THINKING OUTSIDE THE BOX TO MEET CUSTOMER DEMAND
Factoring with Liquid Capital allowed Summit to turn its A/R (accounts receivable) into cash to cover its two chief costs: labour every two weeks and raw materials (wood) every 30 days.
With purchase orders worth hundreds of thousands of dollars in the pipeline, business was booming for Summit Retail Solutions, a two-year-old custom manufacturer of store display fixtures for many of North America’s most prestigious retailers.
In spite of healthy demand for its products, Summit faced a serious challenge: without an established credit history, the company did not qualify for traditional bank financing, and its small business line of credit was proving insufficient. With company owners fully extended financially and other options exhausted, cash flow was starting to dry up. Lacking the liquidity to fill its large orders, supply chain and payroll issues began to threaten operations.
“Our products take three months to build and deliver to clients, and our inability to secure sufficient financing was catching up to us,” says former Summit co-owner Ted Hope. “We needed an alternative solution to manage that cycle.”
Summit knew it was time to think outside the box to secure the financing that would help it fill existing orders and propel future growth. That’s when it began to explore factoring.
“I HONESTLY BELIEVE THAT WE WOULD NOT HAVE HAD THIS SUCCESS WITHOUT LIQUID CAPITAL’S ABILITY TO CUT THROUGH THE RED TAPE AND FACTOR OUR RECEIVABLES. I WOULD STRONGLY RECOMMEND THIS COURSE FOR OTHER COMPANIES THAT REQUIRE WORKING CAPITAL TO GROW.”
Ted Hope, Former Co-owner, Summit Retail Solutions
RESTORED CASH FLOW FUELS GROWTH
After researching several factoring companies, Summit Retail chose Liquid Capital’s A/R factoring solution for its creativity in meeting the company’s specific needs and for its exceptional service and support.
“This is a more intimate relationship than a banking relationship,” Hope notes. “Liquid Capital got to know our business. They had financial maturity and basic understanding of why a business needs funding. And their approach is growth oriented, not punitive. The relationship was never adversarial.”
Factoring with Liquid Capital allowed Summit to turn its A/R (accounts receivable) into cash to cover its two chief costs: labour every two weeks and raw materials (wood) every 30 days.
Between December 2012 and June 2014, Liquid Capital factored $3.0 million over 65 fundings, up to $400,000 at a time. This quickly restored the cash flow needed to finance Summit’s operations and enabled it to offer attractive payment terms of 45 or 60 days to its clients.
EXCEPTIONAL SERVICE AND SUPPORT
The discernible difference with Liquid Capital, according to Hope? Respect and decorum marked all their interactions with both Summit and its clients.
One major client provided about 60% of Summit’s business and, initially, Summit feared they would walk away. However, thanks to Liquid Capital’s “kid glove” professionalism, those fears were laid to rest. Each time Liquid Capital factored that client’s invoices – close to 50 times – Summit would simply write the invoice on shipping, and the cash from
Liquid Capital would be in the bank two hours later, ensuring Summit’s ability to fill the client’s order promptly.
“I’m not sure every factoring company could – or would – do that,” Hope asserts. “For us, every minute counts, and factoring speaks to that. If you need X dollars for payroll, you can have it the day you need it. Moreover, Liquid Capital really stayed on top of the invoice collection process, which helped ensure our own interest payments didn’t get out of hand. A/R factoring allowed our business to thrive where otherwise it might not have.”
The hands-on service and support didn’t stop there. Liquid Capital arranged a waiver of the bank’s GSA (general security agreement) on Summit’s previous small business loan. They also provided a monthly report showing how much had been spent on factoring. And the ease of cross-border factoring was essential to Summit’s ongoing business growth in the U.S.
“WITH LIQUID CAPITAL’S HELP, WE HAVE BEEN ABLE TO SOLIDIFY OUR FLEDGLING COMPANY THROUGH GROWTH TO MATURITY TO BECOMING AN ATTRACTIVE CANDIDATE FOR TRADITIONAL BANK FINANCING.”
Ted Hope, Former Co-owner, Summit Retail Solutions
THE BRIDGE TO BANKABILITY AND GROWTH
With operating capital readily available, Summit was able to draft larger contracts and drive more business. Almost immediately, it began to enjoy higher sales growth. In fact, during its 18-month business relationship with Liquid Capital, Summit’s sales more than doubled, going from $1.4 million to over $4 million.
According to Hope, strategic use of A/R factoring is the ideal solution for maintaining production during periods where cash flow becomes a challenge. In its case, it gave Summit the ability to accept more quality business from larger customers without requiring advance deposits. Once firmly established – and with the track record to prove it – Summit was soon able to secure traditional bank financing to fund its continued growth.
“TEAMING WITH LIQUID CAPITAL WAS THE BEST THING OUR COMPANY COULD HAVE DONE TO ALLOW US TO GROW AND PROSPER.”
Ted Hope, Former Co-owner, Summit Retail Solutions
