Great article here on FT.com highlighting the precarious position suppliers find themselves in trying to fund recovery growth without access to working capital and credit from traditional sources.
The article reports on a task force setup in the UK to "look at small and medium-sized businesses’ access to the credit necessary for innovation and growth that will lead to economic recovery." And while it is UK-specific, the dynamics it reveals are common challenges faced by many smaller suppliers as they try to grow out of the recession and support the growth demands of their customers. Here's the money quotes:
With an economic recovery beginning to take hold in the UK (as in the US), suppliers need to be able to grow and expand to meet increased demand from their customers. But with traditional sources of credit and liquidity continuing to be dry wells, alternative sources need to be found. Many large, cash rich companies are funding the liquidity need by utilizing Dynamic Discounting tools to give suppliers access to their cash in exchange for a discount. And many smart smaller businesses are taking advantage of this for exactly the reasons stated in the article...so they can grow, expand and increase their revenues!
One Ariba Network supplier is doing exactly this...and finding the access to accelerated cash flow to be extremely important. Check out Mediafly's story here to learn how.