Rosenthal & Rosenthal completed several non-recourse factoring deals with furniture companies in Texas and North Carolina.
After a former Rosenthal client sold its furniture business to a furniture brand in 2019, they reached out to Rosenthal to discuss funding for a new company. The client was seeking financing for several of its furniture businesses, both startups and established brands, all of which were experiencing cash flow issues as well as credit coverage concerns. Rosenthal offered a non-recourse factoring solution to cover both.
In addition, when the COVID-19 pandemic began and PPE was in short supply, the client’s medical business saw a growth opportunity to provide its PPE products to retailers, hospital systems and government agencies. Rosenthal provided recourse factoring to solve the company’s cash flow issues, which included challenges around vendors requiring deposits and payment in full upon shipment. The company funded the initial orders and then Rosenthal factored the invoices to generate additional cash for future orders. The client’s small team also benefited from outsourcing its collection and payment process services to Rosenthal.
“This was an unusual scenario, but by offering a factoring facility with advances, we were able to address the client’s working capital needs,” Leigh Lones, SVP and Southeast regional sales manager in Rosenthal’s Atlanta office, said. “Furthermore, Rosenthal’s ability to provide both non-recourse and recourse factoring, managed as a single facility, was key to this deal.”
In addition, a High Point, NC-based, family-owned and operated furniture business was introduced to Rosenthal by another client when it began to experience growth. The company’s volume was expected to grow 30% to 35% over the next 12 to 18 months. Its need for advances on account receivables led it to Rosenthal.
When the company’s largest vendor reduced its terms, forcing the company to pay the vendor more quickly, the company faced a cash flow strain. Business began to pick up through e-commerce channels and then COVID-19 hit, putting even more pressure on the company’s inventory levels. In the current environment, though terms with a new overseas vendor were tight, the company created a new product that would open up opportunities with new customers. Rosenthal provided a non-recourse factoring facility with advances on account receivables under a $500,000 line.
“We’re pleased we were able to solve the client’s working capital issues by offering a factoring facility with advances to address their issues with vendors,” Lones said. “In this case, credit protection was also valuable to the client as our credit team was able to help the company assess new customers for its new product line.”