Rosenthal & Rosenthal, an independent factoring, asset-based lending and purchase order financing firm in the United States, completed a $2 million purchase order finance facility for a California-based toy company.
A former client of Rosenthal’s had secured a bank line a few years ago when it no longer required purchase order financing to support its production financing requirements. However, COVID-19 challenges coupled with a restructuring of their business, gave way to bank-imposed covenants and restrictions that threatened to impede their holiday and 2021 sales. Concerned that these restrictions would make it difficult to achieve sales targets for Q4 and into next year, the company returned to Rosenthal.
Already familiar with the company’s international suppliers and the business’ specific financing needs, Rosenthal was able to quickly step in and re-establish a purchase order financing program. Rosenthal’s $2 million purchase order finance facility helped the client immediately alleviate cash flow strain and ensure an efficient flow of product from overseas suppliers and smooth delivery to customers.
The transaction’s supply chain financing requirements involved the purchase of product from the company’s overseas suppliers, with funding through both letters of credit and cash against documents as well as funding fulfillment and logistics costs. Rosenthal’s advance rate was 100% on the cost of the presold inventory. Rosenthal re-established an inter-creditor agreement with a multi-national bank that was providing a supply chain accounts receivable financing program to the company, offered by one of the major retailers.
“COVID-19 has made multiple aspects of the supply chain even more complex than usual, so it’s more important than ever that funders have a strong grasp on quality control, logistics, licensing and seasonal cash flow requirements,” Paul Schuldiner, Rosenthal division head, said. “Our successful prior experience with the client allowed us to quickly implement a robust purchase order financing program and give them the capital and structure they needed to deliver their critical year-end sales program and begin 2021 on solid footing.”
