Paragon Provides Invoice Factoring Facility to Energy Company
Paragon Financial Group announced that it provided a $250,000 invoice factoring line of credit to a forward-thinking energy service company headquartered in Minneapolis, MN. The facility will provide working capital to meet the company’s increasing payroll needs.
The three-year-old company specializes in privately owned commercial and residential renewable energy systems, providing design, engineering, installation, project management, equipment procurement and commissioning of the best alternative energy system for a given site. It offers turnkey services across the full range of renewable energy systems: wind, solar, biomass and hydrogen.
Recently, the company signed a contract with a new client to engineer and construct a wind turbine field. While representing a large growth opportunity, the client also represented a 100% sales concentration, required extended billing and payment terms and as a young company itself, had a limited financial history.
The contractual billing terms stipulated that the company could only submit sales invoices at quarter end, which created 90 days of unbilled receivables. Additionally, the company had to wait another 45 to 60 days for the invoice to be paid, according to the payment terms. This caused a significant cash slow crunch as the company had to meet payroll expense for dozens of its employees working on the project while waiting to be paid for up to 120 days. The company’s broker recommended it call Paragon Financial.
“We were excited to work with the company as alternative energy is an important and growing segment of the economy. But first we had to clear a few hurdles to get credit approval for the company’s client which had very little public financial history and didn’t want to release their financial statements,” said Michael Rossi, president of Paragon Financial Group. Paragon patiently worked with the company and its client to obtain financial information for credit approval. “We were very pleased to get an approval for a good portion of their billings to the client. Other factoring companies hadn’t been able to get any approvals for them,” Rossi explained.
Because this deal resulted in a 100% sales concentration, the next hurdle to clear was getting ironclad written verification from the client that the work had been done and it would pay Paragon. “Other factors wouldn’t touch a 100% concentration deal, especially with such a large amount on the line,” Rossi said. “But Paragon worked through the challenges and got the deal done.”
With invoice factoring and Paragon’s factoring line of credit, the company now has the working capital it needs to meet payroll and has a reliable, stable source of funding to be able to take advantage of new opportunities to grow. The company is moving forward with its new client, designing and building the new wind turbine field.
For over 18 years, Paragon Financial Group has provided working capital solutions for growing companies throughout the U.S.