New Study: Business Lack Access to Capital, and How Buying Organizations Can Help

September 22, 2014


According to a new survey from Pepperdine University and Dun & Bradstreet Credibility Corp and the private capital access report, business lack access to capital.

What does this mean? It’s simple: When businesses have little or no capital, they’re unable to grow, restricting the overall growth of our economy.

Almost 2,500 businesses with revenue of $5 million or less participated in the survey, and the results were startling. A majority of these businesses revealed they were having trouble accessing credit and noted that these restrictions will stunt growth and hiring in the near future.

What is causing all of this?

While many factors come into play, experts have repeatedly named reluctance of banks to make smaller loans as the main cause. Roughly 60% of these businesses surveyed had applied for bank financing, yet only half said they were approved for the loan. Without bank loans, how can small businesses get financed and continue to operate?

There’s always alternative lending as an option that doesn’t necessarily involve a bank (such as factoring or asset-based lending), but only 26% of survey respondents applied for asset-based loans, and only a third received them.

How can we stop this from getting bigger than it is?

When factoring is too expensive, and bank loans are difficult to obtain, there’s another option available to small businesses, and this includes you. By investing in your supply chain and offering to pay approved invoices early in exchange for a discount, you are not only strengthening the economy, you’re adding to your bottom line.

By offering your suppliers a dynamic discounting or enhanced discounting program, you’re giving suppliers an easy and low cost financing alternative, and incurring no risk because the invoices being paid early, would have been paid anyway. Your suppliers will no longer need to rely on bank loans or alternative lending, as getting paid faster will keep them afloat and stable, allowing them to hire, grow and thrive.

Who is already doing this?

Fortune 500 companies like Coca-Cola Bottling, Hallmark and PG&E are considered top performers in the payables space because they’ve 1) maximized early payment discount capture--to the tune of millions of dollars per year, 2) cut down their invoice cycle time, resulting in major time and cost savings, and 3) maintained healthy and strong supplier relationships as a result.

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