TradeCap Partners provided a $1.4 million purchase order facility to a West Coast-based, branded, consumer goods company. The facility was structured to satisfy a seasonal working capital need related to a program with a key customer.
The company’s supply chain was comprised of several domestic suppliers, including a contract filler. Despite the company’s history with suppliers, it required cash deposits to ensure timely deliveries due to lengthy production lead times relative to the program size.
The company initially turned to a factor for help. Given the suppliers’ requirements of cash deposits, the factor was unable to accommodate the financing request. They needed a partner to satisfy the company’s ‘work-in-process’ finance needs that would provide the bridge to delivery and invoicing under the program.
The factor recommended TradeCap to structure a flexible solution around the suppliers’ terms and production process of the contract filler. TradeCap was able to underwrite the performance risk of each supplier, the timing and logistics of all the moving components and the contract fillers capacity and process to produce the large volume of finished goods. All were critical to ensure timely delivery to the customer.
TradeCap’s solution involved structuring payments to suppliers using a combination of cash payments to three suppliers and a payment guaranty to another. TradeCap’s facility supported 100% of the cost of the components, contract filling, packaging and logistics.
“This specific opportunity posed a challenge due to the production nature of the program, requiring vetting of all suppliers involved. Our client’s history with its suppliers and their customer was crucial in providing the comfort needed to support the program,” said Bryan Ballowe, managing partner of TradeCap.
