The Benefits of Asset Based Lending in Terms of Imposing Forced Discipline
One thing former borrowers tell us is that while they may have resisted tight control reporting initially, they learned it imposed a discipline (a form of which) they continued when they returned to bank financing. The discipline of tightly watching receivables kept them more in tune with customer issues which allowed them to address those issues quicker. This sped up collections and enabled the collateral to perform better.
When business owners watch ineligibles and their borrowing base, they can’t get themselves into trouble with borrowing (i.e., over-advance situations) which may cause their bank to ask for a pay down on their loan. This internal monitoring allows business owners to get to their customers before there’s an issue. And if customers don’t pay, owners have time to go to the bank and address the issue before they’re over-advanced. It’s always better to see an issue coming, and banks appreciate that.
A discussion of more frequent reporting and how asset based lenders analyze what’s eligible and ineligible is beneficial to businesses overall. Internal monitoring keeps a business running smoothly and helps avoid cash flow problems. It provides a pulse of what’s going on in the business which is always a benefit to its owners.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.