Rosenthal & Rosenthal completed a $500,000 PO facility to support the production financing requirements of a California-based cosmetics and beauty products company.
Two large e-commerce subscription box retailers were interested in having the cosmetics company develop a line of cosmetics for their distribution channels. Although it was a large sales opportunity, the scale of the orders in addition to the shipping schedule required by the retailers led to production capacity and cash flow challenges. The cosmetics company’s overseas suppliers were requiring a deposit to start production as well as payment before delivery.
Rosenthal’s PO finance team negotiated with the cosmetic company’s supplier and restructured the financing requirements. Documentary letters of credit were used to fund the purchase of product from the cosmetic company’s overseas supplier, enabling the supplier 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.
“Rosenthal is committed to expanding our production financing program for companies operating in the cosmetics, beauty and wellness segments. This particular transaction allowed our client to fulfill orders from what ultimately became a single large subscription box company, an extremely fast-growing retail distribution channel,” Paul Schuldiner, division head at Rosenthal, said. “By partnering with Rosenthal and a third-party factor, our client benefited from our knowledge of financing international trade, along with the factor’s knowledge of the end customer’s payment practices and history. Working in tandem, we were able to offer the company a platform to exponentially grow its business with this new customer and future customers, an end-to-end supply chain financing solution that was a win-win for all parties.”