Businesses Get Creative to Offer Cash-Flow Crunch Solutions

Coming off a pandemic that upended business as usual across the board, the latest set of macroeconomic challenges is forcing financial executives to think hard about the “new normal.”

Perhaps nowhere is that more noticeable than at companies doing B2B sales, where margins are typically the tightest and legacy processes the most entrenched.

“You can see it in how delinquencies are coming up across the industry,” said Mariana Coontz, chief financial officer at DigniFi, a FinTech that provides innovative financing solutions in the used car market. “Because particularly when you’re underwriting credit, getting to that early stage is so critical in terms of the performance of the portfolio.”

From financing to fashion merchandising to wholesale auto parts, and all points in-between, business leaders are contending with changing marketplace and lending dynamics at a breakneck pace, seeking new ways to help customers access capital and smooth out their own cash flow, all while automating and streamlining operations.

Challenging times, clearly, call for creative solutions. And in a conversation with PYMNTS, Coontz, along with Joor CEO Kristin Savilia and CFO Ryan Lockwood, said they have discovered ways to use new digital options to help their customers contend with the cash crunch — and boost incremental top-line results in the process.

Risk and Opportunity

As the CEO of fashion wholesale management company Joor, Savilia said her company has a unique position in the market, which could actually see it benefit from the current cash flow crunch.

This, as fashion merchandisers are experiencing the widest gap yet between financing for the brands that need cash to make apparel and the retailers that are strapped for cash to pay for products before they sell them to the end consumer. Joor is making it easier on the brands to get their money at the time of sale to the retailers, by offering the latter a 60-day window to pay off the debt.

To do so, this fashion platform created Joor Pay, a newly added feature that Savilia said eliminates “that middle need for factoring and [expensive] loans by doing it on a platform with our new solution.”

And as interest rates continue to rise, credit is only going to become less accessible. This creates the need for businesses to have robust risk management models. For its part, Joor used its customer data going back to 2010, which tracks its real-life experience with global buyers and sellers to help improve the overall risk profile.

The fact that Joor has been around since 2010, she said, gives it a good amount of data to work with to actually know “who pays and who doesn’t pay.”

Coontz is optimistic about DigniFi’s ability to weather the storm and avoid a credit calamity, underscoring the experience with the past financial crisis. The company is in the business of making auto loans more accessible to consumers. “I think we are smarter, our models are better. We know the things that we can do, we can pivot faster than we ever could,” she said.

Good Workers & Excel Madness

Finance is usually not the first domain to get automated.

“It’s hard to show an ROI on getting rid of spreadsheets until you actually can see that phase out,” Coontz said.

Her company has been working to eradicate some of its more tedious spreadsheet and manual tasks.

While many employees worried that they will be replaced by an algorithm, Coontz assured that automation is “about redeployment of resources.” She said that “it’s more about how do you get people doing more fulfilling jobs as opposed to the Excel madness that goes on in our world.” She noted that while Joor is a digital-first company for customers and vendors, the digitization isn’t always felt on the back end.

Lockwood agreed that automation does not have to mean downsizing. To him, it’s about making sure that employees are “not working 80 hours a week to try and maintain these manual spreadsheets.”

Savilia noted, however, that collection remains a function that cannot be automated (at least not yet), saying it remains a significant time eater at her company as collections inevitably involve “reps who have the relationship getting on the phone to get the money paid.”