New equipment can often be purchased using an equipment loan or business line of credit. For a local skateboard company whose owner had less than stellar credit, neither one of these loans was an option.
The company had a good customer base and recently picked up more retail contracts which meant that the business was straining at the seams. The owner realized that he needed to invest in some additional equipment to decrease production time and increase production capacity. Unfortunately, the specialized equipment did not come cheap. The company needed $75,000 to purchase the equipment. Without a way to fund the purchase personally, the owner turned to invoice factoring to secure the funds.
After approaching an invoice factoring company, the owner was able to sell his outstanding invoices for his large retail clients totaling $65,000. He received funds within days of entering into an agreement. The factoring company’s fee was less than the owner would have paid on any sort of loan agreement due, even if he had been able to obtain a loan.
Once the funds were received, the company was able to use them for any company expenses which meant that they were able to stay current on all of their bills and payroll while purchasing the new equipment and expanding their operation.
The new equipment increased their profit margins by decreasing their production time. The on time delivery of their products to their retail customers led to additional orders and increased cash flow.
Though the skateboard company has yet to become a household name, they are well on their way to cornering their local market. Additionally, they are expanding their presence to additional states and new markets. The factoring arrangement coupled with the new equipment gave the company the resources it needed to grow.
Casey has 12 years of technical writing experience. She is also a CPA and bookkeeper. Casey graduated from the University of St. Thomas (Minnesota) with a B.A. in mathematics and currently resides in San Diego, CA.
