TradeCap Partners closed a letter of credit facility for a women’s apparel importer based on the West Coast. The $1 million facility was established based on purchase orders the importer receives from customers.
Despite lower sales, constrained cash flow and losses for the client during the beginning of the COVID-19 pandemic, the client’s factoring company stood by its side. As non-essential retailers opened back up, the client started receiving orders to restock inventory with its customers. The company needed money to complete production with its overseas suppliers. In an over-advance position, the factor was unable to help and turned to TradeCap Partners for the solution.
TradeCap Partners worked to understand the client’s supplier payment terms and the logistics of the trade cycle. Through collaboration with all parties, a letter of credit structure was implemented providing the guarantee of payment suppliers needed to commence production. Due to timing, goods needed to be air shipped in order to meet delivery dates and avoid delays others were experiencing with ocean shipments. Although the change in freight impacted margins, TradeCap Partners and the client developed a plan allowing air freight costs to be included in the availability formula.
With the client’s supply chain restarted through TradeCap Partners’ financing, the client filled restocking orders and has a facility in place to support future operations. TradeCap Partners’ solution benefitted the factor by shoring up the over-advance following fulfillment and invoicing of the initial orders.
“This was a great win for all parties and exemplifies the benefits of collaborating with trusted partners within the specialty finance niche,” Clinton Stanton, managing partner at TradCap Partners, said. “We’re grateful for the trust our factoring, ABL and bank partners place in us to provide purchase order and trade finance solutions for their clients.”
