Rosenthal & Rosenthal completed a $2 million purchase order finance facility to support the production financing requirements of a California-based cosmetic and beauty products company.
The fast-growing cosmetics importer had recently secured a significant license from an emerging brand, which led to a major sales opportunity with one of the largest direct-to-consumer subscription box retailers in the U.S. The company faced both production capacity concerns and cash flow challenges because of the scale of the sales order and the customer’s aggressive shipping schedule. In addition, the company’s overseas suppliers required a deposit to start production, along with payment before delivery.
Rosenthal was introduced to the client by its existing lender, a large international bank. Rosenthal immediately stepped in to restructure the financing requirements with the company’s suppliers and provided a $2 million PO financing facility so the company could fulfill its sales program on time.
The purchase of product from the company’s overseas supplier was funded through documentary letters of credit, allowing the suppliers to obtain its own financing to procure the raw materials and fund all production costs. Cash funding was also provided for fulfillment and logistics costs. Rosenthal’s advance rate was 100% on the cost of the presold inventory.
As part of the deal, Rosenthal partnered with a third-party factor with previous experience working with the direct-to-consumer retailer. That partnership accelerated the transaction’s cash flow cycle, as the third-party factor created access to additional liquidity for the company over and above the repayment of Rosenthal’s PO financing facility.
“Rosenthal is committed to expanding our production financing solutions for cosmetics, beauty and wellness companies. This specific transaction capital program allowed our client to expand its business and acquire new customers through a rapidly growing retail distribution channel,” said Rosenthal Division Head Paul Schuldiner.