The modern day telecommunication industry was born after AT&T was designated a monopoly in 1982. One company was split into seven which ultimately evolved into thousands. With billions of dollars invested and the evolution of cable and the internet, the industry exploded. And then it imploded. With so much competition and very little profit being generated (or even foreseeable in many instances), investment capital dried up and many telecommunication companies failed. Any company with “telecommunications” in their name or the service they provide could forget about receiving a bank loan. And that created the opportunity that Thermo Credit, LLC addressed.
The telecommunications industry is a rapidly changing industry evolving as quickly as technology itself. The traditional operator services (1-plus and 0-plus) providers are transitioning to voice over internet protocol (VOIP) and wireless opportunities. Internet service providers, wholesale carriers and prison pay phone services are other examples of the telecommunication industry. Transmission of voice is evolving into transmission of data. The industry is changing, truly a moving target that requires flexibility and imagination in financing models.
As with any niche, it is critical to have an in-depth understanding of the opportunities and pitfalls lurking therein. It is equally important to be aware of the many aspects of the industry that are unique to factoring and other forms of asset-based lending. Thermo Credit’s far-reaching experience in the telecom industry and constant monitoring of client and industry issues have helped it to navigate the ever-churning waters of the telecom industry.
The complexities of the industry include:
Volume---A typical telecommunications company will process hundreds to hundreds of thousands of $50 to $100 invoices each. Typically this is through batch processing by the client on a weekly or cycle basis. Tracking the sheer volume of invoices can prove to be quite an operational endeavor.
Billing Methods---Telecom companies typically bill through one of two ways, although ACH and credit card processes are becoming more prevalent. The first method is through a “direct bill”—the telecom provider sends their bill directly to the consumer who then pays directly to the provider. The second method is through the local exchange carriers (“LEC”), known as LEC billing. In a LEC billing process, there is a billing intermediary that processes a batch of billings that are ultimately reflected on the consumer’s telephone bill.
Collection Rates and Timing---The type of telecom product and billing method have an impact on the billing process. A straightforward long distance service that is direct-billed would typically collect at 95-98% in 35 days; a VOIP service or ISP service that is LEC billed may collect at 60% and settle at 90 days.
Telecommunications is a constantly evolving and expanding industry. But with over 30 years in both the financial and telecommunications industries, Thermo Credit is able to apply specialized knowledge to help bring your business to the next level. Whether offering our asset based solutions or partnering to provide you with a more comprehensive financial package, Thermo Credit will offer the best solution to help you achieve your objectives.
