Purchase Order Finance Case Study

Financing is a very difficult proposition for most small business, and never more so than when starting up.  Borrowing on credit cards or from the old “friends and family” have very definite limits, sufficient internal cash flow is in the future as is the least expensive borrowing alternative, traditional Bank financing.  You look at other possibilities such as Factoring or Purchase Order (PO) Finance but only find programs that have minimum monthly volume requirements or they have contractual time requirements that lock you in to expensive fees.  Worse yet, they have a Separation Fee which will apply often even if you hit the exact notification date required to terminate the relationship.  Premier Trade Solutions, Inc., PTSI,  is the solution.

The Client imports goods to sell to big box retailers.  At the end of their first year, all personal financing sources had been exhausted.  Cash flow was good but not sufficient to internally finance the growth opportunities they were seeing.   In 2008 we started discussions.  All parties agreed that a combination of Purchase Order (PO) Finance and Factoring was what was needed.  A PO Program was put in place which virtually financed every transaction they did.  The Client Factored all their Invoices.  With the Programs in place, they could focus on business.  Cash Flow improved at a rapid rate.

By early 2010, PTSI provided the last of the PO Financing with the Client continuing to Factor most of their Invoices.  As cash flow continued to improve, they found they only had to Factor a few of their Customers.  Profits were retained in the company until funding needs were reduced sufficiently that Factoring became an option rather than a need.  The Client is now negotiating for a revolving bank line for occasional working capital needs.  PTSI was pleased to provide several Bank referrals to help them to the next phase.  And there were no Separation Fees to worry about nor a specific date by which to notify us!  At PTSI we call this a success story!