receivables Exchange include:

--  Increased Liquidity: Access to cash in as little as 24 hours
--  Complete Control: Companies set all auction parameters, including
    minimum advance, maximum fee and auction duration.
--  Lower Cost of Capital: Competitive real-time bidding drives down cost
--  Improved Debt Position: Receivables are sold as an asset versus
    traditional lines of credit, which are balance sheet liabilities
--  Less Restrictive: No all asset liens, restrictive covenants or personal
    guarantees
--  Key Financial Benefits: Decrease Days Sales Outstanding (DSO), increase
    liquidity ratios, enhance ROE

The Receivables Exchange serves as a centralized capital marketplace for small and midsize businesses seeking alternative ways to finance growth and optimize their working capital management. Learn more about how companies are improving cash flow by financing accounts receivable at www.receivablesXchange.com.

About The Receivables Exchange

The Receivables Exchange (www.receivablesXchange.com) is the world's first online marketplace for real-time trading of accounts receivable. The Receivables Exchange is changing the landscape of small business financing by providing a new dimension in working capital management. The Exchange connects a global network of accredited institutional investors (Buyers) to the nation's millions of small and mid-sized businesses (Sellers) in search of capital to grow. Buyers get direct access to an $18 trillion new investable asset; Sellers gain access to a new competitive working capital management solution by having their receivables bid on in real-time by multiple Buyers.

(1) Source: Wall Street Journal, average length of Days Sales Outstanding (DSO's) of U.S. companies under $500m in revenues.

Contact Information

  • Company Contact:
    Laurie Azzano
    The Receivables Exchange
    415.786.3317
    Email Contact