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(September 1st, 2000) ~ Small Business Banker Page 9 ~
(c) Copyright 2000 THOMSON FINANCIAL MEDIA. All Rights Reserved
- Targeting a quiet segment of the financial services
industry, CDS Services Corp. is moving its accounts receivable
services online on its web site, www.myreceivables.com, hoping
to attract more small businesses and community banks as clients.
"We took the entire operation,
from application processing to marketing, and we put it online,"
said CEO Leonard Leff. "As we put it online, we found that
there was an even greater need for accounts receivable financing."
Leff said the need for accounts
receivable financing is critical for the growth of the smallest
businesses. The smaller the business, the more accounts receivable
financing plays a role in freeing up cash to pay vendors.
The core market for MyReceivables.com consists of businesses
with fewer than 50 employees.
Compared with other credit
products used for short-term borrowing by small businesses,
accounts receivable products have lagged behind lines of credit,
leasing, term loans, mortgages, letters of credit and inventory
financing to provide cash flow, according to a study by American
Banker and Financial Institutions Consulting, published last
year.
Only nine percent of respondents
said they had accounts receivable financing. By contrast,
76 percent said they had lines of credit.
CDS Services' accounts receivable
technology is kept on servers hosted by Uunet, a division
of WorldCom. Banks and small businesses have access to the
site through the www.myreceivables.com URL and a password.
The company has invested more than $1 million in its technology.
MyReceivables.com has an alliance
with Bank of New York, the transaction processing powerhouse,
and Prime- Street, the online loan auction. When big lenders
like Wells Fargo pass on loan applications on Prime- Street's
web site, the application is bounced to MyReceivables.com.
Leff said the value of MyReceivables.com
is that it brings technology and cash flows to small businesses.
MyReceivables.com gets a fee from a business to manage its
receivables. MyReceivables deposits cash in the business's
account weekly or bi-weekly.
The online service also helps
banks, Leff said. For a fee, banks can elect to have MyReceivables.com
process receivables under a bank-branded web site. That relieves
the bank of having to take on the risk of funding the business's
receivables.
Launched in May, the web site
has more than 35 clients in addition to the 400-plus clients
who do business with CDS Services. The 35 new businesses are
mostly mom-and-pop stores, small distributors, independent
consultants and retailers.
Leff said he is working to
supply True Value hardware stores and American Floral Services,
a vendor to the flower industry, with the web-based service.
Leff also plans an advertising
campaign in the fourth quarter, targeting community banks
through direct marketing. The exposure is expected to help
the firm compete online with small business accounting services
like Netledger.com and Eledger.com.
MyReceivables.com offers a
full set of accounts receivables management services, transaction
processing electronic billing, credit and collection services,
private label credit services, and marketing services.
MyReceivables.com was created
by CDS Capital LLC, a division of CDS Services Corp. The parent
company, CDS Group, has offered accounts receivable management
services for small businesses since 1972. SBb Copyright c
2000 Thomson Financial Media. All Rights Reserved.
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