Rosenthal & Rosenthal completed a purchase order finance facility to support the production financing requirements of an Illinois-based manufacturer and importer of mechanical components for large customers in the OEM industrial sector.
The company’s funding needs changed when it began to diversify its product sourcing requirements and required a financial partner with significant international trade experience. A consultant familiar with Rosenthal’s expertise introduced the client to Rosenthal.
Based on a review of and discussions with the company’s overseas suppliers, Rosenthal established a $750,000 purchase order finance facility that allowed the client to fund the production of product backed by sales orders from large industrial customers. With Rosenthal’s assistance, the client no longer was forced to rely solely on China as a sole production source.
The transaction’s production financing requirements involved structuring purchases from several Asian component suppliers. The funding was provided via letters of credit as well as cash against documents, as the specific requirements differed for each supplier. Cash funding for freight, duty and logistics costs was also incorporated into the facility. Rosenthal’s advance rate was 100% on the cost of the presold inventory.
“As concerns continue to grow around the spread of coronavirus, companies are now faced with new supply chain challenges that highlight the need for importers to diversify their production sourcing strategy,” said Rosenthal Division Head Paul Schuldiner. “This transaction is a great example of Rosenthal’s experience facilitating inventory financing solutions for companies with changing sourcing requirements. Purchase order financing is a valuable tool to help industrial product importers take advantage of larger sales opportunities with soundly structured international trade financing.”