TradeCap Partners closed a $1.2 million purchase order finance Facility for a technology hardware importer based in California.
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After several years of steady growth, the company’s sales backlog exploded due to demand from customers for newer technology and an exclusive distribution agreement with a customer in a niche industry. The increased demand forecast and short-term delivery timeframes created immediate financing needs to ramp production capacity with their European suppliers. Supplier terms required letters of credit to be issued prior to production and payments denominated in Euros instead of U.S. dollars.
After initially speaking with a West Coast factor, the company was introduced to TradeCap given their need for a quick and flexible PO finance solution that could facilitate payments to suppliers in Euros. TradeCap and the factor worked in tandem with the company to structure a facility that satisfied the needs of suppliers to be paid in local currency and provided adequate funding capacity related to the anticipated growth with multiple customers.
In one week, TradeCap structured, underwrote, closed and funded the first import transaction through a Euro denominated letter of credit issuance to a key supplier. TradeCap’s facility will support 100% of the cost of goods being sourced from suppliers as well as inbound freight, duties and inland logistics costs to their customers’ doorstep.
With TradeCap’s facility in place, the company has a solution to support production with their manufacturers. The stage is set to capitalize on the immediate growth opportunities and fulfill the increasing backlog of purchase orders.
Clinton Stanton, TradeCap’s managing partner, remarked, “Our international capabilities provide companies flexibility to issue letters of credit and payments to suppliers in foreign currency denominations. This was a great example where our speed and flexibility accommodated the structural payment needs of our client, solved a growth dilemma and salvaged an opportunity for our factoring partner.”
