TradeCap Partners closed an $800,000 production finance facility for a North Carolina-based integrated security solutions company.
Two years of reduced security infrastructure spending from state and municipal customers resulted in losses and reduced working capital for the company. Entering 2022 with constrained cash flow, the company was having difficulty sourcing capital to support an uptick in business. Previously delayed customer projects were being brought back online and the company secured several purchase orders with overlapping delivery dates. Reduced supplier credit limits and cash flow, in addition to higher-than-normal working capital needs to support sourcing of equipment, were jeopardizing the company’s ability to perform. Availability under its factoring line was maxed out and there were no additional assets to leverage. Knowing TradeCap’s production finance capabilities, the factor introduced the client to TradeCap.
TradeCap assessed the credit limits with each supplier, open A/P obligations and needs to support the company’s various projects. TradeCap structured the facility around supplier terms and cash flow needed to maintain terms with suppliers and complete installation for multiple projects. The more than 15 suppliers in the client’s supply chain had various lead times, some up to eight weeks, and either required prepayment with placement of orders or payment on terms. TradeCap’s facility accommodated both as well as the upfront costs needed to complete each project installation.
TradeCap’s financing enhanced supplier terms, further supplementing the company’s existing cash flow, allowing the projects to be fulfilled. With TradeCap’s production finance facility in place, the company has a new source of liquidity to complement its factoring facility and support growth.
“This new relationship exemplifies the depth of TradeCap’s purchase order financing offerings, which includes production and work-in-process financing for domestic manufacturers and value-add distributors completing installations,” Clinton Stanton, managing partner at TradeCap Partners, said. “Our ability to provide this type of financing alongside traditional trade finance differentiates us in the market.”
