Friday, April 24, 2009

Fred Smith, CEO of FedEX recently spoke at the Common Wealth Club in SF. You can hear his speech at the link provided below.

In his speech, he described how a company because "an overnight" lowering of their credit limit by their bank was not able to fulfill their customer's orders. In this example, Fred points out that because of the reduced access to money, both the company and their customer were struggling to keep afloat. This example illustrates how the financial and business sectors are intimately intertwined and any unexpected disruption can lead to:

~Business Failure
~Reduced Tax Revenue
~Loss of Jobs

I'm here to say that this didn't have to happen at all. There are funding programs, outside the traditional banking system, that can supply cash very quickly for many situations like the one above. Accounts Receivable (AR) Financing. This is the selling of a company's receivable accounts at a small discount to a Factorer, who then assumes the risk of the account debtors.

AR Financing could have helped the company in Fred Smith's example seamlessly securing the necessary funds rather than struggle with the burden of the reduced bank credit.

Fred talks about a plastic parts manufacture. Check this link for Fred Smiths Audio

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