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Abby Parsonnet of Webster Bank Discusses Cash Flow and Different Forms of Financing

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Abby Parsonnet started her career in finance at Irving Trust Company. Afterwards, she joined Chase Manhattan Bank in 1990. Abby also has experience in the textile and apparel industries and has working for FTI Consulting, a global business advisory firm that provides multidisciplinary solutions to complex challenges and opportunities. Abby currently hold the position of Regional President of Webster Bank.

Cash Flow Management

For managing your cash flow, you must have good information. “It’s almost impossible to manage and/or maximize your cash flow if you don’t have good information,” explained Abby. This means understanding what you’re looking to finance, what you’re asset conversion cycle is, if it’s working capital financing and matching your financing appropriately to your conversion cycle.

“The big math is understanding your payback and your ability to generate cash flow to service the debt, this all comes down to good information and model, which is critical to a business of any size,” commented Abby. “With a small business, you usually see an entrepreneur who may or may not have the grounding in accounting and who may or may not have access yet to the kind of systems that give that information, so it’s important for them to know what it is that they don’t know and know where they may be able to get that advice or outsource some of those functions so they still have access to the information to position them to get the financing they may need  and meet the requirements,” she added.

Inventory and Purchase Order Financing

Inventory financing is bank line of credit secured by the company’s inventory. This type of financing can help to free up some of the cash that a business has tied up in inventory for more pressing needs. “In many cases, inventory financing might be one of the only options for a startup, simply because they have no other assets,” stated Abby.

“Inventory financing is definitely appropriate and the appropriate amounts at the right time. What I mean by this is when you think of the different assets of company and you think of the left side of the balance sheet top to bottom, your top assets are the most liquid (cash, accounts receivable, etc.) and your assets become less liquid as you go down the balance sheet, even inventory and then you go to fixed assets, so the financing becomes riskier because the assets have less liquidity the further down that you finance,” added Abby.

Purchase order financing is a short-term commercial finance option that provides capital to pay suppliers upfront so your company doesn’t have to deplete cash reserves. Purchase order financing is designed for growing businesses with little access to working capital and/or poor cash flow. “The type of business that qualifies is usually a producer, distributor, wholesaler or reseller of manufactured products,” commented Abby.

By Lolita A. Alford

Interested in finding out more on financial management for your company? Call us at Exceed Network and see how we can help you!

info@exceednetwork.org

718-787-1400

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Brooklyn, NY 11223

 

 

 

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