Background:
A business owner and former CFI employee started an agriculture trade company centered on importing cashew nuts. Originally from Guinea Bissau, the owner holds dual citizenship in Guinea Bissau and the United States. He, along with his U.S. associates, partnered with local farmers in Guinea-Bissau to distribute their products in the United States. The owner recognized an opportunity to create a business that fostered economic growth and helped create jobs in his native country.
Financing Solution: Invoice Factoring
Initial Amount: $100,000
Location: Utah
Industry: Food Importer/Agriculture - Trade
Problem:
As the business owner developed his business and secured contracts, he encountered an operational hurdle that severely impacted cash flow. His largest supplier required a 50% down payment on product orders and demanded the remaining balance be paid within 15 days of shipments arriving in the U.S. However, his U.S. wholesale customers were asking for a minimum of 30-day terms. This created an ongoing cash flow gap.
To exacerbate the problem, time was of the essence as the first shipment was already on the water and headed to a U.S. port. The importer needed funding quickly so he could take possession of the shipment when it arrived.
To further complicate matters, the company needed some flexibility in the long-term structure of the factoring line. He had contracts for orders, but the shipments would be large and infrequent.
Solution:
Being very familiar with invoice factoring and with CFI, the owner knew that factoring could bridge the cash flow gap, allowing him to pay his supplier and continue developing new business. The owner came into the CFI office and explained his situation, noting the size and frequency of the transactions.
CFI understood the situation and issued a Letter of Intent (LOI) to the importer on the day of their first meeting. CFI structured the facility to accommodate the importer's needs and circumstances. The underwriters were then able to complete the underwriting process, verify the invoice, and provide funding to the customer within two days.
Results:
CFI’s flexibility and quick turnaround on funding allowed the customer to complete the initial product order and get his business off the ground. This helped the importer solidify the relationships with his supplier and his customer. Moving ahead, the owner looks forward to expanding into additional products, and new markets and growing his business.
