Resources | Market Trends | June 7, 2024

Interest Rates Are Stuck at Higher Levels. Here’s How to Find Working Capital on Demand, Without a Lot of Headaches.

Don't wait for your lenders to drop interest rates. You still have other great options for working capital.

High interest rates are creating headaches for many business owners.

Don’t wait for your lenders to drop interest rates. You still have other great options for working capital.

It’s one of the biggest questions hanging over the economy right now: What’s going to happen with interest rates? When will these rates finally start to go down to pre-pandemic levels?

But that might be the wrong question. Instead of waiting for policymakers to cut rates, businesses should look for other ways to access funding that put cash in their pockets when they need it most. 

For example, there’s C2FO. C2FO Early Pay gives companies more control over their working capital, allowing them to increase their cash flow without long lender approval times and without taking on debt. All it takes is a couple of clicks.  

In this post, we’ll review the current environment for interest rates, how we got here and how businesses can use C2FO to access funding. 

Why interest rates aren’t moving

It’s understandable why people are closely watching interest rates. Since last summer, rates have stabilized, but they’re at highs that we haven’t seen in decades.

Many market watchers were hopeful that 2024 would bring a series of rate cuts. After all, the Federal Reserve and other central banks had raised rates to help fight inflation, and for most of the past year, annual inflation gradually eased. 

Except there was a complication: During the first quarter of this year, the US Consumer Price Index (CPI) — one of the most common measures of inflation — started rising again. 

CPI went down again in April and May, but the first quarter raised the question of when rate cuts should happen. Fed board members said they will delay lowering rates until inflation is “sustainably” lower, reaching the target rate of 2%. As a result, at its June meeting, the Fed voted to keep benchmark rates where they are, and it released an updated forecast of how many rate cuts it predicts for this year: just one, compared to the three that had been forecast in December.

According to the CME FedWatch Tool, a predictor of rate changes, there was only an 8.8% chance as of June 12 that rates will be cut during the Fed’s next meeting in July. The Fed’s September meeting is the first one where the tool says rate cuts are more likely than not, but the odds of no change at all are still 32.8%, as of mid-June. 

The current interest rates could cause problems for businesses in different ways.

When interest rates are higher, businesses have more difficulty borrowing money at the same volume they have in the past. They can’t access the kind of money necessary for fast growth in a rebounding economy. 

Higher rates also affect consumer spending. Cars and houses become more expensive, and credit card rates jump, too. Consumer spending, one of the major drivers of the US economy, has been supported by high-income households, but it started to slow in April. The more that growth slows, the more likely a recession becomes. 

How C2FO can help

Since 2008, C2FO has given businesses fast, flexible access to working capital when they need it. It’s an approach that has earned the company a Net Promoter Score of 75 and a Trustpilot score of 4.7 stars out of 5. Seventy-three of the Fortune 100 companies use C2FO to support their supply chains.

With our solution, suppliers agree to give a discount to their enterprise buyers in exchange for being paid early — the average C2FO user gets paid 31 days faster. That injection of cash can be used to meet payroll, buy inventory, add staff and make other critical moves. 

As one supplier put it: “I know exactly after that invoice is approved when I’m getting cash and what I can do with it.”

Buyers can use their own cash for early payments or use bank funding, with the ability to seamlessly shift between funding sources. As a result, there’s a steady source of funding available. 

And there are other benefits of using C2FO. 

Flexibility is a core part of the service 

With C2FO Early Pay, suppliers can control their cost of capital. And unlike factoring, our solution lets suppliers apply or withhold different size discounts to different invoices as they see fit. There are no contracts or commitments, so suppliers can change their offers whenever they want. 

Suppliers can increase their odds of getting paid early

C2FO gives suppliers multiple options for offering discounts that are designed to encourage buyers to pay early.

  • Our patented Name Your Rate® technology allows you to select the exact amount you are willing to pay for your invoices to be paid early.
  • Trending Rate is the average rate your buyer typically accepts as a discount from businesses similar to yours, meaning it is usually quickly approved.
  • Express Accept is a rate your buyer will accept immediately. This is the best option for receiving your payment faster if you want immediate access to cash.
  • Some enterprise customers offer C2FO Preferred, allowing you to lock in rates in exchange for accelerating 100% of your approved invoices for a set period of time ranging from three to 12 months.

C2FO is the modern approach to supplier finance

There’s no paperwork, and you don’t have to wait weeks for approval. Payment can arrive in your account in as little as one day. 

Get started today

The economic environment continues to change and evolve, but C2FO Early Pay puts suppliers in control of their cash flow. Our platform provides fast and convenient access to the funds companies need to thrive in challenging circumstances. 

Learn more about how C2FO’s Early Pay solution works here.

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