Starting off with positive news, the U.S. economy shows strong signs of recovery as the pandemic abates and confidence in the vaccines grows. On the downside, expect many parts of the economy to experience some growing pains.

For example, businesses still struggle with supply-side and labor issues. Businesses and individuals will have to choose between spending more and buying less.

Find out how these pandemic-related issues will impact businesses and the companies that fund their growth.

Potential Inflation Risks

Several pandemic-related forces may combine to drive increased inflation. For instance:

• Supply and labor problems: Some industries still struggle with supply-side issues, such as the rising cost of key inputs like lumber and semiconductors, as well as overseas shipping delays. Other companies have had a hard time attracting new workers to meet demand. Employers need to compete with government unemployment stipends and employees who have employed their time off to seek better opportunities.  A tight labor market combined with higher minimum wages are also contributing factors.
• Pent-up demand for products and services: Pent-up demand for various products and services can boost revenues but also aggravate supply and labor problems in struggling markets. Until suppliers expand production and distribution, prices for scarce human and material resources will rise.
• Government stimulus programs for individuals and businesses: The government also offered multiple stimulus programs to both businesses and consumers. People with extra cash to spend generate more revenue for businesses, but the extra customers may burden unprepared businesses and even entire industries as they struggle to scale.  Given so much cash (government stimulus) being pumped into the economy, consumers now have $2.1 trillion in disposable personal income (savings).  This disposable income, if deployed by consumers in pre-pandemic activities, should result in increased consumer spending, as estimated by the U.S. Bureau of Economic Analysis
• End of deflation from China:  With China being the hub of the world’s manufacturing for the past 30 years, China was contributing -1% to global inflation as estimated by the Fed.  More recently, China’s economy has caught up to the rest of the world and is not exporting deflation like it once did.

Comparison of the Pandemic Recovery to Historical Periods

The Inflation of the 1960s

According to speculation by economists involved in the business financing industry, ongoing government stimulus may keep contributing to higher inflation rates over the next few years. As an analogy, consider the “guns and butter” period of the 1960s when social spending heavily competed with defense spending for a share of the government’s budget.

During that time in history, modest inflation of one to two percent ballooned into five or six percent within only a couple of years. Some economists suggest that the pandemic recovery period of the 2020s could mirror that time because of increased government stimulus spending.

The Roaring Stock Market of the 1920s

A contrast of the potential of the 2020s to the growth period of the 1920s, exactly a century ago, might even appear more striking. Like today, the country had emerged from a pandemic. Similar to today’s digital revolution, innovations like electricity, refrigeration, radio and even indoor plumbing accelerated growth and productivity.  Both periods created permanent changes to the country’s population and economy resulting in an unparalleled movement of people and significant social disruption. 

Also, like the 2020s, in the 1920s, economic growth fueled a soaring stock market mostly benefiting the wealthiest people, and some financial analysts expressed concerns about it being overvalued. Sadly, the 1920s ended in the Great Depression. Besides concerns about the economy, political divisions loomed over this generally prosperous time. Again, the economy’s definitely demonstrating signs of a strong economy. On the other hand, all stakeholders in that economy have an opportunity to study history in order to avoid repeating it.

What are Some Sectors to Watch?

Some sectors of the economy will take longer to recover. In fact, some may never experience the kind of growth they did prior to the disruption caused by the pandemic. For instance:

• Hotels: Compared to three percent before the pandemic, over 15 percent of hotel loans are delinquent now. People have slowly begun to resume traveling. Many businesses relied on video conferences to avoid in-person meetings during the pandemic, and they may continue to rely upon technology because of cost savings and convenience.
• Retail store space: Even before the pandemic, e-commerce started to take an increasingly large share of retail revenues. Once people grow accustomed to shopping online, many said they plan to continue to rely on their favorite digital outlines for convenience and the ease of comparing prices. Thus, many brick-and-mortar stores have closed. Over 10 percent of retail loans were delinquent, and some experts predict that up to half of the large anchor stores in malls will close by the end of 2021. Note that while demand for physical stores declined, overall retail sales have trended up.
• Office space: The pandemic drove many employees from their business offices to their home offices. As employees and businesses have adapted to this change, many companies have turned remote work into the new normal in many industries. While the share of long-term leases as a percentage of all leases dropped, the average length of leases has declined by 15 percent.

The Good News for Secured Lenders During the Recovery

While many end-use sectors for secured lending are in recovery mode, plenty of sectors, such as manufacturing are struggling right now to keep pace with demand. The chart for the ISM manufacturing index spiked and so have both wholesale and retail sales. Accordingly, commodity prices have rapidly increased, notably for lumber, semiconductor, base metals used in manufacturing, and other products.

As cash flows recover, current demand growth for both secured and traditional funding remains somewhat flat. However, full recovery is within reach and should pick up soon as manufacturers take advantage of financing to expand production and inventories.  The saying goes ‘All change is preceded by crisis’ and today there is a huge push for lenders to adapt to innovation and technology like never before.  Capstone is ready with a fresh website redesign, enhancements to informational content, a quick and convenient funding app, as well as integration of new software and social technologies.  These updates will improve functionality and usability for current clients and make it easier than ever to help all business owners access the capital they need throughout their recovery.

Scoring a new contract or purchase order from a reliable customer can provide any contractor or supplier with a windfall growth opportunity. Still, the nature of the opportunity can also present many growing businesses with a dilemma.

Credit-worthy companies know that plenty of suppliers and other contract firms covet doing business with them.  Accordingly, they possess enough leverage to require generous payment terms that may leave their partners waiting for 60 to 90 days, or even longer, for payment.

Without an immediate payment, small businesses may lack the cash flow they need to pay vendors and employees to deliver on the contract.  In today’s world, where there are very few customers, and everything is consolidated, businesses do not have the luxury of turning a customer down.  If a company is not properly managing its cash flow, it might have to pass on the opportunity and risk never being offered it again. 

Learn more about current payment term trends and some tips to help manage cash flow in this environment.

Payment Terms Are Trending Longer

More businesses have turned to longer payment terms as a way to manage their own cash flow. As one example, The Star Tribune reported that 3M notified some suppliers that they needed to extend their payment terms from net 60 to net 90 to help manage their working capital.

Supply-chain professionals and economists have observed that 3M provides just one example of a growing trend towards extending contract payment schedules. For other examples, Best Buy and Honeywell also asked suppliers to extend payment terms within the last year.

Besides longer payment times, other causes have contributed to later payments. As an example, pandemic-related manufacturing slowdowns and supply issues have also generated long lead times. In turn, longer turnaround times will mean waiting even longer for payments.

Tips to Manage Cash Flow Challenges

Waiting months for payment poses a challenge for many businesses, including manufacturers, suppliers, staffing companies, transportation businesses, construction trades, and even professional service firms. While changing terms might help some businesses manage their own working capital better, it obviously hampers their partner company’s ability to do the same.

Cash Flow Management Strategies

Dealing with cash flow ensures businesses have the money they need to pay their suppliers and employees. Some important tactics for managing cash flow include:

• Understanding the impact of payment terms: For various reasons, businesses should understand and accept the consequences of varying payment terms. With other things equal, shorter payment terms offer more value than longer ones because delayed payments might generate more costs in the form of interest, fees, or lost opportunities.
• Offering incentives for early payers: With the understanding that shorter payment terms hold value, some businesses offer incentives for early or cash payments. Offering a discount or other incentive for early payments may save money in the long run. Adding electronic payment can make paying more convenient and help speed things up.

Invoice Factoring

New, small, or struggling businesses may lack the credit or the time to apply for traditional business loans.  Rather than turn away opportunities for growth because of a simple lack of cash or credit, small businesses should consider alternative funding options that bridge the gap between agreements and payment dates.  As a simple, fast, and reliable alternative, consider the benefits of invoice factoring as a funding solution.  

Unlike most kinds of traditional business financing, invoice factoring does not involve a loan. When an invoice is factored, the business will transfer ownership of their invoices for accepted and completed work in exchange for an agreed-upon advance, as a percentage of the invoice. 

This kind of funding gives companies the cash flow they need to focus on their current operations and relieves concerns over slow-paying customers.

Businesses with these kinds of characteristics may benefit from invoice factoring:

• Qualified unpaid invoices for completed delivery of goods and services
• Creditworthy B2B or B2G customers
• Long delays between completed work and payment; trade cycle 60-150 days or more
• Losing sales or missing growth opportunities 
• Immediate growth opportunity with a product, customer, project, or market share

Don’t Let Long Payment Terms Derail Business Growth

In the worst cases, extended payment terms can force companies to turn down work. In some cases, demonstrating that cash flow management has caused problems might even damage their business reputations and ability to conduct business in the future. In all cases, it wastes time and money that the company used to generate a sale.

Access to rapid, flexible funding not only helps companies grow but can even help them save money. Many of the business’ own suppliers and vendors will offer discounts for prompt, cash payments that the business owner will be able to take advantage of. Moreover, companies don’t need to have established credit scores or wait for months for approval.

To discuss the best funding solution for your business, contact Capstone at (212) 755-3636 or complete a short, online application.

Disadvantaged businesses often lack sufficient access to business financing options. Some reasons for this might include a lack of collateral, lower net worth, too little credit and banking history, or other tangible and intangible barriers. To pursue certain opportunities, businesses also often need faster approvals and access to funds than banks and other typical lenders can offer. Because of these obstacles to obtaining traditional loans, disadvantaged business owners may need to consider business financing alternatives, such as invoice factoring.

Over the past several years, Capstone has served as a primary or secondary financing source for a variety of minority, women, and disadvantaged business entities, or in short “MWDBEs.”  We’re experts in making sure that companies can obtain the funding they need to pursue growth opportunities. Business owners can always contact Capstone with questions about business financing.

Has PPP Run Out of Funds to Lend?

Early in May 2021, the SBA announced that it could not accept more PPP loan applications. Out of $800 billion in forgivable loans meant to support small businesses through the pandemic, the fund only had $8 billion left, according to CBS News. Because of rapidly depleted funds and current borrower targeting, most small businesses cannot apply or get approved for PPP loans any longer, though the SBA said it would still process applications that had already been submitted.

The government earmarked the small pool of remaining funds for community banks that mostly serve MWDBEs. Even for disadvantaged businesses, the $8 billion is not expected to last long after considering it only took 13 days to use up the initial $350 billion in funding.

Alternatives to PPP for Small Businesses After PPP Ends

With the chance of obtaining one of these forgivable PPP loans largely gone, small businesses must compare other funding options. To get started, take a brief look at various financing alternatives, including invoice factoring, current SBA programs, bank lines of credit, business credit cards, and merchant cash advances.

Invoice Factoring

Instead of having to wait 30 to 90 days for customers to pay invoices, qualified businesses can sell all or some portion of their accounts receivable to an invoice factoring company. This makes invoice factoring a great option for companies that are new, have faced some credit challenges, would rather not take on debt, or simply need funding fast.

Factoring fees usually range between one and four percent, making invoice factoring a low-cost alternative when compared to the interest rates on most small business funding options. Generally, a business is able to obtain an advance for their accounts receivable within a day or two once initial underwriting has been completed. 

How to Apply and Qualify for Invoice Factoring

Qualified businesses usually generate invoices for other businesses or government contracts. Since the factoring company will assume responsibility for collecting accounts receivable, they’re mostly concerned about the creditworthiness of their client’s customers and quality of the accounts receivable. Processing time typically ranges from 48 hours to seven business days.

SBA Loans

The SBA has multiple programs, include some for traditionally disadvantaged business owners. Benefits of SBA funding may include competitive rates and flexible terms. Some even come with extra resources, like business mentoring, counseling, and education. Depending on the loan program and qualification, loans can range from as little as $500 to as much as $5 million. Some SBA loans impose restrictions on how the borrower can use the money.

Qualifying and Applying for SBA loans

Qualification depends upon the loan program. SBA might qualify businesses that have been declined by banks and other traditional lenders. Still, businesses typically need to demonstrate their ability to repay, and have a prolonged history of financials, certain length of time in business, and demonstrate that the company engages in sound business practices. Processing times and required documentation varies; however, typically expect to supply plenty of documentation and to wait at least 90 days and even up to 6 – 12 months for a loan decision.

Bank Lines of Credit

A line of credit from a bank can offer businesses a flexible way to draw upon funding when they need it. Lenders will offer each borrower their own maximum credit limit, which generally won’t exceed $250,000. Similar to credit cards, businesses can usually keep drawing on and repaying their balance, so long as they adhere to the terms. Interest rates for business lines of credit can vary wildly, but typically are around 15 percent or more.

Qualifying and Applying for a Bank Line of Credit

Banks generally want prospective borrowers to demonstrate creditworthiness and steady revenue over at least the past couple of years. Some online lenders also offer business lines of credit and may focus mostly on revenue and not even require business credit scores. Other lenders generally want to see credit scores of at least 600 to 650. Generally, the bank may have certain requirements for the size of the corporate Balance Sheet, corporate liquidity and value of personal assets. The borrower may also need at least six months of revenue, collateral or personal guarantees to secure financing.

Business Credit Cards

Business credit cards work somewhat similarly to lines of credit, though they typically have much smaller maximum balances. For instance:

• Credit card issuers generally limit maximum balances to around $15,000 – $30,000.
• Also, except for cash advances, businesses mostly use credit cards for purchases. Cash advances on credit cards usually come with higher interest rates than purchases too. A line of credit actually deposits cash into the business account.

Qualifying and Applying for a Business Credit Card

Qualifying for the best business credit cards generally requires good to excellent credit, with scores over 720. Even so, interest rates often range from 15 percent or more.  Some credit cards also charge an annual fee.

Credit card companies offer online applications and can even provide instant approval decisions. Otherwise, expect to wait from 10 days to two weeks to get approval and a credit card in the mail.

Merchant Cash Advances (MCAs)

Targeted to businesses with steady receipts of credit and debit card sales, a merchant cash advance is a form of non-bank lending that gives businesses the chance to obtain an advance against future sales. The business repays the advance through an agreed-upon percentage of sales which the MCA company automatically withdraws on a daily or weekly basis from the business’s bank account. Fees vary considerably, but compared to most other financing sources, they’re extremely high, from a 30 percent APR up to triple digits.  Generally, merchant cash advances can land small business owners in a never-ending cycle of debt and should be avoided at all costs. 

Qualifying for a Merchant Cash Advance

Lenders will consider historical sales volume to estimate future revenues and will require a personal guarantee to secure funding.  Very often, lenders can execute this process and offer approval decisions within a day or so.

Don’t Wait Until Your PPP Funds Run Out – Call Capstone for Business Funding Today

Capstone offers flexible factoring options for businesses in many industries. In particular, we understand the unique challenges faced by MWDBEs and we have been able to structure a funding platform specifically to support the working capital needs of these types of businesses. Capstone can serve as a primary funding source or can work within an existing bank relationship for opportunities that banks and other lenders have declined or take too long to approve.

Contact us today to tell us more about your business needs, and we will work hard to provide you with the best solution.

Jeff Bezos received the initial capital for Amazon when his parents offered to invest almost their entire life savings in his idea. Most startup and small business owners don’t have this luxury or might prefer to pass on such an offer anyway. Still, companies typically need to seek a source of outside financing in order to manage cash flow and grow.

On the positive side, some financial institutions offer flexible financing for various kinds of businesses. Explore the pros and cons of invoice factoring vs. a bank line of credit, two popular alternatives for new and small business funding. The best solution really depends upon the kind of customers a business has and how they invoice clients.

Pros and Cons of Invoice Factoring Vs. a Bank Line of Credit

Even though invoice factoring (also known as “A/R” or “accounts receivable” factoring) and bank lines of credit can both provide flexible business financing, they don’t work the same way. Most of all:

• A bank line of credit equals debt: Getting a line of credit from a bank increases the company’s debt on their Balance Sheet. Interest on this debt may indicate that the business ends up having to pay back considerably more than they borrowed. Outstanding debt might make it difficult to qualify for other kinds of financing. High interest on some lines of credit can even generate future financial difficulties.
• Invoice factoring equals a sale: In contrast to a line of credit, invoice factoring does not increase business debt. In fact, it’s a sale of an asset that generates cash flow. It’s true that factoring companies charge a fee; however, they also relieve the business of the effort of collecting payments and make it easier for businesses to grant and extend credit to their own customers.

Is Qualifying for Invoice Factoring Harder Than Qualifying for a Bank Line of Credit?

In general, qualifying for invoice factoring depends upon:

• Customers: Factoring companies rely upon the creditworthiness of invoiced customers and not the business selling the invoices. Thus, they favor businesses with B2B or B2G invoices. Most factoring companies also prefer to deal with domestic customers as well.
• Invoice timing: For non-recourse transactions, the factoring company will assume the risk of collecting receivables and won’t want to take on any additional risk that a business is unable to deliver on the goods or services they’ve billed their customer for. Therefore, the business must submit invoices for delivered goods or services that have been completed/ accepted and not in-process or planned work.

In contrast, businesses need to demonstrate creditworthiness and financial strength to qualify for a bank line of credit. Approval can take time. After approval, banks and similar lenders generally make it relatively easy and fast to draw upon the funds.

How Much Does AR Factoring Cost?

As with any kind of financing, costs may vary depending upon the unique business and the factoring company you use. In general, expect fees to range from two to four percent for the first 30 days a balance is outstanding with the factor company, usually depending upon many factors such as the general creditworthiness of customers and how long it takes them to pay. Typically, businesses can, expect upfront advances of 70 to 80 percent of the total invoice. The factoring company will also issue a rebate for the rest (minus fees) after successful invoice collections.

How Much Does a Bank Line of Credit Cost?

Interest rates typically depend upon the company’s creditworthiness and the size of the draw. For some customers, banks might charge as little as five percent; however, they can charge as much as 20 percent.

With a bank line of credit, the borrowers only need to pay interest on money they actually take and not the entire maximum line of credit. On the other hand, some banks also charge periodic fees to manage the account, even if the business doesn’t use any credit facility.

Is Invoice Factoring or a Bank Line of Credit Better?

For a business with the right kind of receivables, invoice factoring can offer several advantages over a bank line of credit. For example:

• Lower financing costs: When a factor company pays for invoices, they generally only subtract a small fraction of the total for fees.
• No additional debt: Businesses sell invoices to a factoring company and don’t need to assume extra debt or pay to service that debt.
• Reduced collection effort: The factoring company will issue an advance to the seller and handle the collection of the receivable from there.
• Easier approval for businesses with creditworthy customers: Businesses with domestic B2B or B2G invoices for delivered products and services should enjoy quick approval.

Partner With Capstone for Fast Business Funding

Businesses in all types of industries need to deliver products or services, issue invoices, and then wait to get paid. Capstone’s invoice factoring services can provide upfront funding, so their clients don’t have to wait to get the working capital that they need to pay operating expenses and invest in growth.

Besides invoice factoring, Capstone also offers a variety of funding options for all sorts of companies. Contact Capstone today to find the best funding option for almost any business.

In the construction industry, the term “mobilization” refers to the effort and expense involved in getting a project started. Some common examples of mobilization tasks might include scheduling crews, securing permits, establishing a site office, arranging transportation, renting or buying equipment, buying materials, and even back office support.

All of this advanced preparation requires funding and has to get done before work can commence. Especially for newer construction businesses, it’s this first project phase that tends to generate the most cash flow problems as, typically, mobilization costs are not recouped till long after they are incurred. Without funding these initial steps, the construction businesses are unable to make progress, will struggle to meet performance marks and therefore will not be able to bill out for and obtain progress payments.

That makes mobilization a common source of construction cash flow problems especially for new businesses that haven’t had time to develop cash reserves and might lack experience writing contracts and selecting the best financing options. Sadly, some construction businesses even turn down projects and opportunities for growth simply because they lack the funds to get started and can’t manage cash flow until they do.

How to Plan for Construction Mobilization Funding

Capstone is an expert with construction financing and knows how to help our clients obtain the money they need for all stages of their projects. A good strategy for managing cash flow and obtaining financing for mobilization typically starts by developing a construction mobilization plan.

This mobilization plan can include an overview of:

• Necessary personal, equipment, and resources
• Permits, licenses, and other regulatory requirements
• Funding needed to complete all the mobilization tasks
• A schedule with key deadlines and performance targets

First, this plan should serve as a useful resource to set budgets, compile cash flow projections, and schedules to keep work on track during the mobilization phase. Even the process of developing the plan should improve efficiency by helping planners account for possible obstacles early and ensuring they can get the job done within the customer’s specifications. Even more, the plan can serve as a tool to help obtain quick funding to manage cash flow during the mobilization phase.

Account for Mobilization Efforts Within the Contract

The mobilization plan should serve as a framework to explicitly account for mobilization costs within the project contract. Ideally, negotiating a mobilization clause into the contract will demonstrate the kind of good planning and transparent communication that prompts customers to agree to advance a mobilization fee (or deposit) to fund these necessary expenses.

Customers will see a schedule of values with mobilization costs and understand that their construction partner needs funds to get started. While the customer might not offer to write a check as soon as they’ve signed the contract, the terms of the mobilization clause can allow the construction company to generate an invoice or payment application for a mobilization advance fee.

Even so, construction companies might need to wait an additional 30, 60, or even 90 days for payment from their customers. Rather than waiting for payment on the invoice from their customer, the construction business can present it as documentation to apply for Capstone construction financing. This gives the construction firm the ability to convert their invoices or progress billings for mobilization into immediate cash flow through invoice factoring.  It also allows businesses to offer their own customer’s payment terms and still enjoy rapid funding for their efforts.

How Does Capstone Construction Financing Work?

Capstone’s unique approach to construction financing helps their clients get projects off the ground rapidly and with access to adequate financing. Rather than having to apply for and then assume more debt, the construction company simply factors the customer’s invoice for the agreed-upon advance rate.

With this kind of funding, called construction invoice factoring, the construction company receives money quickly, and Capstone takes on the responsibility of collecting payments for invoices. Unlike most invoice factoring companies, Capstone has the unique ability to accept invoices or payment applications for mobilization and knows how to close these deals.

The simple funding process works like this:

• Once Capstone verifies the invoice with their client’s credit worthy customer, they are able to provide funds right away.
• After the customer pays the invoice, according to the invoice terms, Capstone will send along any remaining reserve funds after taking out their factoring fee.

Even more, as the project moves forward, clients may ask Capstone to advance more of their invoices; however, they don’t have any obligation to. This flexible approach leaves construction companies free to ask Capstone for immediate funding when they need it and pass on it when they don’t.

How to Work With Capstone for Fast, Flexible Construction Financing

Working with Capstone means construction companies don’t have to turn down projects of opportunities for growth because they lack the financing to get started. Instead, invoice factoring gives them the chance to take on more work because they won’t need to wait to get paid and in turn, use their funds to manage cash flow.

Take a moment to learn more about Capstone construction funding opportunities. Call or email us at any time to have a conversation with one of your experienced financing representatives or apply online.

In its basic form, a Letter of Credit (or LC) is a document produced by a financial institution delivered to another financial institution that guarantees an Importer’s payment to an Exporter will be received on time and for the correct amount. The Importer is required to send payment to the issuing institution who then transfers funds to the Exporter’s advising institution or directly to the Exporter. In the end, the Exporter will receive payment as long as the transportation of the goods is compliant with the LC’s terms and conditions. Letters of Credit are most often used between Banks that are in different countries for international trade.

Trade Finance Process Flowchart

Letters of Credit Process

1. Importer and Exporter enter into a Sale Contract.
2. Importer applies for the Letter of Credit with their Bank.
3. The Bank issues the LC and sends it to the Exporter’s (Foreign) Bank.
4. Foreign Bank authenticates & advises the LC.
5. Exporter receives LC and produces Trade Documents. Once the LC matches the Terms and Conditions of the Sales Contract, the goods are manufactured.
6. Prior to shipment, the goods are inspected.
7. Goods are shipped to the Importer.
8. Exporter submits Trade Documents to their Bank.
9. Foreign Bank examines the Trade Documents for compliance.
10. Foreign Bank sends Trade Documents to Issuing Bank who also examines Trade Document for compliance.
11. If all Terms and Conditions have been met, payment will be disbursed among the parties involved.

Trade Finance

Trade Finance assists with trade cycle funding gaps and allows businesses to obtain goods from a Supplier with cash upfront. When a Supplier abroad is exporting goods to a business partner elsewhere, they will want assurance that payment will be received in a timely fashion. Instead of the business owner paying for goods right away, the institution handling their import financing will instead produce a Letter of Credit that will be presented to the Supplier or their finance company. As previously mentioned, the Letter of Credit serves as a guarantee of payment when the conditions of the initial Supplier agreement are met. Upon receipt of goods, payment is made to the Supplier or their finance company.

This arrangement can be used for a one-time purchase of supplies or continuingly if there will be a lasting business relationship between the Importer and the Exporter.

Reasons to Use an LC with Trade Finance

There are a few key reasons why an LC should be used with Trade Finance. 

• First, International Trade between countries is difficult due to a variety of issues including differing laws, customs, languages, currencies, and so forth.
• In general, LCs offer a more secure method of payment for both parties involved.
• Next, the financial institutions handling the transaction offer their expertise and resources for aiding the completion of the transaction.
• The central benefit of using an LC is that it mitigates the risk of the buyer missing their payments, especially if the Seller is unsure of the buyer’s credit.

Need funding for trade? Capstone is here to help: Let us work with you today to help you find the best solution to your cash needs without taking on more debt. Whether you are facing an immediate one-time need for cash to secure a contract, or you require a long-term solution to cash flow, contact our skilled team of representatives today and let us work with you to find the best options for your funding needs.