TradeCap Partners closed a $1.5 million trade finance facility for a promotional products importer located in the Southwest.
The company experienced sizable growth in fiscal year 2019, financed primarily with the help of favorable payment terms with its overseas supplier and a long-standing factoring relationship. Growth in 2020 started out strong with performance exceeding projections. However, as the pandemic began to take hold, the company’s customers delayed and, in some cases, suspended purchase order delivery dates until they were able to reopen doors. This resulted in significantly reduced cash flow, prohibiting the company’s ability to stay within payment terms extended by its primary overseas supplier.
When TradeCap was introduced to the client by its factor, the supplier was demanding payments for product already shipped before it was willing to ship additional product or start new production. As customers began reopening, the products importer needed a solution to ensure additional product would ship and production would stay on schedule to meet demand. TradeCap and the products importer identified inventory located in domestic third-party warehouses supported by customer purchase orders to provide availability and allow TradeCap to administer payment to the overseas supplier to curtail past due accounts payable. TradeCap also structured future payments to the supplier on a ‘documents upon presentation’ basis for additional presold goods once produced and shipped. The solution shortened the payment cycle to the supplier and ensured goods would ship on time.
Once goods financed by TradeCap were delivered and invoiced, the products importer utilized its factoring facility to repay TradeCap’s pre-shipment financing and provide additional working capital.
“To say this has been a challenging time for all of us is quite an understatement. Few businesses have been immune to this horrible pandemic,” Bryan Ballowe, managing partner of TradeCap Partners, said. “Being able to move quickly and creatively for our clients is a challenge all finance companies should meet head on as we continue to work our way back to a sense of normalcy. We are fortunate we were able to do our part for our client.”