Toy Manufacturer Factors Its Invoices
Invoice Factoring Toy Manufacturer Factors Its Invoices
Author: Casey Marie Long
Date posted: 07.23.24

In 2021, the supply chain was disrupted for many manufacturers throughout the globe. One toy company in the Pacific Northwest, was getting nervous over the summer as they approached the holiday season. Though the majority of their toys were made using local woods and supplies, some of the raw materials were sourced from Asia. As prices were rising, supplies dwindled, and delivery timelines were extended, the company knew that it had to take immediate action to have its toys ready for Christmas.

Major retailers, such as Target and Kohls, sent several open invoices to the company. Faced with a surge in sales, the company had to take immediate action to fulfill the agreements and meet the growing demand. They actively coordinated their operations to efficiently process the incoming orders, ensuring timely delivery and customer satisfaction. Additionally, they actively communicated with the retailers to maintain smooth and seamless transactions throughout the process.

 

The business proactively secured contracts well in advance of the holidays, strengthening cash flow predictions and budget planning year-round. However, the unusual environment of 2021 exerted significant impacts on their budgets as various factors came into play. To address these challenges head-on, they actively navigated the situation, making proactive adjustments to their financial strategies, and ensuring adaptability to the changing circumstances, thereby maintaining stability and staying ahead of potential disruptions.

Toy Manufacturer Factors Its Invoices

Although the company had a solid reputation, its limited cash flow and low margins didn’t attract traditional lenders. However, factoring companies found the company highly appealing because of its clients’ reputation.

 

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

The company’s sudden influx of cash enabled them to buy extra materials and hire more employees to adequately staff their production equipment. The increased workforce resulted in fewer overtime hours, leading to cost savings even after factoring in the fee.

Thanks to the additional cash, the toy company completed their holiday toy production on time and under budget. Their on-time delivery and quality products enabled the company to promptly secure contracts for the upcoming holiday season. Securing the contracts a year in advance allowed the company to start sourcing materials early in the year and build inventory. Consequently, this helped them avoid any crunch during the next holiday season

Toy Manufacturer Factors Its Invoices
About The Author | Casey Marie Long

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.

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