Middle Market Companies Express Need for Multi-Funder Liquidity Solutions

By Brian Medley • Published on September 29, 2021 • 3 minute read

Producer costs are rising faster than consumer costs – and that’s bad news for midmarket companies. Without the financial cushion of their enterprise counterparts, midmarket companies need a liquidity strategy that protects (rather than promotes) against higher debt and rising interest rates.

According to data from the National Center for the Middle Market (NCMM), the middle market is equivalent to the 5th largest global economy. Nearly 200,000 businesses across all industries and geographies fall into this segment. In 2021, mid-size companies saw an average revenue growth of 8% and that growth is expected to continue despite economic headwinds. Midmarket CFOs remain optimistic about growth according to the 2022 Middle Market CFO Outlook Survey conducted by BDO.

However, many midmarket companies still lack accessible, competitively priced liquidity options – especially amid rising interest rates and record-high inflation.

The problem lies in the fact that traditional financing for companies in the midmarket is typically expensive and inaccessible. Stand-alone financial institutions simply cannot cost-effectively meet financing demands due to low risk tolerance, technical deficiencies, limited resources, and more.

Further, as the modern business landscape becomes increasingly global, single bank programs often lack the currency and jurisdictional coverage that midmarket companies need to sustain and scale the business.

An Approachable Solution for Businesses of all Sizes

While it is a common misconception that trade finance is reserved for large, investment-grade enterprises, middle market businesses are realizing alternative liquidity solutions are more viable than they thought.

A popular alternative among midmarket companies is multi-funder supply chain finance and accounts receivable finance, which offer affordable capital and increased control over cash flow.

Unlike single bank-led programs, the competitive nature of a multi-funder approach provides continuous funding at affordable rates – without negatively impacting the balance sheet. A key benefit of this approach is the flexibility of program funding. With more than 100 financial institutions in PrimeRevenue’s funding network, middle market companies have access to a wide variety of funders that have an appetite for middle market companies.

As the program grows or the needs change, a multi-funder approach also ensures companies have access to financial institutions around the world, so they know they’re covered today and tomorrow as the company expands. These benefits are must-haves at a time of unrelenting disruptions and economic uncertainty looms.

If you’re interested in learning more about how PrimeRevenue can solve your businesses’ working capital needs, contact us to get in touch with a working capital expert.