Rosenthal & Rosenthal completed a $1.6 million purchase order financing facility to support the production financing requirements of a New York-based accessories company.
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Rosenthal was introduced by a consultant to the rapidly growing accessories importer that landed a major sales opportunity with one of the country’s largest direct-to-consumer subscription box retailers. The scale of the sales order and the retailer’s shipping schedule requirements created both production capacity and cash flow challenges, making it difficult for the client to ensure critical on-time deliveries. The company’s overseas suppliers required a deposit to start production as well as payment before delivery.
Rosenthal’s P/O financing team negotiated with the overseas supplier, ultimately restructuring the financing requirements. This structured solution benefited all parties involved with the transaction.
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Rosenthal also provided a P/O financing facility so the company could fulfill the sales program. The purchase of product from the company’s overseas supplier was funded by utilizing documentary letters of credit, which enabled the supplier to obtain its own financing to procure raw materials and fund production costs. Additionally, cash funding was provided for fulfillment and logistics costs. Rosenthal’s advance rate was 100% on the cost of the presold inventory.
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As part of the transaction, Rosenthal partnered with a third-party factoring company that had significant experience and a proven track record of success with the subscription box retailer. The factor created access to additional liquidity for the company over and above the repayment of the purchase order financing provided by Rosenthal, which improved the overall cash flow cycle of the transaction.
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“When companies like our client are looking to break into rapidly growing retail distribution channels, they need access to larger amounts of financing. By partnering with Rosenthal and the third-party factor, our client was able to leverage our knowledge of international trade financing as well as the factor’s understanding of the end customer’s payment practices and history. Working in tandem, it was rewarding to provide our client with a platform to exponentially grow its business with this new customer,” said Rosenthal Division Head Paul Schuldiner. “This soundly structured end-to-end supply chain financing solution created a win-win for all parties involved.”
