Rosenthal & Rosenthal completed a purchase order finance facility to support the production financing requirements of a Florida-based, minority-owned government contractor.
A financial consultant reached out to Rosenthal’s purchase order financing team through a recommendation by a third-party factoring company serving government contractors. A mutual client of the consultant and the third-party factor required purchase order financing related to a contract with a security branch of the U.S. government. Rosenthal established a $2.4 million purchase order finance facility, which allowed the client to fund the production of containers for use in training and storage required to fulfill the government contract.
The production financing requirements of the transaction involved the funding of purchases from an overseas supplier using letters of credit and cash funding for freight and duty. Rosenthal’s advance rate was 100% on the cost of the pre-sold inventory. The third-party factoring company purchased the accounts receivable due from the federal government and repaid Rosenthal’s purchase order financing, effectively satisfying all elements of the client’s supply chain financing.
“We were pleased to have been asked to participate in this transaction and partner with the company’s existing factor to finalize an intercreditor agreement within 24 hours and secure a sound financing solution for the client,” Paul Schuldiner, division head for Rosenthal, said. “When timing is critical, PO financing is an excellent alternative when conventional financing is insufficient because it can quickly assist government contractors in successfully bidding, winning and executing on larger opportunities. As in this transaction, the client benefits when its factoring and PO financing source work in tandem, both of whom bring experience and expertise with the unique requirements of government contracts.”
