Ever Dream of the Big Sale?

April 7, 2009 by  Filed under: Sales 

That did happen to a Telecommunication Company in New York State, USA.  In one order, their sales had increased to over 3 times the size of their entire Line of Credit at their bank.  The owner went to the bank to get it increased so they could take on the order but the bank refused to increase their limit.

With this order, the customer had to have terms on the invoice of 30 days, and to make it worse the supplier required payment prior to shipping.  The time to deliver the goods from the time it leaves the supplier dock is 10 days.  In this case we have a 10 day delivery time plus a 30 day collection time from the customer, so we have a 40 time span of where we do not have the financial capacity to handle the order.  So what now?  Decline the order? 

That is an option, but the owner of the company kept looking for a solution.  He ended up speaking with an Accounts Receivable Factoring Company, but they could not help because of the time span as well since they could only fund on open invoices on delivered goods.  The goods could not be delivered without payment and he could not get payment at this point without delivering the goods.  Quite a predicament. 

The owner of the company spoke with a Professional Commercial Finance Broker who knew exactly what to do.  He put together a Purchase Order Finance facility with a lender that specialized in the product that the company was selling.  In a very short period of time, the financing was approved and the transaction was completed without an issue, and now the company was in the position to take any size order without the fear of not being able to afford to take the business.

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