Read how business owners tap into the working capital they
need, when they need it.
Note: All specific names are fictitious to ensure confidentiality
Expert advice protected current
resources for a ‘cash crunch’ later
The challenge:
A business owner needed to upgrade his computers. Purchasing
the equipment he needed would have consumed all of his available
cash. The question was how to raise the cash to make the
purchase? The owner initially thought factoring (the selling
of his customer invoices for an advance payment) would be
a good solution. Turns out, with some expert advise, there
was an even better solution.
The solution:
The business owner was advised that leasing the equipment
would be a wiser solution for him than paying cash: even
better than factoring. He followed this advice and purchased
the new computers, paying cash to the vendor, supplied by
the leasing program. Now he makes comfortable monthly payments
with a payment program the business can afford, and his
available cash was left untouched.
Benefit:
Not only that, by leasing, he still had factoring as an
ace in the hole for future use and short-term money. This
was wise counsel, since soon after, he sailed smoothly through
a ‘cash crunch’ by using factoring to grow his
business.
Contact us now for a quick
no-obligation conversation about your business financing
needs.
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Home Health Staffing (HHS)
How to meet payroll while waiting for contracted payments
The challenge
HHS is a business which operates by obtaining contracts
with various pharmaceutical companies. These companies sold
chemotherapy and other invasive drugs prescribed by a doctor.
HHS hired nurses to administer these drugs in patients’
homes. Having little competition this business was successful
and, with business doubling every six months, the need for
working capital was apparent.
HHS’ challenge was the paying of the nursing staff
before they were paid by the pharmaceutical companies.
The solution:
HHS used factoring to receive payments when they were needed
– rather than when available from the pharmaceutical
companies. This allowed them to guarantee the payment of
the staff and undertake a controlled expansion of the staffing
needed to service the new business that was being generated.
Benefit:
After starting factoring in May, in December HHS stated
that they had been able to grow their business 130% through
using these services. After a while HHS became financially
independent and were able to slow their factoring to a crawl
– which is just what factoring is all about. However,
when another growth spurt started, factoring was available
again to ensure that the financial growth was again smooth
and controlled.
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Freddy Ready’s Carpet Cleaning
(FRCC)
Used Accounts Receivable to secure better control of cash
flow
The challenge
FRCC had been in business for over 20 years but their bookkeeping
was terrible. The owner was sure that the company was losing
money on invoices they couldn’t track. The business
was barely surviving in spite of the fact that they catered
to some large property management companies.
The solution:
Upon engaging the services of a factor, FRCC’s invoices
were incorporated into and tracked by the factor’s
accounting system. This simplified FRCC’s book-keeping
processes and provided detailed reporting on the invoices
and their status. In addition, since the factor also runs
credit checks prior to funding their new customers, FRCC
has also avoided some non-pays.
Benefit:
FRCC’s business has flourished. With the accounting
system in place they are more efficient, and with the improved
cash flow FRCC is able to take advantage of large volume
and cash discounts from their vendors. Here again the business
is now reaching a point where they no longer need factoring
services any more.
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Funded as a budding inventor—now
a thriving success
The challenge:
An inventor was able to get his invention in front of the
buyer for a major chain. The buyer loved it and wanted to
sell it through a small percentage of their stores as a
test. With the success of the test this product was added
to the inventory of the entire chain. The problem was the
inventor was using a contract manufacturer who needed to
be paid 50% up front and the balance upon delivery. The
inventor did not have the money to do it and was about to
lose the order.
The solution:
The inventor qualified for contract financing, which paid
for the invention to be made, packaged, insured and shipped.
Successfully able to fill his orders, he continued with
the sale and distribution of his popular invention.
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BWO Manufacturing
Bank wrote them off—Financing created win/win for bank
and company
The problem:
BWO had been the client of a bank for about 5 years, with
a loan covering $400,000 for inventory and $400,000 for
receivables. However, the bank sensed that there was something
wrong and wanted to get BWO off their books.
The solution:
A Purchase Order funder was brought in to look at the situation.
After verifying that BWO did have $4m of Purchase Orders
from good companies, and that the factory would be able
to perform according to the stipulations of their contracts,
the P.O. funder was able to present the bank with a solution
whereby they would a) buy the receivables and b) work on
the remaining $400,000 – contracting to pay $10,000
off the top of each contract until such time as the $400,000
was paid off.
The Benefit:
In this case the bank was paid off in 5 months, as opposed
to the 2 years that they had calculated it would take. BWO
became so profitable that the company was sold 10 months
later.
You don't need to add debt when
you infuse your business with cash. Contact
us now to learn how to gain ready access to cash without
incurring any new debt or giving up equity.
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AEM Manufacturing
Purchase Order financing saved company from brink of closure
The problem:
AEM aerospace engine manufacturers had been in business
for about 10 years, with a track record of approximately
$4m in yearly sales.The owner of AEM had entrusted the running
of the company to “friends” who had severely
mismanaged the company – to the extent there an urgent
influx of $2m in financing was needed to pay for shipments
required to stay in production. After paying an intermediary
to arrange this financing no one showed up at the closing,
and if the funding could not be found in time layoffs would
result, word would get around and AEM would be forced out
of business.
The solution:
The P.O. funder went in to evaluate the company on the Monday.
Since they had been in business for 10 years, and the owner
of the Company was now back directly involved in managing
the operations, $1.5m in purchase order funding was arranged
by Wednesday – in time to pay for the critical shipments.
Benefit:
In the first year using purchase order funding, AEM did
$12m in sales, producing $4m in profits. In the next year
they did $20m in sales, producing $8m in profits and were
named as the State’s turnaround company of the year.
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Turned a business note into cash
to start a new business
The challenge:
A business owner sold his business and decided to "carry
the paper" himself for a total payout over 5 years.
The monthly payments from the buyer were sent like clockwork.
After 2 years, the seller was bored with golf and tired
of retirement so he decided to start a new business. Since
all his cash was tied up in his previous business, he didn’t
have the funding for his new venture.
The solution:
He had heard about selling a business note, and was prepared
to sell off his remaining payments. The solution turned
out to be even better than he thought. Instead of selling
his entire note, he sold just the future payments needed
to get the cash he wanted. This left him with additional
payments he could continue to collect on, or sell in the
future. With his financing in place, he moved forward implementing
his new business plan.
Contact us now for a quick no-obligation
conversation about your business financing needs.
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TSI Transportation Supplies Inc.
Kept supply chain active when unexpected change in management
caused suppliers to raise prices
The problem:
TSI is a business that supplied parts to their region’s
Mass Transit Authority (MTA), to keep their rolling stock
in good running condition. They had built up a solid reputation
for the production of timely quality work. The business
was a small operation with a marketing/finance partner and
a technical designer/Operations Manager. The business obtained
contracts, provided technical specifications for manufacturing
work that was contracted out, and carried out inspections
before packaging and distributing to the Transit Authority.
When the marketing / finance partner decided to leave the
business, since this was a small company, the manufacturer
to whom work was being contracted out decided to increase
his up-front payment requirement to manufacture the goods
on order.
The solution:
TSI used purchase order funding to ensure the production
could be started. The Purchase Order funder was able to
swiftly analyze the situation, guarantee the availability
of the funds required to keep the production line flowing.
Benefit:
Through Purchase Order funding TSI’s business was
able to remain viable. Rather than having to go out of business,
the delivery to the MTA continued and TSI remained on the
approved vendor list, continuing to receive and fulfill
contracts and overcome their difficulties.
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