Vehicle Exporter Purchase Order Financing Case Study

03:11 05 July in Blog, Case Studies

Headquartered in Westchester, New York, this Client is a unique specialty export financing business involved with the sale of new and used vehicles such as BMW, Mercedes Benz, Audi, Porsche, and Range Rover. They finance the purchase of luxury automobiles and sports car in North America and Europe for export to independent car dealers and traders in China, Vietnam and other Asian countries.

Background

  • The Client purchases luxury automobiles and sports car in North America as well as Europe for export to independent car dealers and traders in China, Vietnam and other Asian countries.
  • Payment for the vehicles is made via Irrevocable Documentary Letters of Credit with the Client as the beneficiary of the export letters of credit.

Company Challenges

  • The Client lacked the liquidity to purchase the vehicles required to fulfill the documentary requirements of the export letters of credit.

Capstone’s Solution

  • Established a pre-export PO Financing Facility based on the value of the letter of credit and the cost of the vehicle to be exported.
  • Capstone makes cash advances to the car dealer to purchase the vehicles which are then drop-shipped to the port for export to Asia.
  • The proceeds of the letter of credit are paid into a blocked account that Capstone has dominion and control over. Upon receipt of funds following the presentation of documents to the LC (letter of credit) issuing bank, Capstone recovers the advance and any accrued fees sending the net proceeds (Client’s profit) to the Client.

Progress and Future Outlook

  • Since 2019, Capstone has funded 282 vehicle exports transactions averaging $10MM in exports per year. 
  • The Biden administration has reduced U.S. sanctions on China opening up the export market more than during the previous Trump administration.
  • In early 2022, the Client renewed the Purchase Order Financing facility with Capstone for an additional two years.   

 

 

Wholesaler Master Factoring Facility & Purchase Order Financing Case Study

14:04 21 June in Blog, Case Studies

Wholesaler Master Factoring Facility & Purchase Order Financing Case Study

Based in New Orleans, Louisiana, this Client is a wood and construction products wholesaler. Formed in 2009, the Client was originally a wood products wholesaler however they built a disaster relief segment a few years ago in response to hurricanes and flooding in Louisiana, Texas, the Virgin Islands and Puerto Rico.

Background

  • The Client primarily provides product procurement and related logistical assistance required for a particular disaster area. 
  • They are recognized as a high value-added niche player within the disaster relief industry, as they are able to handle all logistical matters in addition to sourcing and procuring the associated product required under very tight deadlines.

Company Challenges

  • The Governor’s Office for the State of Louisiana issued a disaster relief purchase order to the Client for the delivery of 250 recreational vehicles (RVs) to be given to residents displaced by Hurricane Irma.  
  • The RVs had to be sourced from 50 different vendors throughout the United States and needed to be delivered within five days of receipt of the $11MM purchase order.

Capstone’s Solution

  • Provided an $11MM Master Factoring Facility. 
  • Opened an $8MM PO Financing Facility to facilitate the purchase of the RVs.

Progress and Future Outlook

  • The Governor’s Office of the State of Louisiana was so impressed with their performance they are issuing the Client another purchase order for 500 RVs.

 

 

Minority-Owned Supplier Master Factoring Facility, Purchase Order Financing & Letter of Credit Case Study

14:41 08 June in Blog, Case Studies

This Client is a globally diversified supply-chain solutions company with offices in New York and Shanghai, China.  They provide all supply chain services from procurement, warehousing, distribution, fulfillment and transportation and has a broad portfolio of service offerings.

Background

  • The management team has experience with servicing the world’s leading consumer product manufacturers. 
  • The Client is able to assist small businesses to large corporations with their supply chain needs.  
  • As a certified minority contractor, they have dedicated contracts from New York City agencies for materials required to conduct the City’s business and maintain and improve its assets.

Company Challenges

  • The Client received contracts totaling $2MM from the New York City Housing Authority (NYCHA) to supply generators.   
  • Two of the generators are manufactured in China.  The terms of the sale were 30% down payment of the COGS and 70% of the COGS upon shipment of the goods to the USA.

Capstone’s Solution

  • Provided a $2MM Master Factoring Facility. 
  • Opened a $1MM PO Financing Facility and issued two Letters of Credit to Chinese manufacturers for each generator.

Progress and Future Outlook

  • Based on the Client’s ability to issue letters of credit and arrange for the delivery of the generators, NYCHA has given additional orders.
  • The new orders are for materials required for construction and maintenance of the apartment buildings and related infrastructure owned by the City of New York.

 

Frozen Foods Manufacturer and Supplier: Purchase Order Financing and Factoring Facility Case Study

09:57 26 August in Blog, Case Studies

This Client is a family-owned and operated frozen foods manufacturer headquartered in New York.  They offer a full line of convenience products, which includes an extensive line of appetizers/ hors d’oeuvres, pre-plated meals, gluten-free certified, vegetarian, bulk entrees, breakfast products, crepes, and blintzes.

Background:

  • Formed in the 1970s, the company is a nationally recognized leader in the production of high-quality, kosher endorsed (OU Kosher Certified), frozen foods products.
  • The Client manufactures under its own brand as well as private label which are distributed to all major renowned discount warehouses based in the United States.

Company Challenges:

  • This company is well established and has a well-deserved reputation however they were struggling to make timely payments to vendors due to working capital constraints imposed by their existing bank facility.
  • The Client’s growth significantly outpaced its ability to leverage its balance sheet and cash flow.
  • They were unable to meet the growing demands of their major customers using their bank sponsored ABL Facility.

Capstone’s Solution:

  • Provided a seven-figure Master Factoring Facility and a Purchase Order Facility.
  • Opened ad-hoc Letters of Credit for the purchase of new equipment.

Progress and Future Outlook:

  • Since the commencement of the relationship back in 2019, Capstone has purchased $72 million in total sales.
  • Cash flows and business operations were stabilized through the uncertainty of the COVID-19 pandemic.
  • Cash flow constraints were eased resulting in the Client meeting/surpassing order demand from all major customers.
  • The Client has found Capstone to be flexible, practical and knowledgeable about their industry; Capstone took the time to understand their business needs and provided a customized funding solution.
Purchase Order Factoring

Household Appliance Retailer Purchase Order Financing & Invoice Factoring Case Study

07:02 22 November in Case Studies

This Ronkonkoma, NY based retailer is an industry leader in developing and executing environmentally friendly solutions through the recycling, recovery, and repair of a variety of products. The client is equipped with skilled technicians who follow strict testing, inspection and approval schedule for all products, creating like new products that continue to exceed manufacturer and customer expectations.

Background

  • Formed in 2016, the client provides damaged and returned product management, return center services, remanufacturing, reprocessing, repairing and recycling of consumer products for consumer product manufacturers such as Whirlpool, Miele, Kitchen Aid, Bosch, etc.
  • The client’s management team has experience with servicing the world’s leading consumer product manufacturers

Company Challenges

  • Highly cash flow constrained
  • Company struggled with stretched payables demand and meeting payroll

Capstone’s Solution

  • Provided a Master Invoice Factoring Facility to purchase a minimum of $4.8 million in invoices
  • Opened $500k PO Financing Facility in 2018 to facilitate Best Buy Returned Inventory Program

Progress and Future Outlook

  • Capstone has purchased over $6.0 million in total invoicing
  • Client secured Fred’s Inc., a general store chain, as a customer through the Best Buy inventory program.
    • $759k in 2019 Fred’s sales to date
  • The Client can now focus on the rapid growth of their company:
    • $1.6 million in 2017 sales
    • $3.3 million in 2018 sales
    • On pace for $5.0 million in 2019 sales

 

Remanufaturer-Recycler Purchase Order Financing _ Master Invoice Factoring

NYC Steel Erector and Fabricator Single Invoice Factoring Case Study

06:58 22 November in Case Studies

This client provides New York, NYC and the Tri-State area with structural steel erection and fabrication services. Without sufficient cash flow, the company could be forced to turn down new projects. Capstone knew to assist this company, they would need a solution that generated immediate cash flow. Therefore, single invoice factoring made sense; the company would not need to take on additional debt, and they would have the capital they needed to ensure funds were available to cover payroll and make timely payment to vendors.

Background

Locally owned and operated full fabrication and erection service company of structural steel and one of NYC’s largest plank erectors.

  • Projects consist of large residential and commercial buildings located throughout New York City
  • Clients: Two major plank manufacturers on the East Coast
  • Since August 2015, the company has factored over 260 invoices ranging from $4,000 to $180,000
  • Total funding has been $9.2 million

Company Challenges

This company is well-established and have been in business since 1967.

They have a well-deserved reputation and yet the company was struggling to make payroll, and timely payments to vendors. The company’s growth significantly outpaced cash flow and due to this cash crunch, they were forced to turn down work from two of their main customers.

Capstone’s Solution

  • Provided a Single Invoice Factoring Facility to inject the working capital required for supporting a larger volume of contracts
  • Increased customer credit line by over 500 percent since the start of the relationship

Progress and Future Outlook

  • Cash flow constraints have been drastically eased and now the client can focus on taking on a higher volume of projects for its customers
  • Business volume has tripled since the client started factoring

 

NYC Steel Fabricator Single Invoice Factoring

Non-Profit Advocacy Organization Single Invoice Factoring Case Study

06:47 22 November in Case Studies

One of our recent clients is a Pennsylvania-based non-profit advocacy organization dedicated to improving the futures of children in foster care. The client’s mission is to provide a safe and caring home for all at-risk children in foster care in the Philadelphia, PA region. The organization also provides food, clothing and therapeutic services to households of up to six children.

Background

  • Philadelphia, PA-based non-profit organization that fosters and assists with the adoption of children
  • Focuses on troubled children who have been fostered in multiple homes in an effort to give them stability
  • Owners of the company have fostered over eight children personally

Company Challenges

  • As a non-profit organization, the Client had a very difficult time obtaining financing
  • Wanted to expand and open additional homes for boys and girls so they could foster more children and get them adopted

Capstone’s Solution

  • Provided a single invoice financing program allowing them to obtain funding through their invoices as they needed to with no annual commitment
  • Increased the advance rate to 80% to help the client access cash quicker

Progress and Future Outlook

  • The Client has opened one additional home since we began working together for girls and has plans to open an additional home for boys later this year
  • Invoices have been increasing as they foster and tutor additional children, thereby creating more cash flow for them to continue expanding

 

Non-Profit Organization Single Invoice Factoring

Military and Emergency Services Supplier Purchase Order Financing Case Study

06:02 22 November in Case Studies

A recent client of ours is a Spokane, WA based company that offers over one million products nationwide servicing the military, police, fire, tactical and emergency markets. The Client is known for their long-lasting relationships and continues to build relationships by providing additional services and information about products in the market to their customers.

Background

  • Formed in 1987, the client sells products to the U.S. Government
  • Was awarded a $4 billion extension to their existing contract with the
  • Defense Logistics Agency (DLA) Troop Support in 2019, expiring in 2020

Company Challenges

  • The Client was going through an acquisition and lacked sufficient credit to purchase goods ordered by the United States government
  • Needed a PO Financing Facility to continue to fulfill their obligations under the government contract
  • Certain purchase orders were partially funded by working capital but needed additional funds to get the goods released by the manufacturers and meet the significant increase in supply opportunities

Capstone’s Solution

  • Provided a temporary PO Financing Facility of up to $1 million, followed by a $20 million PO Financing Facility after their merger transaction closed
  • Introduced the Client to a new factor that specializes in buying U.S. government accounts receivables

Progress and Future Outlook

  • A Tri-Party Agreement was negotiated between Capstone, the Client, and the Factor
  • Capstone has received all funds on the financed POs on schedule
  • The Client is projected to expand rapidly and utilize much more of the
  • Purchase Order line on a going-forward basis once the new factoring relationship begins

 

Military-Emergency Services Supplier Purchase Order Financing _ Introduction to Specialty Factor Partner

Independent Mobile Game Developer Master Factoring Facility Case Study

05:43 22 November in Case Studies

This California based client develops mobile games for major companies in the entertainment industry and has recently launched their own free-to-play mobile game for a blockbuster movie. Without sufficient cash flow, the company could have trouble covering payroll and software development related expenses needed to complete their milestones on time. Capstone provided the additional working capital they needed through a Master Factoring Facility.

Background

Projects are mainly work-for-hire service contracts that require software development and operational milestones to be met

Clients include global toy production company and a major entertainment companies

Since early 2018, the company has factored over 60 invoices totaling $7.3 million

Company Challenges

The company in the past had an exclusive customer for its software development. In order to grow, they decided to diversify their development revenues and bid on work-for-hire service contracts with major entertainment companies. Additionally, they self-published their own game which gave them additional expenses such as royalties and marketing. This produced a cash crunch and limited the amount of work-for-hire contracts they had for 2018. These work-for-hire contracts were potentially much more profitable.

Capstone’s Solution

  • Provided a Master Factoring Facility to inject the working capital required to support their work-for-hire contracts and self-published game
  • Progress and Future Outlook
  • The client has compared the performance of their work-for-hire contracts vs self-publishing and found that their work-for-hire is much more profitable
  • The client has been awarded five additional work-for-hire contracts in 2019 and will phase out self-publishing
  • Revenue is projected to increase by 50% during 2019

 

Independent Mobile Game Developer

Construction Firm Master Factoring & Purchase Order Financing Case Study

04:34 22 November in Case Studies

Background

The Client is the largest construction/ general contractor company in the Pittsburgh, PA region

Industries served by the client include hospitality, timeshare, multifamily/ senior living, energy, sports, and retail

The Client has consistently ranked among the Top 10 Contractors in the United States

 

Company Challenges

Highly cash flow constrained

The Client struggled with stretched payables demand and less profitable terms, which constricted margins, operating leverage, and the company’s ability to generate new and profitable business

 

Capstone’s Solution

Began with a $15 million Master Factoring Facility and a $5 million Purchase Order Financing Facility to inject the working capital required for supporting their backlog of projects

Progress and Future Outlook

Constraints drastically eased on cash flow

Timely payments are being made to vendors

Currently doing $20 million on a monthly basis on both Factoring / PO

 

Facilities

The Client can now focus on the rapid growth of their company-revenues have doubled on a monthly basis

Capstone is funding 6 active projects:

  • Four Seasons Resort in Bermuda- $173 million contract
  • Half Moon Bay Hotel in Jamaica- $50 million contract
  • Ritz-Carlton Napa Valley in Calistoga, CA – $123 million contract
  • Belmond Cap Juluca in Maundays Bay, Anguilla – $75 million contract
  • Ritz Carlton Resort in St Thomas, US Virgin Islands – $55 million contract
  • Rosewood Little Dix Bay Resort in Virgin Gorda, BVI – $73 million contract

 

Construction Firm Master Factoring _ Purchase Order Financing

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