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Accessing Credit in a Changing Environment
By: Michael McDonald, Executive Vice President and Director of FirstBank’s Business Group
René López, Senior Vice President and Director of Business Banking at FirstBank
In recent years, businesses in Puerto Rico and globally have faced marked volatility caused by factors such as the increase in ocean and land freight costs, insurance, taxes and other inflationary pressures. These changes have forced many business owners to implement expense control strategies or price adjustments to protect profit margins.
Although the decline in the global cost of fuel has helped to partially moderate the inflationary environment, it remains a challenge for companies to secure accessible capital and maintain liquidity to sustain and accelerate their growth.
In this scenario, access to commercial credit and finance becomes a key tool. Below, we’ll share some strategic recommendations that can help strengthen the financial health of your business and improve your capital alternatives.
Optimize Cash Flow
Maintaining tight control of accounts receivable and payable allows businesses to anticipate liquidity gaps, identify savings opportunities, and present a stronger financial position when applying for financing.
Mitigate Foreign Exchange and Interest Rate Risks
The use of financial tools such as interest rate hedging can help lay out more stable scenarios in the face of rate or international market fluctuations.
Adjust Prices According to Projected Inflation
Integrating inflation projection and replacement cost models allows for prices to be adjusted dynamically and responsibly. This approach helps maintain competitiveness without compromising the profitability of the business in prolonged inflationary cycles.
Maintain Transparency and Up-to-date Financial Reporting
Clear, accurate and up-to-date financial statements allow for informed decisions to be made while raising the credibility of the business with financial institutions. Transparency continues to be a determining factor in the assessment of risk and the approval of credit lines.
Automate Processes with Technology
Incorporating automation tools into financial and accounting processes results in greater accuracy, less margin for error, and more efficient operations. Integrated systems allow you to control expenses, standardize flows, and increase operational agility.
Adopt Business Intelligence (BI) Systems
Business Intelligence platforms allow you to monitor margins, inventory levels, and costs in real time. This type of analysis helps entrepreneurs react quickly to market changes, and identify opportunities for continuous improvement.
Work with Conservative Financial Projections
Projections based on prudent scenarios strengthen planning and help anticipate future capital needs. This is essential to maintain financial flexibility and resilience in the face of volatile business cycles.
Develop Products or Services with Higher Margin
Diversification towards higher-margin options allows for cushioning the inflationary impact, and creates additional sources of income that sustain the operation, even in times of cost pressure.
Navigating a changing economic environment requires strategy, discipline, and a constant evaluation of available financing opportunities. At FirstBank for Business, we’re committed to supporting our business customers through flexible solutions, expert advice, and tools that strengthen their ability to sustain growth.
Do you need support to strengthen the liquidity of your business?
We invite you to contact your FirstBank for Business Relationship Officer, or learn about commercial credit options1 available for your business, including the option to apply for business loans online2.
Explore financing alternatives designed to help you meet today’s challenges with confidence and strategic vision.
About the Authors
Michael McDonald, Executive Vice President and Director of FirstBank’s Business Group
With a background in business banking and financial services, he directs financing strategies and solutions aimed at strengthening liquidity and growth for business clients.
René López, Senior Vice President and Director of Business Banking at FirstBank
Focused on growing and established businesses, he heads the Business Banking segment, offering financial and cash management solutions tailored to more complex operational needs.
FirstBank is Member FDIC. 1Commercial credit products are subject to credit approval. Certain restrictions apply. 2The online commercial finance platform is subject to FirstBank’s terms and conditions.
The contents in this section are provided for informational and educational purposes only and do not apply to all types of situations. The contents should not be construed as any type of advice or suggestion to take (or refrain from taking) any particular action, as it does not include or take into account all factors that may be relevant to your individual needs.