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BLOG. 2 min read

How Private Equity Firms Can Make the Most of Working Capital Finance

In a rapidly changing, volatile economic environment, the ability for companies to monetize assets is more crucial than ever, which is why working capital finance has emerged as an essential tool. Firms of all sizes are figuring out how to overcome financial and liquidity challenges as their operational costs fluctuate. And, with the cost of debt financing, goods and employee expenses on the rise, we are seeing massive strain on many organizations’ cash reserves.

Whether organizations have a strategic desire to generate cash quickly, or just to maintain smooth operations, selling receivables or leveraging assets to free up short-term cash is an increasingly key method organizations use to manage cash flow.

Working Capital Finance Is Changing

Historically, banks were the primary suppliers of working capital financing. But the industry is shifting, and the market now has a new outlook. Banks are increasingly reluctant to provide loans, and entities like hedge funds, private equity funds and insurers are stepping up to fill this void. Unbound by strict capital banking ratios, non-traditional lenders are starting to see how capital finance drives value with returns that are often upwards of 10%.

Despite this big shift, there are some significant obstacles private equity firms and other non-traditional lenders are facing that can block them from getting the most out of offering capital financing.

Overcoming Industry Challenges with Technology

One obstacle for many private equity and insurance firms that want to enter this space is processing the vast number of transactions that come with this type of lending. Without automation, scaling to handle the volume isn’t a simple endeavor, so the right technology is key.

This is where SS&C comes in with solutions that can scale like no other. We provide a wide range of highly scalable services including loan administration, fund administration and investor reporting. With our cutting-edge technology and efficient processes, we can automate and handle millions of loans and assets. Reconciling and storing vast amounts of data is already baked into our solutions.

Plus, our automation isn't only for processing — it's also about data transformation. We take source data, transform it, and integrate it into our platform. This is how our solution can seamlessly scale up to enable firms to manage millions of loans without faltering. “To learn more, read "Opportunities for Intelligent Automation in Lending Operations- Five Key Areas for Recognizable ROI."

For companies looking to squeeze every ounce of insight from their data, we also offer outputs that summarize details and feed it back into a general ledger, so our clients can be sure they get every necessary piece of insight and output they need from the massive amount of detailed data they input.

The market is changing. Working capital finance is evolving and taking its place to solve emerging needs. As the landscape shifts, non-traditional fund managers equipped with the right tools, technology and expertise are poised to stay competitive and thrive.

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