TradeCap Partners closed a $1 million supply chain finance facility for a New Jersey-based toy company. The company manufactures overseas and sells to wholesalers and retailers through both direct import and domestic sales programs.
In its first year of operations, the company was able to scale quickly, adding several major retailers and boutique customers. Following a successful holiday season, three of the largest retailers in the U.S. indicated they were increasing the number of stores where the company’s line of popular toys would be sold. The backlog of orders received for Q1/18 delivery exceeded prior years’ total sales. Projections for modular programs through the remainder of FY/18 are forecast to exceed $10 million, a 4x multiple of FY/17 sales.
The company was seeking additional capital to support their overseas manufacturing partners. There was also an immediate funding need related to a large quantity of goods sitting at port overseas incurring storage charges due to the company’s insufficient cash flow to pay the freight forwarder. Those goods needed to be air shipped to accommodate order delivery dates with shorter than normal lead times due to popularity and sell through at retailers. Although the company had an existing factoring relationship in place, it needed a solution to provide additional funding capacity to get the goods at port released and provide suppliers the support needed to increase production and satisfy growing demand.
TradeCap expedited the due diligence process with help from the company and existing factor and was able to close and fund in just five days. Payment was made to the freight forwarder, goods were shipped immediately and additional availability was used to pay suppliers for goods rolling off the production line.
TradeCap’s facility provided the company an added source of non-dilutive growth capital and the flexibility to support multiple suppliers with different terms, utilizing a combination of letters of credit and cash payments to purchase goods from suppliers. Combined with the company’s factoring facility, TradeCap’s solution will alleviate cash constraints allowing the company to ramp production to accommodate the increasing retail demand.
