Rosenthal & Rosenthal, a factoring, asset-based lending and purchase order financing firm in the United States, completed an $11.5 million purchase order finance facility to support the production financing requirements of a Florida-based apparel company.
The company experienced explosive sales growth when it launched several new product lines in its men’s and women’s divisions and expanded its relationship with a major retailer, which created a significant concentration for the business. This rapid growth is transforming the business, with sales projected to increase from $40 million to more than $100 million within the calendar year. In addition, as a seasonal business, the company has longer lead times for production and shipping from its overseas supplier base. As a result, incremental sales growth has created significant cash flow strain that could not be supported by the company’s financing arrangement with its existing lender, the factoring division of an international bank.
Rosenthal was able to support the business by providing a multi-million dollar purchase order financing facility that involved the purchase of product from the company’s overseas suppliers, with funding through letters of credit and cash funding for fulfillment and logistics costs. Rosenthal’s advance rate was 100% on the cost of the presold inventory. Once the inventory arrives, clears customs and is distributed by a third-party logistics facility, the related sales invoices will be funded by the factor and the Rosenthal purchase order financing will be repaid.
Rosenthal has known the company’s management team for nearly 10 years from a prior relationship through Rosenthal’s purchase order financing team.
“We’re thrilled to be able to help this company and their highly skilled management team capitalize on these exciting growth opportunities,” Jennifer Draffkorn, senior vice president and portfolio manager for purchase order financing at Rosenthal & Rosenthal, said. “This transaction is a perfect example of how Rosenthal values our deep relationships with clients and is representative of how many of our clients view us as partners, not just lenders.”
“Rosenthal’s ability to offer creative solutions to clients seeking alternatives to raising more permanent capital makes us unique and ultimately saves owners from further diluting their equity,” Paul Schuldiner, chief lending officer at Rosenthal & Rosenthal, said. “Purchase order financing is an excellent counterpart to factoring, and with our long history of working hand-in-hand with third-party factors, asset-based lenders and banks, Rosenthal is well positioned as an effective partner in these types of transactions.”
