Capital Market - Contagion Risk from the US banking crisis

By Magda Rozczka - May, 15 2023

The crisis in US regional banks is highlighting how confidence can quickly evaporate putting pressure on the availability of credit.

This reduction in credit availability can have severe consequences, especially for SMEs, who have little bargaining power with banks. Corporate clients can also see reductions in credit facilities on a sector by sector basis, and as a consequence of the former, then get pressured by their SME suppliers for faster payment further reducing their working capital and supplier relationships.

However, working capital does not have to be a constant zero sum game causing pressure on all parties.

The market has trillions in unused funding capacity available from family offices, hedge funds, pension funds, and even incumbent banks looking for a yield, funding short tenor transactions. 


However, the challenge for these funders is how to access that market. Crossflow has addressed this challenge by creating a working capital marketplace that enables funders to choose their risk from IG-rated corporates, with fully automated SOC2 accredited processes and segregated bank accounts ensuring that funds are secured.

As has been evidenced by the run on the US regional banks, sentiment can change quickly. Hence, the importance of having access to diversified sources of working capital. Crossflows working capital marketplace provides that diversification. This reduces the pressure on corporates to pay suppliers faster in tighter credit conditions. Even better, setting up the service can be done in days rather than months.

There is an interesting profile on Crossflow in this recent article giving some insight into Crossflow and perhaps explaining how it has grown to be Europe’s No 1 Fintech.

If you are interested in diversifying your working capital, contact us today.

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Magda Rozczka is CEO at Crossflow. After completing her postgraduate MBA, Magda led product development within the insurance sector at ING and Zurich. Magda represents Crossflow on the Bank of England Decision Maker Panel, which influences UK interest rates, and has represented Crossflow as part of HM Treasury’s Women in Finance initiative.

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