Rosenthal & Rosenthal completed a $500,000 purchase order finance facility to support the production financing requirements of a Massachusetts-based importer and distributor of environmentally sustainable housewares.
Recently founded by two retail and e-commerce entrepreneurs, the early-stage company focused its initial efforts on introducing environmentally friendly and sustainably produced housewares products. With successful initial e-commerce sales, the company was approached by larger retailers, distributors and catering management companies, leading to larger sales orders.
Although the company was actively raising additional equity to expand its marketing and infrastructure, an investment banker contacted Rosenthal to explore purchase order financing as an alternative to the equity raise to help fund the purchase of pre-sold inventory. The facility allowed the company to fulfill the sales program and deliver the products on time to its expanding customer base. As an alternative to cash deposits, documentary letters of credit were used to fund the purchase of product from the company’s overseas supplier, enabling the supplier to obtain its own financing to procure 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 partnered with a third-party accounts receivable financing company and worked in conjunction with the company on this transaction. The accounts receivable financing solution created access to additional liquidity for the company over and above the repayment of the purchase order financing provided by Rosenthal, which accelerated the cash flow cycle of the overall transaction.
“Rosenthal was pleased to assist this rapidly growing housewares company as it expanded its sales distribution channels. The transaction capital program allowed the client to fulfill orders in a segment that has seen significant growth as a result of the increased focus on environmental sustainability across the industry,” Paul Schuldiner, division head of Rosenthal & Rosenthal, said. “We look forward to continuing to create and implement unique financing solutions for earlier-stage growth companies that sell across multiple distribution channels, including e-commerce and brick and mortar.”