As a result of job rescheduling and cancellations in 2020 due to the COVID- 19 pandemic, a significant backlog of outages has been created in the industrial services industry.
Many of these planned outages are now scheduled for 2021 and 2022. This backlog will create unique working capital challenges for businesses with seasonal industry operations.
Cadence Bank stands ready to assist companies in the industrial sector with working capital solutions to help navigate the challenges presented by significant outage buildups.
"For companies servicing refineries or chemical plants, working capital can fluctuate significantly in busy seasons for outages," said Taylor Ducoff, senior vice president of commercial and industrial lending at Cadence Bank. "Typically, when banks evaluate lending money to companies, they like to see very consistent, stable earnings. It can be hard for them to understand seasonality, where 60 or 70 percent of a business' revenue comes in six months of the year.
"Having many great customers in the industry, Cadence Bank is able to work with its credit partners to explain that seasonality and how common it is. Our ability to structure working capital solutions around seasonality is one of our key differentiators."
A revolving line of credit supported by accounts receivable can be a great way for companies to bridge the gap between multiple jobs at once when payment timing does not line up. Working capital efficiencies can be further supported by adopting treasury management products, such as an accounts receivable lockbox that lessens the amount of float time between the time a customer mails a check and when that check is deposited, potentially saving companies days of working capital funds. Furthermore, accounts payable services can help lower administrative costs in paying vendors.
Equipment loans are another way companies can be assisted when experiencing growth or working multiple jobs at once. Instead of costly rentals, Cadence Bank can offer a low-interest loan secured specifically for equipment, allowing companies to pay the loan back over the life of the equipment. This enables companies to take on additional jobs and expand into new service lines that they would not be able to achieve with only cash on hand.
Perhaps most important for companies facing significant outage backlogs is having a strong relationship with their banking partner. This is one category in which Cadence Bank excels -- its bankers are proactive in bringing recommendations to their clients, and they have a strong understanding of how to manage a business' ramp-up during busy outage seasons.
"A good banking partner should be coming to you consistently with ideas and best practices for your business," Ducoff said. "If you have a deep relationship with your bank and your banker understands your company, you can trust that they will advocate for you internally and get something approved quickly.
"Call your banker today to talk about working capital solutions and equipment loans. If you don't have a reliable contact, and if you're not already having those conversations, call us at Cadence Bank. We'll be proactive in bringing those ideas to you, because it is our mission to provide a better banking experience for every client."
For more information, visit www.cadencebank.com or call (713) 871-4192.
