Rosenthal & Rosenthal completed a $1.25 million purchase order finance facility to support the production financing requirements of a New York-based importer and distributor of kitchen and cookware products.
The company had been operating modestly with sales from infomercial-based e-commerce channels as well as smaller catalog retailers. As sales increased, the company was approached by both an e-commerce subscription box retailer and a big box retailer, both of which were interested in having the company develop signature cookware lines for their respective distribution channels. Production cycle timing, a challenging shipping schedule and ongoing freight and logistics issues facing importers from Asia led to increased cash flow strain. Additionally, the company’s overseas supplier required a deposit to start production as well as payment before final delivery.
Rosenthal’s purchase order financing facility allowed the company to fulfill the sales program and deliver the products on time to the retailers. 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 the raw materials and fund all production costs. Cash funding also was provided for fulfillment and logistics costs. Rosenthal’s advance rate was 100% on the cost of the presold inventory.
Rosenthal worked with a third-party accounts receivable financing company on this transaction. The accounts receivable financing solution created access to additional liquidity for the client, over and above the repayment of the purchase order financing provided by Rosenthal, accelerating the cash flow cycle of the overall transaction.
“Rosenthal was pleased to assist this growing kitchen and cookware company in expanding its sales distribution channels. This transaction capital program allowed our client to fulfill orders in a segment that has seen significant growth because of the pandemic,” Paul Schuldiner, division head at Rosenthal & Rosenthal, said. “We look forward to continuing to create and implement unique financing solutions for growth companies selling across multiple distribution channels, including e-commerce and brick and mortar.”
