TradeCap Partners closed a $1.5 million purchase order funding facility for a Texas cosmetic distributor selling to a national subscription box company.
A business consultant was brought in to help secure a funding solution for a large order the client had received. The client’s minimal sales history and single debtor sales concentration were creating roadblocks in their pursuit of additional capital to fulfill the order.
The consultant connected the client with a factoring company to accelerate cash flow once goods were delivered to the subscription company, but the client still needed to pay for goods that had been produced and shipped from their overseas supplier. TradeCap was brought in to work in tandem with the factor to provide a solution.
TradeCap underwrote the performance risk as well as the single debtor concentration and closed the transaction in 10 business days. Its facility made payments to the supplier upon presentation of shipping documents once goods had been produced and shipped. TradeCap and the factor also negotiated an inter-creditor agreement whereby TradeCap would be paid from advances made by the factor once goods had been delivered and invoiced to the customer.
Bryan Ballowe, managing partner of TradeCap, commented, “Although our client was a relatively new company with minimal sales, we were able to take a step back and evaluate their ability to perform and underwrite the concentration of a single account debtor, which normally is a challenge for most finance providers.”
