By Adam Shapiro,
President, Parabilis
Businesses that survive difficult times aren’t always the ones with the largest credit lines or the deepest pockets. More often, they’re the ones whose leaders are willing to have an uncomfortable conversation before a challenge becomes a crisis.
After 15 years working with government contractors, I’ve found that financial success depends as much on transparency as it does on capital. Every GovCon company will eventually face a major setback. The companies that emerge stronger are those that communicate early, engage their financial partners, and work together to find solutions.
Transparency is the foundation of strong partnerships. It often requires setting aside pride and embracing a little short-term discomfort for the long-term health of the business.
Companies that successfully navigate these moments are those who communicate early, engage their partners, and work together toward solutions. Building trust is a shared responsibility — lenders and investors bring resources and expertise, while borrowers bring accountability, preparation, and a commitment to open communication. Putting the company first means making the call, having the conversation, and creating a path forward together.
The temptation during challenging times is often to stay quiet and view a difficult conversation as an admission of failure rather than an opportunity for a solution. But reaching out early with an open dialogue can make all the difference. When owners communicate about changing circumstances, lenders and partners will better understand the situation and more efficiently explore options when finances are tight and before a payment is missed and create the best opportunity for the business to move ahead.
Consequences don’t disappear when you look away from them. They grow. As cash gets tighter, owners start looking for a fast fix — often from people they’ve never met, and far outside the bounds of good judgment.
That’s when predatory lenders turn up. They offer quick approvals, easy money, and terms that sound too good to refuse. Before long, you owe some outfit you found online, on non-negotiable terms, at a rate that can balloon overnight. These lenders have no stake in your business and no interest in your future. The relationship is transactional at best. At worst, it turns tight cash into no cash at all.
This is the price of having avoided a conversation with a partner who already knew you and was willing to help you overcome your challenges.
Good owners don’t wait for a crisis to find an accountant or a lawyer. They build those relationships early, with advisers who understand the rules and regulations and actually know the company. A lender should be no different.
The fallacy I hear most often is that taking on capital creates a relationship. It doesn’t. That’s a transaction. A lender who isn’t talking with you from the start — who isn’t paying attention to your receivables and forecast — has already let you down before you hit the first real bump. When things get tight, the partner you thought you had will turn out to be nothing more than a heartless collections agent.
As president of Parabilis, which provides Federal Market Credit to small-business government contractors, I tell every client the same thing: call the moment a problem appears. Raised in Week 1, that problem is a conversation. Three months in, the solution to that problem may have little flexibility and increased legal and financial consequences.
We’ve helped clients in genuine trouble find a way through — not by throwing money at the situation, but by sitting down, reviewing where they stand and where they’re headed, and building a path forward. You can manage your way out of a crisis. You usually can’t pay your way out of one.
There’s a related pattern in GovCon: some owners have not yet experienced the ebbs and flows of government payment schedules, when unexpected payment delays make it difficult to plan for the unexpected or adhere to a financial forecast.
In the fast-moving GovCon world, it can be easy to focus on today’s revenue and immediate financial needs while overlooking the broader picture. Traditional measures like profit and loss statements and balance sheets remain critical tools, but they don’t always capture unexpected challenges or opportunities that arise.
Maintaining an open line of communication with your lender helps provide the context behind the numbers, allowing both sides to identify potential issues early and make proactive decisions.
Your lenders can’t solve a problem they don’t know about. The earlier we hear from you, the more options are on the table. And that’s good news, because the hard call almost always goes better than you feared.
More often than not, it’s the conversation that saves you.
Parabilis, financing the future of federal contracting.