Pentagon Now Pushing For More Frequent Interaction With Private Sector

Private Sector

By. Bryan F. Hatfield III Regional Vice President, SouthStar Capital

Over the last few years the private sector has been wondering where the DOD has been. Due to budget cuts and travel expenditures being turned down, the Government has taken a back seat to the rest of the world in bringing on new tech. This has left many asking, where are the procurement officers and why new technology is sitting around collecting dust? That is all about to change. Deputy Defense Secretary Robert Work and Undersecretary Frank Kendall are asking all branches of the military and defense agencies to more actively participate in industry conferences as part of a broad effort to inject more innovation into weapons programs.

“DoD participation in conferences and similar events is critical to our ability to share information and break down barriers that block innovation,” Work wrote in a Sept. 23 memorandum to all military department and agencies.

Work and other Defense Department leaders have criticized restrictions on conferences as detrimental to the government’s ability to interact with the private sector and learn about the latest technological innovations. “Excessive restrictions on conference participation and attendance by DoD personnel have become counterproductive, undermining the professional development for communities such as our science and technology, medical and education personnel, and making it more difficult for them to come together with others to promote the free exchange of ideas that drive creativity and innovation,” he stated in the memo.

Work, along with the memo, issued a new “DoD Conference Policy” that updates current guidelines for conference approval in order to make participation “easier, not harder.” He assigned the deputy chief management officer as the key point of contact regarding conference policies.

Kendall, the undersecretary for acquisition, technology and logistics, carried a similar message in an Aug. 6 memorandum titled, “Importance of Strategic Outreach Targeting Small Business, Commercial Markets and Global Technologies Through Industry Forums.”

He advised that it is “important for the acquisition community, particularly DoD small business professionals and those who conduct international acquisitions, to engage with industry and participate in industry forums and outreach events.”

The Pentagon needs “exposure and access to new technology” in order to “maintain our technological superiority,” Kendall said. “We also need to encourage entrepreneurs and non-traditional suppliers to bring their ideas into the department through business with DoD.” Face-to-face interaction, he added, is an “effective way to gain exposure, create access and remove barriers to commercial technologies.”

Curtailing participation of DoD personnel at conferences to save money on travel costs can be detrimental, Kendall noted, because it “constrains their ability to conduct their mission.”

Kendall asked all agency and military service leaders to “emphasize the importance of industry outreach to small businesses and global commercial markets.” By improving communications, he added, “we will promote effective competition, receive better proposals from industry and obtain more innovative solutions.”

This guidance should not be viewed as a license to overspend, he cautioned, but to “be fiscally responsible and strategically focused on outreach with results.”

What does this mean for all of you and why do I share it? Many of my clients are focused in the Government contracting space. Many of the others are in some way related to the industry. After all the US Government is the largest business in the world and the largest purchaser of goods. Most everyone has some type of relationship to the US Government. The fact that they are getting back out to industry conferences is very important.

For all of you in the B2B world, the fact the Government is back out at the conferences and trade shows means that there are more clients coming to these events. No more wasted money on events with no production. For all of you in the B2G world this means more opportunity for you to grow your business. You don’t have to have an 8a or DBE certification to do business with the Government. No more hiding behind larger contractors giving up gross margins. The biggest thing of all is that support companies like mine and many others are going to come out in droves. This will make a more competitive situation for you. Give you more ability to negotiate and also get the resources you need to double if not triple the size of your company.

If your plan is to grow your company in 2016 then you need working capital. Banks are a very cheap source of funds in one sense and on the other hand lack flexibility. The new players in the market are called Merchant Cash Advance companies or MCA’s. The money gets to you very quickly but it is also very very expensive. Be sure to weigh all of your options. Most importantly do not forget about Asset Based Lenders and Factoring companies like SouthStar Capital. Working capital is the key to every business and the key to every other lender is debt. Factoring your receivables or picking up a PO Line gives you the money when you need it. Best of all the debt is paid when the invoice is paid. No costly debt accumulation and getting over your head. You can freely bid on contracts and know that you will have the money to complete that contract. In other words get a good night’s sleep.

Give me a call today at 843-277-6581 or email me bhatfield@southstarholdings.com. I am happy to answer any of your questions and help you take advantage of the opportunities heading your way in 2016.

 

Purchase Order Financing For Small Businesses

purchase-order-financing-companySmall business owners know that having issues with cash flow, while trying to fulfill existing customer orders, is never an easy endeavor. The customer is impressed and wants product, but the small business lacks the funds to not only purchase the raw materials, but to pay for the work needed to complete the customer’s order. Because of their uneven cash flow the small business is left with a large customer order they can’t even start! Is there a solution to such a problem? In fact, there is. It comes in the form of purchase order financing. So, what is purchase order financing, how does it help small businesses with financing.

Purchase order financing occurs when a financing company extends working capital to small businesses, allowing them to purchase the raw materials and parts needed to fulfill a given customer order. Once the order is completed and shipped, the financing company is then reimbursed and the small business is then charged a fee for the financing company’s services. Purchase order financing is a variation of receivables factoring. However, instead of the financing company allowing the company to draw upon the receivables value, the financing company provides up-front cash to the small business based on the value of their customer’s purchase order. This allows the small business to fulfill the customer’s order while freeing up cash reserves.

In a number of cases, purchase order financing is the single best financing option when compared to other conventional lending methods. Given the current state of the economy and tightening of global credit markets, a number of small businesses have had their credit lines slashed. In many cases, these businesses have excellent bottom lines and are in good financial standing. Purchase order financing not only allows small businesses to finance their existing purchase order, it also provides them with immediate cash. This allows the small business to benefit from prompt payment initiatives and discounts with their own vendors and creditors by paying them faster for those aforementioned parts and materials. This is a much better situation for the small business. Otherwise, it would be late in paying its vendors and creditors because of having to finance their own customer’s receivables for 30 days and beyond. This would negatively affect their credit rating.