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Burn Me Once, Shame On Me. Burn Me Twice…

Amanda Potashner — Wed, 04 Nov 2009 15:35:00 GMT

CIT's future is uncertain. Liquidity remains the No. 1 challenge for businesses - clearly, now more than ever - even if you're not a CIT customer. Even if your cash flow hasn't been interrupted, do you really want to wait to see if - and when - it will be? If not, what's your next move? If you're like most companies, you're exploring your options. A reliable, diversified source of liquidity that by its very model provides protection by eliminating the risk of one source of funding almost seems to be too good to be true (at least that's what our customers tell us!).

The Receivables Exchange provides CIT customers with the opportunity to not only gain immediate access to $20 billion in liquidity, but to position themselves for uninterrupted access to capital when and if they need it - all on their own terms. The Exchange makes it easy for CIT customers to transition to start selling their receivables.

Remember your fiduciary responsibility and act now. Don't get caught flat-footed when the risk of losing your cash flow remains very real. Take control of your financial future because the sustainability and growth of your business depends on it!

Amanda Potashner, Associate, Marketing Communications at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.

http://blog.receivablesxchange.com/blog/bid/10770/Burn-Me-Once-Shame-On-Me-Burn-Me-Twice

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Standing in the Wake of CIT Bankruptcy Filing

Laurie Azzano — Mon, 02 Nov 2009 12:27:00 GMT

After months of efforts to stay afloat, CITs filing for bankruptcy yesterday sent shockwaves through the small and midsize business community, particularly retailers and manufacturers. Thousands of retailers and manufacturers are seeing their single source of liquidity evaporate before their eyes.

Yesterday's filing underscores the fact that companies can no longer rely on one primary source of liquidity. It is imperative that they have broad access to competitively-priced capital.

The Receivables Exchange stands ready to provide a diversified source of liquidity to help CIT customers maintain the strength of their businesses. These are historic times. Fortunately, companies have a reliable funding alternative as The Receivables Exchange stands ready with more than $20 billion in liquidity to help CIT customers fill their liquidity gap.

Laurie Azzano, SVP, Head of Marketing at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.

http://blog.receivablesxchange.com/blog/bid/10738/Standing-in-the-Wake-of-CIT-Bankruptcy-Filing

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

What’s Next For CIT? Hurry Up and Wait…

Amanda Potashner — Thu, 29 Oct 2009 08:51:00 GMT

The only thing we know for certain with the unfortunate CIT situation is that we remain in a wait-and-see situation as to whether the CIT restructuring will happen in or out of court. CIT has faced potential fallout since July and this latest $4.5 billion addition to credit facility comes in the 11th hour before the debt-exchange offer expires (and the vote for prepackaged bankruptcy should that fail). They are trying to shorten the length of time should they file for Chapter 11 with a prepackaged plan. Regardless, they will need to use these funds to finance existing debt coming due as a result of restructure. Keep in mind, though, that they tried for $6 billion not too long ago.

Regardless of the outcome, it is hard to ignore the bright shining spotlight that has been shown on the importance of diversification of funding sources for businesses of all sizes. By putting all of their financial eggs in one basket, businesses are increasing their exposure to unnecessary risk. Regaining control of their own financial future rather than having it dependent on the viability of one "Too Big To Fail" lender has never appeared more unwise.

If anything, this economy has proven that no one is "Too Big To Fail" and small and midsize businesses should proactively seek ways to not only improve their liquidity position, but reduce risk of exposure by being tied to only one source funding.

The Receivables Exchange provides an alternative to CIT financing.

http://blog.receivablesxchange.com/blog/bid/10697/What-s-Next-For-CIT-Hurry-Up-and-Wait

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

CIT Amends Terms as Clock Ticks Away

Amanda Potashner — Mon, 26 Oct 2009 15:05:00 GMT

Scrapping for survival, CIT Group, the century old commercial lending giant that lends to nearly 1 million of the nation's small and mid-size companies, is in the 11th hour as they continue to try to build bondholder support for its debt-exchange offer or prepackaged bankruptcy plan, going so far as to warn its bondholders last week, that without one of these 2 plans it would be forced to liquidate.

Many have criticized the restructuring plan - why? At this point they are still struggling to gain bondholder support as the deadline for the debt exchange and pre-package plan draws near. CIT announced today, that it has sweetened the deal to some of its bondholders by increasing the interest rate payable from 9% to 10.25% and extended the deadline to those holders from Oct 29 to Nov 5. The recent amendment applies to holders of bonds issued by a Canadian unit of the lender who are entitled to recover money from both Canadian assets and the parent company in the United States.

While all of us wait for CIT's outcome to be unveiled, many small and midsize businesses have proactively begun to seek out alternative financing options to source working capital. Rightfully so, the fear of the unknown and risk of losing their access to funding has prompted many businesses to turn to new innovative solutions that not only meets their vital working capital needs, but allows them to limit unnecessary risk of one source lenders.

More to come ...

In the meantime, The Receivables Exchange provides an alternative to CIT financing.

http://blog.receivablesxchange.com/blog/bid/10672/CIT-Amends-Terms-as-Clock-Ticks-Away

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Obama Outlines Plan to Help Small and Midsize Business – Is it Enough?

Amanda Potashner — Wed, 21 Oct 2009 14:30:00 GMT

Over the past few weeks, we have all heard news of the recession lifting, but this has yet to trickle down to Main Street U.S.A. With unemployment nearing 10% and capital still not flowing back to Main Street, many of the nation's small and midsize businesses (SMBs) are wondering if it's too late for them to survive. . Considering SMBs are responsible for more than two-thirds of all new jobs created in the U.S. each year, they are the critical driver that will enable sustainable U.S. economic growth and stability.

So, what is being done? After laying out plans in March to provide credit to SMBs, the government is now under enormous pressure to provide more effective rescue efforts to these undercapitalized SMBs. Today, President Obama outlined a set of government initiatives aimed at providing more credit to SMBs and helping the smaller banks gain access to bailout funds. While I applaud the government's realization of the importance of SMBs to the U.S. as a whole, their actions remain slow and are an all too familiar reminder of the struggles that these cash-strapped SMBs face every day.

Today, some business owners can't find working capital to fund contracts which create jobs, while others due to sluggish sales can't afford to increase their debt load. That said, this is a call to action for policy makers to support innovative responsible credit models that provide reliable and responsible solutions to meet the financing needs of small business and also for SMBs to search for these alternative sources of funding.

As the economy regains momentum, and technology continues to accelerate the pace at which business is conducted, only innovation and an uncompromised focus on transparency and responsible financing models will drive sustainable growth and prevent businesses from being reliant on a single source of funding, and thereby exposed to unnecessary risk. Is there a solution?

Here at The Receivables Exchange we've been fortunate to help hundreds of businesses improve their working capital- on their own terms. By auctioning their receivables on our online marketplace, these SMBs can tap more than $20 billion in liquidity from a global network of accredited institutional investors in as little as 24 hours - without increasing their debt. Competitive real-time bidding allows these businesses to drive down their cost of capital.

While the government has finally taken an actionable interest in aiding small business, SMBs must also realize their fiscal and fiduciary responsibility to not keep all their "eggs in one basket". If nothing else, this credit crisis has proven that relying on one source of funding can be detrimental to the survival or growth of a company where cash flow remains the life blood of their business.

http://blog.receivablesxchange.com/blog/bid/10633/Obama-Outlines-Plan-to-Help-Small-and-Midsize-Business-Is-it-Enough

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

The Receivables Exchange Forms Alliance with American Staffing Association

Amanda Potashner — Tue, 20 Oct 2009 12:47:00 GMT

Today The Receivables Exchange announced its alliance with the American Staffing Association (ASA), the voice of the nearly $90 billion staffing industry whose members account for 85% of U.S. staffing industry sales and operate more than 15,000 offices throughout the nation. Read the full press release.

Liquidity remains one of the greatest challenges for staffing companies - even in the best of times - as they manage their cash flow to meet significant payroll needs. Their working capital struggles have only intensified as the doors to traditional financing sources remain locked.

"The Exchange delivers an innovative cash flow solution to help our members fund growth," says ASA president and CEO Richard Wahlquist.

For the first time, staffing firms can improve their cash flow and tap more than $20 Billion in liquidity by auctioning their receivables to a global network of accredited institutional investors on this new online receivables marketplace.

To learn more about how staffing companies nationwide are using The Receivables Exchange to increase their liquidity, visit www.receivablesxchange.com/staffing.

http://blog.receivablesxchange.com/blog/bid/10618/The-Receivables-Exchange-Forms-Alliance-with-American-Staffing-Association

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Financial Health – The Great Divide between SMBs and the Big Guys

Bill Siegel — Mon, 19 Oct 2009 13:04:00 GMT

In the U.S we can divide business into two distinct categories; small and midsize business (SMBs) and fortune 1000 companies. For the most part the SMBs are financed by small and regional banks, while the fortune 1000 companies are banked by large institutions and investment banks. As we wind down 2009, the dichotomy between the health of these two groups is becoming more apparent -specifically as it relates to employment and access to capital.

Employment acts as a good barometer to assess the relative health of an underlying company. According to a recent ADP report, large businesses shed 60,000 jobs in August, while SMBs shed 116,000 jobs. With regards to access to capital, 2009 is the first year since 2002 that new bond issuance has been greater than new loan issuance. The divide here is quite evident as bond issuance is only available to fortune 1000 companies that have access to investment banks of national lenders with the ability to underwrite a syndicate deal. SMBs do not have access to this type of capital and thus are relegated to being dependent on their local banking partner for loans. Additionally, the Treasury recently reported that banks who received TARP money reduced their outstanding loan book by $54 billion in July. Once again, we can see that the financing side clearly favors the larger businesses with access to the public debt markets.

So where does the rubber meet the road? Loans within the 2005-2007 vintage will have to be worked out in the coming years. The non-lending behavior we are seeing is a sharp symptom that suggests just how acidic this vintage is, and how long it will take for the banks to digest them. Smaller banks will either be absorbed by larger healthier banks, or be forced into the arms of the FDIC.

Here at The Receivables Exchange we've rethought working capital in hopes that we could help the nation's small and mid-sized businesses (SMBs) gain access to capital quickly and more effectively. SMBs are the backbone of the U.S. economy representing more than fifty percent of the nation's non-farm GDP and are responsible for more than two-thirds of all new jobs created in the Unites States each year. Yet, more than 60% of their cash flow is tied up in outstanding invoices. These businesses don't have the advantages of the "big guys" when it comes to accessing affordable working capital - or these days any capital.

Bill Siegel, CFA, is Vice President, Head of Liquidity Desk at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.

http://blog.receivablesxchange.com/blog/bid/10607/Financial-Health-The-Great-Divide-between-SMBs-and-the-Big-Guys

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Big Companies Access Capital while Small and Midsize Businesses Get Left Behind

Bill Siegel — Thu, 15 Oct 2009 09:09:00 GMT

Last Thursday the Federal Reserve released data that revealed growth in the U.S. commercial paper (CP) market for the eighth consecutive week. That said, seasonally adjusted, CP outstanding remains roughly half of what it was at its peak in 2007. The recent uptick appears to be the result of a few foreign banks taking advantage of the low rate environment, and a slight increase in regular non-bank commercial activity. While it's difficult to draw a direct statistical correlation between the CP market and extensions on invoice terms of credit, the anecdotal evidence is quite overwhelming and worthy of consideration.

As the CP market dried up during the credit crisis, large companies that were dependent on CP to cover day-to-day expenses were unable to create new issuance. A widely adopted strategy by large manufactures in this position was to first draw down on their current lines of credit, and then to push their payable terms out as far as possible--essentially slowing down payment to their smaller suppliers leaving them to bear the brunt of the collapse in the CP market. These larger, more powerful customers used these small and midsize suppliers as a massive network of free short term loans. None of these loans were approved, just taken by force with indefinite terms. In extreme cases, such as auto suppliers, the level of distress and political focus led the government to intervene.

While the slight uptick in the CP market is notable, SMBs -who traditionally finance through lenders- are still struggling without access to affordable capital as banks continue to be risk averse. Even if the CP market does gradually return, longer dated terms of credit will likely linger for a prolonged period of time. A short term 60 day loan still costs money, while 60 day invoice terms are free.

http://blog.receivablesxchange.com/blog/bid/10563/Big-Companies-Access-Capital-while-Small-and-Midsize-Businesses-Get-Left-Behind

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Small and Midsize Businesses at Risk as Fate of CIT Remains Unknown

Amanda Potashner — Wed, 14 Oct 2009 10:04:00 GMT

The anxiety level is on the rise again for the nearly one million small and midsize businesses (SMBs) that rely on CIT for access to capital. Recent headlines detail the latest in the century old stalwart's struggles to avoid bankruptcy including a second restructuring. Meanwhile, CEO Jeffery Peek has announced his resignation at year end.

While the fate of CIT remains relatively unknown, the reality is that things are looking grim. As a result, SMBs are left with the "what if" scenario and must be prepared to act accordingly.

When the first alarm rang on CIT's financial struggles, many went searching for alternative liquidity sources to meet their timely cash flow needs. That said, the vital lesson to be learned from this is to mitigate risk through diversification. The times of reliance on one single source of funding to fund day-to-day operations are over. Why leave your business virtually unprotected should that lender go under?

Now is the time for SMBs to take control of their own livelihood - working capital.

The Receivables Exchange, a market-based solution, fills that liquidity gap and helps mitigate risk through diversification. SMBs can sell their receivables in a real-time online auction to a global network of accredited institutional investors who bid against each other to purchase their receivables. These Sellers are able to diversify and tap billions in liquidity in as little as 24 hours. Regardless of the CIT outcome, it is both prudent and the fiduciary responsibility for all CFOs and business owners to be proactive and regain control of their working capital.

http://blog.receivablesxchange.com/blog/bid/10551/Small-and-Midsize-Businesses-at-Risk-as-Fate-of-CIT-Remains-Unknown

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Credit Crisis- The Aftershock of Commercial Real Estate

Nic Perkin — Tue, 13 Oct 2009 09:41:00 GMT

As I noted in my previous blog, I'm having that strange quiet feeling you get before a storm. There are a number of reasons to be cautious in this environment, not the least of which is the increasing number of people who are excited about the market climbing a "wall of worry".

But let's get granular here. There are specific reasons to be concerned - notably the commercial real estate market which is facing hundreds of billions of dollars of losses in the next three years. To put things into perspective, 2 Trillion - with a capital T - of commercial real estate mortgages are maturing between now and 2013. Of those, $450 billion are not expected to be refinanceable, assuming they survive to maturity, which many wont. Delinquency rates on these mortgages are going through the roof - growing at levels that far outpace the early 1990s- spanning Industrial, Hotel, Multi-family, Office and Retail mortgages. In terms of delinquencies, this past summer was a disaster and, all in all, 2009 is not looking great. This time it's the larger loans that are at risk, as opposed to the historical norm of small loans being the problem child.

All things considered, what concerns me is, how traditional financial institutions, which are already on their heels (and loaded with taxpayer money), are going to survive these write downs. Again, it is not a question of money. There is more sidelined cash sloshing around now than ever before in history. The problem is that the traditional mechanism for allocating this cash efficiently to the end user is already in a weakened state and it seems as though an assault is soon underway.

The majority of these financial institutions remain focused on their fiduciary responsibility to their shareholders rather than making sure America's small and midsize companies are getting the capital they need, when they need it, at a reasonable price.

I prefer to be an optimist and I generally am, but I'm having difficulty not thinking about this like an earthquake aftershock. I don't think we are headed back towards the mentality of 12 months ago, questioning "will there be a tomorrow?" But, there is cause for some real concern. The only shred of solace lies in my clarity of the situation and the hope that others who must be seeing what I am seeing, and therefore, should have already priced these consequences into various asset prices. That said, if you are a small or midsize business, diversifying the sources of working capital for your business should be a top priority. The time for betting on one source to be there for you when you need them has come and gone.

One of the rules that I live by is: "Generally, things are never as bad or as good as you first think they are." So, I'm looking for that truism to be in effect this time around. On a more positive note, the IPO market is looking pretty robust this last month or so. This increased activity level of companies successfully entering the public markets is certainly promising. So, we have that going for us. More on that next time.

Nic Perkin is Co-founder and President of The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.

http://blog.receivablesxchange.com/blog/bid/10466/Credit-Crisis-The-Aftershock-of-Commercial-Real-Estate

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

WSJ: Small Business Credit Crunch Continues

matt konigsmark — Fri, 02 Oct 2009 09:49:00 GMT

In today's Wall Street Journal, Meredith Whitney echoes what we hear daily from our small and midsized business (SMBs) customers: It's tough to get credit and will get worse before it gets better.

"Anyone counting on a meaningful economic recovery will be greatly disappointed," Ms. Whitney says. "How do I know? I follow credit, and credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan."

Worse yet, Ms. Whitney says "I believe that we are only in the early stages of the second half of this credit cycle."

In this well-informed article, Ms Whitney goes on to explain why small businesses matter so much to the lifeblood of our national economy. For example, "they employ 50% of the country's workforce and contribute 38% of GDP. Without access to credit, small businesses can't grow, can't hire, and too often end up going out of business."

Without SMB access to capital, and for that matter, affordable capital, it will be a long, hard road ahead for U.S. economic recovery.

After you read the WSJ article, let us know what you think about The Receivables Exchange as a working capital management tool and whether we can help your business.

Matt Konigsmark is Sr. Director of Interactive Marketing at The Receivables Exchange, an accounts receivable financing tool. The Exchange is the the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.

http://blog.receivablesxchange.com/blog/bid/10375/WSJ-Small-Business-Credit-Crunch-Continues

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Two Factors Needed for Small, Midsize Business Financing to Increase

Bill Siegel — Mon, 28 Sep 2009 14:19:00 GMT

We have come a long way since the total paralysis last fall and capital has been steadily creeping back into various asset classes. Typically, capital will flow to markets where investors have confidence in asset quality and where there is an active environment for trading and obtaining liquidity. Following that logic, bank lending will actually be one of the last markets to recover. In the wake of the Reserve Fund breaking the buck, the retail money market has recovered with the help of the Fed and Treasury guaranteeing all money market balances.

We have seen the commercial paper market regain its legs with the help of the Fed's Commercial Paper Funding Facility. The market for corporate debt issuance has sprung back to life with a slew of new issuance and credit spreads rallying back to pre-Lehman levels. Investor confidence has also driven the stock market higher, and has even allowed the IPO market to crack open. All of these markets carry the key characteristics of confidence in the underlying asset, and an active market for trading.

At the bottom of the ladder are small and midsize businesses (SMBs) and the tangible assets they hold on balance sheets. Capital has not started to flow there.

While the above markets have recovered, business still remains tough for small and midsize firms. Additionally, banks are unwilling to risk holding additional illiquid collateral on their balance sheets should a loan default. Two things will need to happen for banks to become more active in the SMB lending space. First, the price will have to rise. Banks should and will raise their spreads above prime on new loans. Second, the banks will have to slowly dispose of troubled loans that remain on their balance sheets. This is beginning to happen at the higher levels, where institutional capital is willing to bid ‘x' cents on the dollar to take over larger whole loans. At the lower level, liquidity will still be an issue for the foreseeable future, impeding access to capital for the nation's small and midsize businesses whose recovery is vital to the growth of the U.S. economy

http://blog.receivablesxchange.com/blog/bid/10313/Two-Factors-Needed-for-Small-Midsize-Business-Financing-to-Increase

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Credit Crisis: Is the Second Leg Coming?

Nic Perkin — Fri, 11 Sep 2009 17:00:00 GMT

I'm getting that nervous feeling again - the same one I got in late 2006. At that time, gas prices were going through the roof, wages were flat, the stock market was sky high and real-estate prices were continuing to climb. Everyone was clearly over leveraged and the cost of living, driven by increases in commodity and food prices, was squeezing just about everyone. And yet nobody, but nobody, could explain to me in any cogent way why the market values and real-estate prices were justified.

The one thing I definitely took away from that period of time was to listen to your gut. And my gut, right now, is telling me that some pain lies ahead. The markets are up some 50% from their lows, now that the World has basically realized that the end of civilization as we know it is not happening in the next 12 months. It actually always morbidly amused me that somehow so many people thought they could anticipate the fall of the American and World economies. I think my view of any kind of momentous end, such as that of our economy or, more generally, our World as we know it, is that it is unlikely to be something largely anticipated. My thinking of cataclysms, economic or other, is that they tend to be rather sudden, as opposed to hotly debated on Sunday morning news programs.

So why am I nervous now?

Well, mostly because I simply do not see the availability of credit improving anytime soon. Much of the bad subprime loans have already passed through the system, but recent news on the increase of prime loan defaults is particularly worrying. The WSJ notes that past due mortgages for prime loans are now up from 15% of the total to nearly 40% of bank portfolios. Recent reports show the number of US banks expected to go under in the next 12 months is between 250 and 350. But it is hard to imagine that many banks, including the relatively healthier ones, could have anticipated having to establish reserves for their prime loans at these levels. It's too early to tell, but this very easily could turn into the second leg of the Credit Crisis. With unemployment heading towards nearly 11%, it is hard to imagine that the prime loan situation will not worsen. We will just have to wait and see.

So that was the bad news. The good news is that the IMF sees the economic downturn leveling off, and economic conditions on a global level improving. This to me seems counter-intuitive, but, you have to give credit where credit is due, and these guys got it right(er) the first time around. The IMF was one of the first groups I recall sounding the alarm bell last fall (maybe even before) - so I'm not going to go against them this time around.

That said, my guess here is that eventually everyone will wake up to the fact that cost cutting can't go on forever as a mechanism to improve earnings and that revenue growth will not return until companies begin taking risks and deploying capital. The problem here of course is: where are they going to get the capital to create opportunity and growth? Sometime in the next five years a vibrant electronic capital market for small and medium companies will exist, driven in large part by what we are doing here at The Receivables Exchange. It will essentially be (and essentially already is) the equivalent of the commercial paper market for large companies. The issue today regarding US economic growth is not that there is no capital around for SMBs to put to work. Rather, quite the contrary, the World is basically awash with cash. The issue is that there has not been a ubiquitous mechanism for efficiently allocating this available capital to the companies that need it, when they need it, at the price that they deserve...until recently.

We're seeing it everyday at The Receivables Exchange. I just had one of our Sellers contact me personally the other day to tell me how indebted his company is to us - not only are they gaining much-needed access to cash. But, by trading their receivables and gaining access to this cash, they are suddenly able to grow (in a down economy!). It remains to be seen what will come of this phase of the credit crisis and what the eventual third leg will look like. But, I think it's safe to say that the ride isn't over yet. Stay tuned.

http://blog.receivablesxchange.com/blog/bid/10179/Credit-Crisis-Is-the-Second-Leg-Coming

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Are We a Factoring Company?

matt konigsmark — Wed, 09 Sep 2009 18:30:00 GMT

CIT's headline-making financial misfortunes have suddenly put the spotlight on the hundreds of small and midsize companies that factor receivables. Factoring or accounts receivable factoring is a very effective financing mechanism that allows many businesses to improve their cash flow by selling their account receivables (outstanding invoices) at a discount.

Because The Receivables Exchange also allows businesses to turn their outstanding invoices into cash, we're often asked if we are a factoring company. We are not. While the underlying asset is the same, accounts receivable, and we also allow businesses to improve cash flow, the transaction is entirely different, making us a flexible, transparent working capital management solution.

The Receivables Exchange provides an eBay-like online auction marketplace for buying and selling commercial receivables. This puts businesses (Sellers) in control of their financing, letting them sell their invoices on their terms, without personal guarantees or all-asset liens. Companies can sell single or multiple receivables. Accredited institutional investors (Buyers) compete in real time to purchase these receivables. This provides transparency, price visibility and quick access to a competitive source of funding.

Another advantage of the open marketplace is that as Sellers develop a transaction history on the Exchange, Buyers become more informed about the Sellers and their Account Debtors, enabling Sellers to lower their cost of capital - the more they trade, the more they save!

Benefits at a Glance:
1. Complete Control and Flexibility - You control the terms and timing by setting auction duration, advance amount and discount fee. Seller can use how and when they wanted.
2. No Notification - You maintain the relationship with your customer
3. More Flexibility - No restrictive covenants, all-asset liens or personal guarantees
4. Competitive Costs - Real-time auction drives down cost of capital
5. Quick Access to Cash - Access to billions in liquidity in as little as 24 hours
6. Risk Diversification - Pool of Buyers means you don't have to rely on one funding source

http://blog.receivablesxchange.com/blog/bid/10173/Are-We-a-Factoring-Company

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

CIT Filing Raises Restructuring Questions Again

Bill Siegel — Wed, 02 Sep 2009 18:03:00 GMT

On Monday CIT filed an 8-K with the SEC disclosing that they intended to skip an interest payment on a long-dated indenture. The debt carries an amendment that allows CIT to miss an interest payment without incurring an event of default.

For anyone reading this, whose eyebrows are not already raised, this is not normal behavior. This is desperate behavior befitting a company that is hanging on to every spare dime they can muster. CIT is in a race against the clock. The company is facing a $500 million maturity in November. Unfortunately CIT will not be able to "defer" this maturity, and will have to complete a major restructuring before then.

It is in CIT's best interest to accomplish this restructuring as quickly as it can. The market will likely put CIT into a painful spiral if the company is not transparent about its efforts in the coming weeks. Press releases that are full of insight from senior management, along with public presentations describing current efforts are good things to disseminate early and often.

Slipping an 8-K filing in without a press release on something as material as skipping an interest payment is not encouraging. The behavior is indicative of a poor management team sticking to the same strategy that got them in this mess in the first place.

http://blog.receivablesxchange.com/blog/bid/10113/CIT-Filing-Raises-Restructuring-Questions-Again

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Ariba Blog Offers Three Solutions to Bridge Working Capital Gap

matt konigsmark — Tue, 01 Sep 2009 10:14:00 GMT

On Monday, The Wall Street Journal reported that "Companies with annual revenue of more than $5 billion sped up their collection of cash from customers while slowing their own payments to suppliers. Firms with less than $500 million in annual sales, on the other hand, generally took longer to collect cash and paid their bills faster than in the same period a year ago."

In response, Ariba's Drew Hofler blogs that "the dynamic that the WSJ points to in this article - the have's taking advantage of the have not's - is a classic solution to a long-standing conundrum. Companies want to delay payment as long as possible while their suppliers want to get paid as quickly as possible, two business objectives that are diametrically opposed."

Hofler goes on to say, "the sad part is, balancing working capital optimization and reducing pressure on your key suppliers don't have to be mutually exclusive. ... new technologies have arisen and some traditional methods are getting new looks due to their ability to achieve BOTH results in a win for both parties."

Hofler's post then examines three options that can provide winning results for companies and their suppliers, including The Receivables Exchange, an Ariba partner.

http://blog.receivablesxchange.com/blog/bid/10099/Ariba-Blog-Offers-Three-Solutions-to-Bridge-Working-Capital-Gap

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Wine and Prosciutto as Collateral?

Bill Siegel — Wed, 26 Aug 2009 18:42:00 GMT

Gianni Zonin, chairman of the Banca Popolare di Vicenza is proposing that Italian banks accept expensive wines and legs of prosciutto as collateral on loans to producers. Zonin was recently quoted in the Guardian saying, "We've done it with cheese, why not with prosciutto and good wines like Brunello di Montalcino and Chianti Classico?"

It sounds silly, but if a bank is going to be stuck holding collateral after a loan defaults, I'm sure they would rather have assets like wine and cheese over property and equipment. At a minimum they can have a proper drink while liquidating the collateral. Illiquid and inadequate collateral is becoming a visible theme as more banks deteriorate in the U.S. The inability to recover principle on defaulted loans and bankruptcies is a major issue in the current economic environment. So far, the recovery rate on unsecured debt has fallen 50% from previous levels.

At these depressed levels of recovery, it's easy to see how applying the current default rate can blow holes right through regulatory capital ratios. For most banks it is not a matter of improving terms on future loans; it's more a matter of time before they are forced to recover principle on a significant portion of their outstanding loans. In effect, this is the long route towards mark-to-market.

Instead of selling the loan at an "artificially depressed price," the bank is forced to prove what it is worth by turning it into cash. It's time to call a spade a spade, and brace ourselves for the slow grind of more bank failures. The more banks we see fail, the harder it will be for small businesses to find the credit they need to survive.

http://blog.receivablesxchange.com/blog/bid/10042/Wine-and-Prosciutto-as-Collateral

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Could a Developing Trend Once Again Leave SMBs Out in the Cold?

Bill Siegel — Mon, 24 Aug 2009 09:05:00 GMT

Prime Minister Vladimir Putin recently gave VTB (large Russian bank) head Andrei Kostin permission to take a week's vacation after the banker said he was on track to outpace a mandate to boost the lender's loan portfolio by 100 billion rubles ($3.14 billion) in three months.

While Russia's strong-arm lending practices are uncommon, perhaps US pay czar Ken Feinberg should be taking notes if the US administration is truly determined to loosen the purse strings on US bank lending. Putin's technique and execution are unmatched globally when it comes to reinvigorating the lending environment.

However, for better or worse, the US government can't quite coax banks to lend like the Russians do. In the US, banks innovate around new rules and regulations they don't like. They don't dance for government officials and their veiled threats. Newsweek recently reported that 70% of all credit lines extended so far in 2009 have interest rates that float based on the credit default swap prices (CDS) for the referenced borrower.

One can conclude that banks have given up trying to underwrite and price risk, and have chosen to move to a market-based pricing model. We could also postulate that the product allows banks to hedge the risk of the loan by purchasing CDS protection on the borrower. One of the main problems with these recent trends is that CDS is not efficient enough to be used as a reference for loan pricing. While the CDS market is on its way towards being regulated, it will remain illiquid and volatile. Banks or any other participant could easily push around the price of a CDS that may or may not reference a loan in their loan book.

If this is the direction of the lending industry, then its development will surely draw intense scrutiny from regulators. The most glaringly disappointing part for small and midsize businesses (SMBs) is that a prospective borrower needs to have a substantial public market capitalization and public debt to even have CDS trade on them. This means that once again, many SMBs would be out of the loop on the latest and greatest lending product.

http://blog.receivablesxchange.com/blog/bid/9973/Could-a-Developing-Trend-Once-Again-Leave-SMBs-Out-in-the-Cold

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

5 Reasons Small Businesses Are Turning to Receivables Financing

Amanda Potashner — Mon, 17 Aug 2009 18:03:00 GMT

While the latest news reports that the economy is showing meager signs of improvement, access to funding remains a challenge for many small and midsize businesses (SMBs). Even thriving companies that rely on access to capital to maintain growth are struggling to improve cash flow as credit remains tight.

According to the National Small Business Association 2009 Mid-Year Economic Report, 80% of small business owners said they were negatively impacted by the credit crunch -- up from 67% a year ago. Loan volume to these SMBs remains weak as traditional lenders continue to reject viable businesses and restrict lending. As a result, many companies are turning to alternative funding sources, such as receivables financing, to meet their working capital needs and are finding that these alternative sources are often much more appealing, flexible and competitive than traditional sources.

In the past quarter, The Receivables Exchange has experienced more than 300% growth in receivables financing volume on its online market-based solution. SMBs gain access to more than $20 billion in liquidity in as little as 24 hours by selling their receivables to accredited institutional investors (Receivables Buyers) who compete to purchase their receivables.

Five reasons small & midsize businesses are turning to The Receivables Exchange

1. Quick Access to Capital -On the Exchange, companies are able to post their outstanding receivables one day and have access to cash in as little as 24 hours. Suddenly, companies are no longer held captive by tight credit markets or extended payment terms. Instead, they are able to extend those terms, preserve the relationship with their customers and still get competitively-priced capital to reinvest into their day-to-day operations.

2. Competition Drives Down Cost - The Exchange combines capital market efficiencies, competition and transparency. SMBs are able to lower their cost of capital by selling their outstanding invoices on a competitive auction marketplace where Buyers compete in real time to buy the receivables.

3. Funding Diversification -In recent news, CIT, the nation's biggest lender to SMBs, is skirting collapse amidst the credit crisis. As a result, many businesses are now questioning their vulnerability if and/or when their primary source of financing runs into trouble. By having a number of Buyers bidding to purchase their receivables, The Exchange allows companies to diversify funding sources. CFOs can sleep better at night knowing that they no longer are reliant on one source of funding.

4. Flexibility - CFOs often are hamstrung by high costs, heavy restrictions and constraints such as personal guarantees and all asset liens. Now they can achieve the financial freedom they needed to run and grow their business by improving their cash flow strategies with the Exchange. With additional monetary flexibility, these companies are able to reinvest that capital into growing their business.

5. Control - A strong word in tough times. Bound by terms set by their lenders, even before the credit crisis began, CFOs were limited in the amount of control they had when it came to accessing additional liquidity. Now, for the first time, they have the ability to be in the driver's seat and take control of their working capital management on their own terms. On the Exchange, they can determine:

auction length
which invoices to sell
the advance amount they are willing to accept
the discount fee they are willing to pay

The best bid that meets these terms will win the auction. Additionally, no transaction fees are charged unless the auction is successful.

Using alternative sources of financing creates an avenue for companies to not only survive a weakened economy, but also grow and thrive. And most important, they can use the Exchange how and when they need it. We're glad to play a part and hear the stories of success everyday on the Exchange.

http://blog.receivablesxchange.com/blog/bid/9929/5-Reasons-Small-Businesses-Are-Turning-to-Receivables-Financing

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

We’re Not Out of The Woods Yet - SMBs continue to turn to Alternative Sources of Financing

Bill Siegel — Mon, 10 Aug 2009 16:18:00 GMT

With the stock market up and credit spreads falling to their lowest level in 14 months, it would be tempting to flash the ‘all-clear' signal. Before we do that, let's check in on a few key drivers that will affect the economy in the back-half of 2009.

Mortgage foreclosures: RealtyTrac reported that as of the end of Q2, foreclosure filings were up 11% quarter-over-quarter and up 20% over the last year. This represents a continued worsening trend that is directly tied to unemployment levels. While much of the media focus tends to be on the direction of housing prices, foreclosures represent the hard truth of people being removed from their homes.

Unemployment: The unemployment rate fell to 9.4% from 9.5% in June, indicating the pace of job losses has slowed. Nevertheless, the economy continues to lose jobs, though an improvement in the rate of loss has us heading in the right direction. I suspect these job losses at this point in the cycle are a mixture of continued corporate cost restructuring and capacity excess being thinned through whole business failures. While grim, both are necessary in order for economic supply and demand to find balance.

Access to Credit: With the fed pumping money into the banking system, and credit spreads contracting, you may wonder why I even bring this up. For the average Fortune 100 company, the credit markets are ok, albeit thin. For the small and midsize business that needs more money to grow their business, the credit markets are as hostile and unwelcoming as ever. Loan burnout is now the number one reason I hear from new Sellers that join the Exchange.

This leaves SMBs in an interesting state. With demand levels stabilizing, albeit without a return to a healthy lending environment there remains a massive funding gap in the U.S. Despite money being pumped in, U.S. banks are still not healthy enough to resume the level of lending required to fill this hole leaving the lending environment for SMBs virtually inaccessible. This will result in a mixture of slower growth, and growing reliance on alternative sources of finance.

http://blog.receivablesxchange.com/blog/bid/9859/We-re-Not-Out-of-The-Woods-Yet-SMBs-continue-to-turn-to-Alternative-Sources-of-Financing

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Ariba Comments on CIT Struggle (video)

Amanda Potashner — Thu, 30 Jul 2009 12:11:00 GMT

In response to the Wall Street Journal's article "5 Alternative Sources of Funding" article, Ariba's Drew Hofler gives his take on the effects of the anticipated CIT bankruptcy on small and medium-sized businesses that rely on single-source financing options to fund their operations. Drew also provides an analysis of alternative sources of funding in which The Receivables Exchange is featured.

View Part One

View Part Two

http://blog.receivablesxchange.com/blog/bid/9775/Ariba-Comments-on-CIT-Struggle-video

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

About.com: The Receivables Exchange - A Viable Source of Capital for Small Businesses

Amanda Potashner — Tue, 21 Jul 2009 11:37:00 GMT

In light of the liquidity struggles small and mid-sized businesses face as a result of the credit crunch and most recently the CIT malaise, The Receivables Exchange was featured today as a viable working capital solution for receivables financing in Rosemary's Business Finance Blog on About.com.

The blog entitled, "The Receivables Exchange - A Viable Source of Capital for Small Businesses," said this about the Exchange: "This New Orleans-based start-up is flourishing by making capital available to small to medium-sized businesses in a time when small businesses are struggling to find financing."

The blog went on to say that "This concept has broken the mold for business models in small business financing."

Read the Business Finance blog on About.com and let us know what you think about The Receivables Exchange as a working capital management tool and how we can help your business.

http://blog.receivablesxchange.com/blog/bid/9700/About-com-The-Receivables-Exchange-A-Viable-Source-of-Capital-for-Small-Businesses

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

Three Key Factors That Led to the Collapse of CIT

Bill Siegel — Mon, 20 Jul 2009 08:49:00 GMT

Liquidity, credit quality, and management have been three key factors in determining the fate of large financial institutions through this credit crisis. Having an ‘X' through all three characteristics has generally meant death or bailout.

Companies like Lehman, AIG and Countrywide can easily be lumped in the bucket of having three strikes against them. JP Morgan and Goldman were saved by savvy management, access to liquidity, and relatively meager (as compared to peers) exposure to credit losses. Early on in this crisis, drawing a full strike through any of the three factors when considering CIT seemed presumptuous. In hindsight, however, the management team appears the more likely culprit.

Credit quality within CIT has not been an overwhelming force as losses have been in-line with other commercial peers. The company did not have outsized exposure to derivatives like its larger investment banking peers and liquidity was not an immediate issue last fall. And, unlike its now flourishing peers, CIT did not raise new capital outside of the government mandated preferred shares. By dodging the big derivative losses, the company did not act with urgency when credit began to ease in February. The passage of time and complacency at the management level seems to have drawn the final ‘X' through the company. As credit continued to erode, and upcoming debt maturities came into focus, the company failed to secure alternative funding from the government. The death spiral we have seen in the last 2 weeks is reminiscent of Lehman in that the perception of an upcoming liquidity crunch accelerated its velocity. Customers withdrew funds and drew down lines, while short term funding vanished. The closing chapter will be written in the next few weeks.

Lightly touched on, and probably misunderstood by the media is the effect of a bankruptcy on CIT's factoring division. For CIT's retail factoring customers, the risk lies in not receiving their reserve remittance on the back end of factored receivables, and the risk of future remittance getting trapped in the bankrupt entity. The immediate disruption to invoices in process, and the lack of access to continuing working capital finance is probably enough to push a number of companies to insolvency. We have already heard stories of companies desperately trying to redirect payment away from CIT to avoid disruptions.

We can't fault small businesses for trusting their working capital finance to CIT; their reputation and history was sterling. What we can conclude is that a central source of working capital finance as large as CIT cannot be funded by large bullets of long-term debt. We can also contrast CIT's model with that of The Receivables Exchange (TRE). While the Exchange's primary market is central, our funding is completely decentralized and not dependent on access to the credit markets. Going forward TRE has a pretty clear story to tell as it relates to mitigating the funding risks to the backbone of the US economy.

http://blog.receivablesxchange.com/blog/bid/9692/Three-Key-Factors-That-Led-to-the-Collapse-of-CIT

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

WSJ: CIT's Woes Prompt Surge In Activity At Receivables Exchange

matt konigsmark — Fri, 17 Jul 2009 13:12:00 GMT

The Receivables Exchange was the subject of a very favorable article in Wall Street Journal yesterday.

The article entitled, "CIT's Woes Prompt Surge In Activity At Receivables Exchange," said this about the Exchange: "The site provides a much-needed financing option for companies that are finding the doors locked at traditional credit markets."

The article went on to say that "The Receivables Exchange, which opened for business in January, is positioning itself as a new option.

"When you think about somebody like CIT, they're a single point of failure, and we have a market-based solution that brings all these sources of funding together at an auction," said [Justin] Brownhill."

The Atlantic Monthly's Recession Road Trip also stopped by The Receivables Exchange office yesterday. You can read about reporter Christina Davidson's visit in her article, Even the Recession Can Create Winners.

Read the WSJ article let us know what you think about The Receivables Exchange as a working capital management tool and whether we can help your business.

Matt Konigsmark is Sr. Director of Interactive Marketing at The Receivables Exchange.

http://blog.receivablesxchange.com/blog/bid/9683/WSJ-CIT-s-Woes-Prompt-Surge-In-Activity-At-Receivables-Exchange

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.

CIT: Too Big to Fail?

Amanda Potashner — Wed, 15 Jul 2009 09:19:00 GMT

With the failure of CIT - the nation's largest lender for small and mid-sized businesses - seemingly inevitable, those nearly 1 million small and mid-sized businesses that depend on CIT for business financing are about to be dealt another huge blow. With a weakened economy this will only add to the cash flow struggles and debt load as they try to improve their working capital.

The failure of CIT is another example of the problem we are seeing when one company controls the purse strings of so many. Unfortunately, it's the nation's small businesses that are left to suffer - where will they turn for much needed working capital to run their day-to-day operations? There is much talk about how small business is the "engine that drives this economy" but who is watching to make sure that the vehicle gets the gas (working capital) needed to get where it's going?

Instead of being held hostage by "too big to fail" financial institutions and reliance on one source of funding, many businesses are turning to a new online marketplace to gain access to working capital. The Receivables Exchange, the world's first online marketplace for trading accounts receivable (think eBay for receivables). Companies sell their receivables through auction to a global network of accredited institutional investors (receivables Buyers) who compete against each other to purchase their receivables. Capital markets and the efficiencies of the exchange model, not only drive down the cost of capital, but more importantly allow for risk diversification amongst companies. We would be able to avoid an entire cash flow disruption to the funding environment of the SMB sector. Dependence on one company as a funding source leaves America's "engine" that drives our economy extremely vulnerable should that company fail. And, the bigger they are the more that go down with them.

It's another sad day to see a company like CIT in this predicament. It would be sadder still for lessons not to be learned and for us to continue to rely on the one or two big guys to carry us through. It's time small and mid-sized businesses get their fair share.

http://blog.receivablesxchange.com/blog/bid/9655/CIT-Too-Big-to-Fail

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The Receivables Exchange is the world's first online marketplace for real-time trading of accounts receivable.