THIN PROFIT MARGIN? GRAB THIS UNIQUE EOY OPPORTUNITY

RECOGNIZING EXISTENTIAL ISSUES

Inflation doesn’t vanish because the Federal Reserve says things are back to normal and lowers interest rates. Even though the headlines claim inflation is under control, the reality on the ground is different. We’re seeing its effects in the supply chain industry. This is a reminder that economic shifts linger, impacting businesses in ways that aren’t always immediately visible.

Supply Chain Dive ?WHITE PAPER: ?Peak Seasons Management, By: Max Garland - Senior Reporter 01 August 2024 https://www.supplychaindive.com/trendline/peak-season-management/172/

UPS defends higher peak surcharges ahead of shorter holiday season. The magnitude of the added fees surprised one analyst, but CEO Carol B. Tomé said the carrier's pricing is in line with anticipated demand.

UPS is expecting to encounter the highest volume ever in our network on Dec. 18, she added. We think that the prices are going to stick because of what the environment is telling us from a demand perspective.

The two demand surcharges are a double whammy this year and will drive up costs for customers that don't mitigate them, Onrout founder Jonathan Hessney said in a LinkedIn post.

FedEx and Amazon have also signaled that shipping costs will rise during the end-of-year holiday period. This isn’t a seasonal inconvenience; it’s a critical factor that will impact Net Profit After Taxes (NPAT).

Supply Chain Dive ? EMAIL August 17, 2024

联邦快递 rolls out pricier surcharges, new fees for 2024 peak season ?

The charges, some of which start in September,?fall closely in line with what rival UPS unveiled. ?

亚马逊 unveils 2024 peak season fulfillment fees ?

The added costs, starting in October, will come as the e-commerce giant gears up for a shorter holiday shipping season. ?

That alone would be of concern but compounding this many companies are carrying High-Cost Debt with unfavorable terms, including steep interest rates and bloated transaction fees.

This points to the strong likelihood that Q4 shipping costs will exacerbate the erosion of profits for your company. These factors can lead to Tight Liquidity that will leave business owners, CEO’s and CFO’s struggling to meet short-term obligations or limited in the potential to fulfill their market demand during this crucial period.

AVOIDING A TIPPING POINT

For business owners, CEO’s and CFO’s managing companies with thin profit margins, the current economic climate could be the tipping point between survival and closure.

If you find yourself now micromanaging every penny to maintain liquidity, this is a signal that immediate action is necessary now to secure your company’s future.

Effective Cash Flow Management

Focus on ensuring that you have sufficient liquidity to cover operational costs is more crucial than ever.

Your tasks should center optimizing working capital, improving cash conversion cycles, and tightening credit controls.

This proactive approach should help prevent cash shortages that could otherwise cripple daily operations, helping your business get by, but it won’t improve your NPAT.

Focus on Lowering Your Cost of Capital

Imagine that you and your competitors are carrying a burden on your back, the cost of debt, so that the company that can lower the amount of that burden is able to be more agile.

The objective here is to gain advantage against your competition by restructuring current debt, refinancing at more favorable rates, and negotiating with new creditors to obtain enhance lines of credit.

This will reduce financial strain by lowering interest costs and extending debt maturities, thereby improving your company's financial health by gaining market share or increasing sales.

The urgency of taking proactive financial measures cannot be overstated. Addressing these challenges head-on now will not only stabilize your current situation and will position your business for success.

A SOLUTION: PROACTIVE STRATEGIC REFINANCING

Please note that the following comments are not made with the intention of selling you anything but to inform business owners, CEO’s and CFO’s of what CORNER sees as a window of opportunity to gain competitive advantage. If you don’t feel that is appropriate for your circumstances, go do something else with your time, if we can be of help through our consulting services , please contact us.

Our view is that your current commercial debt is siphoning off your essential cash reserves, so the logical step is to refinance your debt now.

Doing this now allows companies to leverages the anticipated drop in interest rates and the ongoing loosening of Domestic Banks Tightening Standards for Commercial and Industrial Loans as described in my 23 July 2024 post: https://www.dhirubhai.net/pulse/preparing-good-times-francisco-becerra-3wwoe/.

There's a rare window of opportunity for proactive companies to benefit from these favorable conditions.

The urgency to act quickly is due to an advantage that will only be enjoyed in 2024 by those companies that can refinance in 2024, the laggards will have to wait to refinance until the end of Q1 2025.

Lowering your cost of debt will be like discovering money.

1. First, it will lower the financial burden that your company carries.
2. Second, it will immediately improve your bottom line.
3. Third, it will likely provide additional funds to fully serve your customers during the peak season.

This strategic move will help offset the expected spike in year-end expenses. While the degree of benefit will vary by company, the potential for financial relief and competitive advantages may be significant.

Companies that move quickly to refinance will gain a competitive edge over those that miss this critical year-end window.

Companies unable to refinance now will have to wait until about the end of Q1-2025, after completing their EOY2024 financial statements.

Meaning that companies that refinance now can enjoy a financial advantage over those who don’t, for almost 2 quarters.

TIMING IS CRITICAL

With less than 90 business days until the end of the year, business owners, CEOs, and CFOs are urged to act decisively to seize the moment and reduce costs.

The expected drop in interest rates by September presents a crucial window for those needing to lower their cost of capital to ensure both survival and growth.

This is not a pressure tactic; CORNER’s professional consulting experience underscores the opportunity.

Poorly timed capital raising can compound financial stress.

BUT HOW?

Successfully navigating the complexities of securing strategic funding is crucial for any small business owner, CEO, or CFO.

The key lies in connecting to the right funding source, thoroughly assessing multiple capital offers to gauge that you're securing the best possible deal.

But how do you gauge if an offer is genuinely beneficial?

It's essential to have help from an experienced strategic capital sourcing consulting service that connects your company to vetted funding sources, who works to evaluate not only the immediate advantages of any offer but also the long-term implications.

Professional support in judging the risks associated with capital sourcing is vital to prevent replacing one financial burden with another.

Successfully securing funding under favorable terms requires adept handling of negotiations and while shielding administrators from the distractions of capital sourcing, so that you can focus on your core business.

OTHER IMPORTANT CHALLENGES

ACCESSING SUITABLE FINANCING SOURCES

Challenge: Identifying and connecting with capital sources that most suitably align with your company's strategic objectives, growth stage, and risk profile.

Reason: Not all financing options are suitable for the needs of every company , and finding the right match requires deep market knowledge and connections.?

CONFUSION OF CAPITAL MARKETS AND OPTIONS

Challenge: Understanding the multitude of financing companies and options and their implications for your company's financial health and strategic goals.

Reason: The financial product landscape is broad and complex, each with its own terms, conditions, and impacts on the company's balance sheet.

MITIGATING RISKS FROM CAPITAL

Challenge: Assessing and lowering the risks associated with each financing option, including interest rate risk, refinancing risk and costs.

Reason: Each financing decision introduces potential risks that can threaten your company’s financial stability if not properly managed.

UNCERTAIN ROI

Challenge: Determining the return on investment for new financial strategies, which CFOs need to validate through clear evidence of financial benefits.

Reason: Directors require robust proof of cost savings, efficiency gains, or improved performance before committing to significant changes.

TRANSACTION COMPLEXITY AND EXECUTION

Challenge: Managing the complexity of capital transactions, including due diligence, legal documentation, and negotiation of terms.

Reason: These tasks are resource-intensive and require specialized expertise, making them formidable but necessary hurdles in capital sourcing.

RISK OF DISRUPTION

Challenge: Integrating new capital sourcing strategies might disrupt existing financial operations.

Reason: While there is a natural caution against disruption, the potential for improved financial functionality and health is a compelling reason to embrace change.

LIMITED TIME AND RESOURCES

Challenge: Business owners, CEO’s and CFO’s face stringent time constraints and limited resources in evaluating and managing new financial initiatives.

Reason: The high demands of implementing new strategies

act as deterrents, but addressing them promptly can lead to long-term benefits.

RESOURCES AVAILABLE TO SUPPORT YOUR STRATEGIC CAPITAL SEARCH NOW

Aligning your financing strategies with your company's long-term goals is not just beneficial—it's competitively essential.

CORNER offers expert guidance on capital sourcing that fits with your growth stages and risk profile so that you can enhance your strategic decision-making.

We help you ensure that your choice of funding source supports your broader vision, while identifying and mitigating risks associated with misaligned capital, so that you preserving future flexibility.

This strategic alignment helps business owners, CEO’s and CFOs choose financing options that best support their operational needs without compromising their strategic goals.

The timing and positioning of capital raising are critical and can be advantageous, especially in fluctuating market conditions.

We provide knowledge and guidance aimed at optimizing your strategic capital search.

By advising on when and how to engage with the capital markets, we ensure that you secure funding under the most advantageous terms possible, enhancing your market position and financial stability.

Our continuous strategic support go beyond initial advice. We conduct in-depth analyses of your current financial status to pinpoint critical financial pressure points and improvement opportunities.

This holistic approach not only prepares you for a rigorous due diligence but also enhances your credibility and trustworthiness with potential funding sources.

Our ongoing partnership ensures that you receive continuous advice in response to evolving business and market conditions, providing a robust foundation for enduring success.

By leveraging our extensive network and expertise in strategic capital sourcing, we negotiate on your behalf to secure the most favorable financing terms, reducing costs, and streamlining processes to save you time and effort.

Our ability to match your business with suitable funding sources minimizes delays, ensuring that you can capitalize on growth opportunities without unnecessary hindrance.

Visit our website: www.CORNERFINANCE.com

CORNER Finance LLC

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