Getting into the right financial condition
It takes vision, ambition and talent to grow your business. But once that growth starts to happen, it also takes capital. That’s the position Air Oasis owner Kaleb Zeringue found himself in when he decided to make Liquid Capital part of his business’s financial strategy.
Air Oasis is a Florida-based HVAC installation company that had been working diligently toward adding commercial business to complement its strong residential clientele. With that in mind, they were looking to get into the Florida hotel space installing air system upgrades. Zeringue’s efforts paid off, and he landed installation contracts with Marriott International. Marriott would use a third-party engineering firm to design and order the upgraded air systems for specific hotel properties such as Marriott Courtyard at Mayo Jacksonville. Once the new equipment arrived at the hotel site, Air Oasis would install it over a one- to two-week period.
With work in place and increasing, Air Oasis was looking for a line of credit to ensure it could meet its client’s needs as well as its own payroll and other working capital requirements. Although the bank was unable to underwrite the funding, they referred Air Oasis to Liquid Capital. It turned out an accounts receivable factoring solution was ideal for the company’s needs.
”Our business was growing pretty rapidly. We had a contract lined up with Marriott for six jobs in a row—that’s $150,000 worth of work—but we didn’t have the funds to float it. Each job costs thousands to execute, but with the 45-to-60-day payment schedule, I just didn’t have the cash flow to pay my people. If we couldn’t get funding really quickly, we probably couldn’t have done the jobs.” – Kaleb Zeringue, Owner, Air Oasis
Where there’s work, there’s a way
The Marriott upgrade work Air Oasis had secured was a series of pressurization projects. It involved replacing air system equipment, doing duct work modification and determining the right air-flow balances across the property. With a month’s worth of labour often costing $25,000 and materials perhaps $10,000, the costs on such projects can mount quickly. In most cases, banks will not finance based on accounts receivable, so Liquid Capital’s solution was the perfect way for Air Oasis to realize its potential.
In keeping with Liquid Capital’s hands-on approach, they visited Zeringue at his office to better understand his needs. He liked the concept of factoring and was further impressed that the facility could be done as spot financing—one deal at a time—and that he wasn’t locked into using it any more than he wanted or needed. The one-on-one service and attention, along with the principal’s geographical proximity and availability, sealed the deal for Air Oasis. A financing deal—which now funds roughly $75,000 to $100,000 quarterly—was quickly worked out and the Marriott contract secured.
“It can be an incredibly frustrating position to be in. You go to the traditional banks and they won’t help, even though you have signed commitments. For anyone in that position, factoring is an incredible solution. Instead of waiting 45-60 days to get paid, we were getting paid the week we finished the work, then Marriott would pay Liquid Capital. It’s been five or six years now, and factoring is still a big part of our success.” – Kaleb Zeringue
The definition of value for money
For companies that have the opportunity to take on bigger, more lucrative jobs but are worried about cash flow, as Air Oasis was, factoring delivers. Despite losing a bit on the percentages, Zeringue believes that the reward—and the fast payment—more than makes up for it.
“Liquid Capital gave me the cash flow to look for bigger jobs, sign bigger contracts and make better profits. Instead of doing a residential job where I’m making, say, $1,000 per day, I’m averaging $5,000 per day at Marriott while using and paying the same amount of labour. Then I can take on even bigger contracts. It’s a ride you want to be on. Now I do anywhere from $200-300K/year.” – Kaleb Zeringue
Planning for the future
For Air Oasis, Liquid Capital’s factoring solution has opened doors to more than better contracts. Companies in the residential HVAC business struggle perpetually with low margins. To take business to the next level, Air Oasis needed the increased profit base a steady commercial contract would bring. That success has led to the development of a new business line based on a refrigeration monitoring system Zeringue designed for coolers and freezers.
“The Marriott contract was critical to taking the company forward—and Liquid Capital was critical in making that contract possible. I couldn’t be happier with Liquid Capital. Their solution is helping me get where I want to be. I simply couldn’t have done it without them.” – Kaleb Zeringue