With inflation, slower payments, and rising interest rates, working capital has become a constant concern, not just a financial metric.
It doesn’t take a crisis to feel the squeeze. For many business owners today, liquidity pressures build quietly. That is — until a delayed order, a lost vendor discount, or pending payroll brings it to the surface. After years of strong growth, stimulus and abundant liquidity, attention is turning back to working capital discipline.
Ross Van Beek, a Chicago-based expert in asset-based lending and receivables financing at First American Bank, sees it daily: “Clients are dealing with more uncertainty, longer payment cycles, and higher input costs. Some are holding back on investments not because they lack opportunities, but because they lack the short-term cash flow to act on them.”
What’s Making It Worse?
Inflation is driving up wages and input costs, and high interest rates are compounding the issue. Despite expectations of relief from the Federal Reserve, cuts have been slow to materialize. “Many business owners became accustomed to a decade of very low borrowing costs,” says Van Beek. “Today’s rates are closer to historical norms, but they still sting, especially when paired with all the other pressures.”
The result? Even businesses that are growing on paper may feel cash-poor. Revenue and margins don’t always line up with payment schedules. Without careful management, companies can find themselves out of position when opportunities arise.
Solutions That Match the Cash Cycle
This is where tools like asset-based lending (ABL) and accounts receivable financing come in.
Rather than relying on a traditional line of credit with a fixed limit, businesses can use ABL to borrow against the value of their receivables and inventory on a real- time basis by reporting monthly, allowing the bank to provide additional leverage on those assets. “As your assets grow, so does your access to capital,” Van Beek explains. “It’s a more flexible approach, especially for companies in growth mode.” This helps businesses better match cash availability with short-term needs: whether that’s vendor payments, payroll, or capturing a new contract.
Accounts receivable financing offers similar flexibility by converting invoices into cash without waiting 30, 60, or 90 days for payment. It’s especially helpful for businesses with large, reliable customers that demand extended payment terms.
One Size Doesn’t Fit All
Amanda R. Dorr, Assistant Vice President on the Commercial & Industrial team, emphasizes customization.
“At First American Bank, we take time to understand the client’s business model before proposing a structure. Working capital needs vary widely, even between companies in the same sector.”
She continued: “That extra effort allows us to design facilities reflecting how the business actually runs, not just what the spreadsheet says.”
That flexibility extends globally. Exporters often struggle with collecting foreign receivables, which many lenders avoid. First American Bank uses tools like trade credit insurance or the SBA Export Working Capital Program to structure solutions and reduce risk.
What to Watch For
Early warning signs that a company’s working capital strategy may be breaking down include:
- Consistently growing receivables
- Low cash-on-hand compared to vendor obligations
- Missed discounts
- Inventory that’s slow to turn
Van Beek advises business owners to have a plan in place before cash becomes a problem. “If your receivables are strong but you’re struggling to cover weekly expenses, there’s probably a better solution available,” he says.
A Smarter Conversation
Not all lenders take the same approach when evaluating your borrowing base. Some are more conservative with things like customer concentrations or aged receivables. Others might exclude international assets entirely.
The key is to work with a banking partner who understands your operations and has the flexibility to adapt as conditions change.
“Working capital is not static,” says Van Beek. “Our role is to help businesses stay ready not just for problems, but for opportunities.”
Get in touch to learn more about how First American Bank can support your working capital needs.
