The company had several open invoices from major retailers including Target and Kohls. With additional sales in hand, they had to act fast to fulfill the agreements.


Because the business secured contracts well in advance of the holidays, they were normally able to predict their cash flow throughout the year and budget accordingly. During the unusual environment of 2021, their budgets were off significantly.

Though the company had a solid reputation, its lack of cash flow and low margins did not make it very attractive to traditional lenders. But the reputation of its clients made the company very attractive to factoring companies.


The company was able to leverage its large outstanding invoices with a financing company. The company took possession of the invoice in exchange for immediately providing 75% of the invoice amount. When the invoice was paid by the client, the company would receive the rest of the invoice amount minus a modest fee.

The sudden influx of cash allowed the company to purchase additional materials and even hire more employees to better staff their production equipment. The additional staff meant that the company had few overtime hours and was able to save money even after taking into consideration the factoring fee.


The toy company was able to complete the production of their toys for the holidays on time and under budget thanks to the additional cash available. Because of their on-time delivery and quality products, the company was able to immediately secure contracts for the following holiday season. Having the contracts a year in advance helped the company start sourcing materials early in the year and build inventory so they won’t be in a crunch during the next holiday season.

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