Many companies default to relying solely on their house bank for working capital needs. It feels familiar, fits into established processes and builds on existing relationships. But in a volatile market, that single-channel approach can limit your flexibility, slow your response time, and keep you from unlocking better terms.
The question is not whether a bank relationship is valuable. It is. The question is whether it is enough to support your strategic working capital goals in today’s environment. Here are six factors to evaluate when deciding if it is time to add an alternative capital partner to your strategy.
1. Pricing and Terms
If a provider can offer more competitive pricing or extended payment terms, even small improvements can deliver a meaningful boost to liquidity or margin. Compare your current terms with what is available in the market.
2. Speed to Capital
In high-pressure situations, timing is everything. Some providers can make funds available in as little as 24 to 48 hours, allowing you to seize opportunities or address challenges before they escalate. Assess onboarding speed and funding responsiveness, not just interest rates.
3. Operational Efficiency
Your capital source should make your processes easier, not harder. Evaluate how intuitive a provider’s platform is and whether it integrates with your existing systems. Faster invoice loading, approvals and funding cycles can significantly reduce internal workload.
4. Relationship Dynamics
If you have strong banking relationships and broad access to credit, an external partner can be a supplemental tool for specific needs. If you do not, an alternative capital provider may give you faster execution, more tailored solutions and new funding avenues.
5. Credit Profile Alignment
Receivables-based financing is especially valuable for companies with diverse customer bases across regions and risk profiles. Some external providers are better equipped to structure solutions that account for these complexities.
6. Extended Payment Terms
If you offer customers 30, 60, or 90-day payment terms, bridging the cash flow gap can protect operations without straining resources. Establishing a flexible financing solution early can give you an advantage as you scale.
Bottom line: An external working capital partner is not a replacement for your bank. It is a strategic extension of your liquidity toolkit. By balancing control with flexibility, you can move faster, negotiate stronger and maintain resilience in any market condition.
Explore how to gain a competitive edge in working capital management. Download the full GSCF eBook