Rosenthal & Rosenthal completed a $2 million purchase order finance facility to support the production financing requirements of a New York-based accessories company.
When the company faced continued uncertainty around the tariffs associated with importing from China, as well as its usual Chinese New Year cash flow concerns, it encouraged one of its major retail customers to pre-order product for 2019. Not wanting to jeopardize its successful annual program, the retail customer agreed to preorder their products, preserving their selling margin. As a result, the company required additional supply chain financing to fulfill the program earlier than usual.
Rosenthal’s facility allowed the company to fulfill the program on time. The transaction’s supply chain financing requirements involved the purchase of product from the company’s overseas supplier, with funding through cash against documents (i.e., documents against payment or DP financing), as well as funding fulfillment and logistics costs.
Rosenthal’s advance rate was 100% on the cost of the presold inventory.
“The international trade climate, specifically affecting consumer products imported from China, seems to change daily. This uncertainty creates sourcing and cash flow challenges for companies operating in that sector,” said Rosenthal Division Head Paul Schuldiner. “It is very rewarding to provide our client with a solution that allowed them to preserve both their margin and their retail partner’s, while also solving the supply chain finance requirements from their overseas supplier. This transaction is an excellent example of how cash funding can be used as a P/O financing mechanism when letters of credit are not necessarily required by international suppliers. Rosenthal’s deep knowledge of international trade and our ability to facilitate soundly structured production financing created a win-win for all parties involved.”
