Purchase Order Funding

Fund Large Orders with PO Financing

07:59 28 January in Blog, Business Funding

Nearly all companies, regardless of size, want to grow their business. Accepting orders can help you grow your business. However, if you lack the capital to fulfill the order, this can be problematic. At a minimum, large orders require an expenditure of capital to purchase supplies. Large orders may require a business to hire new staff members or purchase equipment, often an issue. What many business owners overlook is the potential to access the capital they need through purchase order financing.

What is Purchase Order Financing?

Purchase order financing or funding is a commercial loan option that some businesses turn to for necessary capital while growing. Generally, this type of financing is considered short-term and does not have a negative impact on the balance sheet of a company.

Companies typically use purchase order funding in specific business categories including:

• Distribution Businesses
• Import and Export Businesses
• Manufacturing Businesses
• Wholesale and Reseller Businesses

Other businesses may overlook PO financing, including concrete, landscaping, HVAC, and plumbing contractors that may be eligible. Staffing agencies may also find that the new purchase order they are considering is eligible for PO funding. Anyone who is considering providing any type of deliverable, with a pay period of 60 to 90 days, may have the option of using PO funding.

The basis for this type of innovative financing is that once a business has a qualified purchase order, it can borrow money against the terms of the PO. It can then use those funds to provide upfront payments to suppliers, ramp up production schedules, or meet other financial needs.

Advantages of PO Financing

Business owners who are interested in growth must be able to bid on larger orders and have the means of fulfilling those orders. PO funding means a company can get the working capital it needs to support increased sales efforts. This increases product availability and provides more favorable credit terms to its customers.

Another distinct advantage of having the ability to borrow money against a large purchase order is you can more effectively compete with other businesses in the same field, regardless of size. For small businesses that are seeking ways to “stand out” from the competition, the ability to bid on large orders can make a big difference.

Effectiveness of Purchase Order Financing

Too often, a small but growing business lacks the necessary capital to take on large orders because it does not have the required cash flow to meet the customer’s terms. This can stifle growth. Unfortunately, these same businesses may not have access to lines of credit or have the ability to borrow money through their bank.

Purchase order funding allows a company to take on a larger contract because it does not have to borrow money. Instead, it is getting the financial benefits of the new agreement.

Time from Application to Funding POs

Unlike traditional bank loans, companies can obtain purchase order financing in a relatively short period of time. Capstone’s process for PO funding means your request could be approved in just a few business days. Once approved, the time to wait for financing could be as little as three business days. This is a far different timetable than banks where funding your loan application could take weeks or months.

As a small or mid-sized business, you often do not have the required capital on hand. You don’t always have access to the capital you need to bid on larger contracts or to take on large orders. Because of this lack of funding, you could lose your competitive edge. Rather than bypassing growth opportunities, contact Capstone by email at [email protected] or call us at (212) 755-3636. Let us help you take advantage of larger orders, which can help you accelerate your company growth.

Business Broker Benefits

Why Working With a Business Broker to Sell your Business Matters

08:09 23 January in Blog

When the owner or owners of a company are considering selling, they often believe the best method is to work on securing a buyer on their own. However, in nearly all cases, using a broker to sell your business is the better option. There are several advantages to working with a reputable business broker, some of which include:

Matters of Confidentiality — One of the challenges you will face is keeping your company information confidential during the sales process. Confidentiality includes maintaining corporate insider information which, if released publicly, can damage your company’s future. Business brokers will typically only release information about your company to those whom they know are financially able to purchase your business. Additionally, a business broker can keep the name of your company from potential purchasers, which helps protect owners.
Maintaining Internal Focus – The last thing you want is to have a potential sale disrupt internal processes. The focus of you and your team should always be continuing to provide the highest quality service to your customers. Should you be distracted by continually having to follow up with potential buyers, business growth takes a back seat.
Contacts Matter When Selling – Chances are your network of other business ventures who are interested in buying another company is limited. However, business brokers act as intermediaries for numerous businesses that have other contacts. Since a business broker is always acting as an intermediary, they likely have a more extensive contact base. This means your proposal will get in front of more people in less time than if you were attempting to sell on your own.
Price Tags: Business Valuations – Let’s face it, we work hard to establish a robust business, yet we typically do not know its real value. We understand what we have in terms of business, inventory, and goodwill. Putting a price tag on a company is a different matter. Business brokers offer a level of expertise that we often do not possess on our own. They can evaluate a business accurately based upon applicable variables considering the industry, sales, and age of the company. Other variables may include a client base and other relevant information that make a business appealing.
Closing and Transition – One of the concerns any business owner has when selling a business is the potential for disruption after finding a buyer. Business brokers have extensive experience assisting in the timely closing of a business sale. They also ensure a smooth transfer of ownership with little disruption to supply chains, employees, and clients.

Finding the Right Broker Also Matters

Keep in mind, not every business broker will be able to help you with your quest to identify another buyer. You will want to find a business broker with experience in your industry and who has worked with comparably sized companies. Experience, expertise, and ethics all matter as well. Make sure your business broker has a solid reputation within the industry before you agree to any contracts.

Buyers and sellers often do not understand the marketplace nor the processes necessary for a successful business sale or purchase. Working with a broker to sell your business provides you with the necessary skills and expertise. It enables you to continue to work hard to develop your company. It is critical to maintain a focus on growth and the future, which can only improve the value. You do not want to lose focus on your business while you are attempting to sell and jeopardize its value.

Maintaining a steady cash flow, staying current on your financial obligations, and growth during the sales process are essential. Capstone Capital Group can help you retain the cash flow you need during this critical period. For more information on Capstone, please call us at (212) 755-3636 to speak with a representative about spot factoring, and other financing programs, which can help you maintain the value of your company during this crucial time.

Purchase Order Factoring

Household Appliance Retailer Purchase Order Financing & Invoice Factoring Case Study

07:02 22 November in Case Studies

This Ronkonkoma, NY based retailer is an industry leader in developing and executing environmentally friendly solutions through the recycling, recovery, and repair of a variety of products. The client is equipped with skilled technicians who follow strict testing, inspection and approval schedule for all products, creating like new products that continue to exceed manufacturer and customer expectations.

Background

  • Formed in 2016, the client provides damaged and returned product management, return center services, remanufacturing, reprocessing, repairing and recycling of consumer products for consumer product manufacturers such as Whirlpool, Miele, Kitchen Aid, Bosch, etc.
  • The client’s management team has experience with servicing the world’s leading consumer product manufacturers

Company Challenges

  • Highly cash flow constrained
  • Company struggled with stretched payables demand and meeting payroll

Capstone’s Solution

  • Provided a Master Invoice Factoring Facility to purchase a minimum of $4.8 million in invoices
  • Opened $500k PO Financing Facility in 2018 to facilitate Best Buy Returned Inventory Program

Progress and Future Outlook

  • Capstone has purchased over $6.0 million in total invoicing
  • Client secured Fred’s Inc., a general store chain, as a customer through the Best Buy inventory program.
    • $759k in 2019 Fred’s sales to date
  • The Client can now focus on the rapid growth of their company:
    • $1.6 million in 2017 sales
    • $3.3 million in 2018 sales
    • On pace for $5.0 million in 2019 sales

 

Remanufaturer-Recycler Purchase Order Financing _ Master Invoice Factoring

NYC Steel Erector and Fabricator Single Invoice Factoring Case Study

06:58 22 November in Case Studies

This client provides New York, NYC and the Tri-State area with structural steel erection and fabrication services. Without sufficient cash flow, the company could be forced to turn down new projects. Capstone knew to assist this company, they would need a solution that generated immediate cash flow. Therefore, single invoice factoring made sense; the company would not need to take on additional debt, and they would have the capital they needed to ensure funds were available to cover payroll and make timely payment to vendors.

Background

Locally owned and operated full fabrication and erection service company of structural steel and one of NYC’s largest plank erectors.

  • Projects consist of large residential and commercial buildings located throughout New York City
  • Clients: Two major plank manufacturers on the East Coast
  • Since August 2015, the company has factored over 260 invoices ranging from $4,000 to $180,000
  • Total funding has been $9.2 million

Company Challenges

This company is well-established and have been in business since 1967.

They have a well-deserved reputation and yet the company was struggling to make payroll, and timely payments to vendors. The company’s growth significantly outpaced cash flow and due to this cash crunch, they were forced to turn down work from two of their main customers.

Capstone’s Solution

  • Provided a Single Invoice Factoring Facility to inject the working capital required for supporting a larger volume of contracts
  • Increased customer credit line by over 500 percent since the start of the relationship

Progress and Future Outlook

  • Cash flow constraints have been drastically eased and now the client can focus on taking on a higher volume of projects for its customers
  • Business volume has tripled since the client started factoring

 

NYC Steel Fabricator Single Invoice Factoring

Non-Profit Advocacy Organization Single Invoice Factoring Case Study

06:47 22 November in Case Studies

One of our recent clients is a Pennsylvania-based non-profit advocacy organization dedicated to improving the futures of children in foster care. The client’s mission is to provide a safe and caring home for all at-risk children in foster care in the Philadelphia, PA region. The organization also provides food, clothing and therapeutic services to households of up to six children.

Background

  • Philadelphia, PA-based non-profit organization that fosters and assists with the adoption of children
  • Focuses on troubled children who have been fostered in multiple homes in an effort to give them stability
  • Owners of the company have fostered over eight children personally

Company Challenges

  • As a non-profit organization, the Client had a very difficult time obtaining financing
  • Wanted to expand and open additional homes for boys and girls so they could foster more children and get them adopted

Capstone’s Solution

  • Provided a single invoice financing program allowing them to obtain funding through their invoices as they needed to with no annual commitment
  • Increased the advance rate to 80% to help the client access cash quicker

Progress and Future Outlook

  • The Client has opened one additional home since we began working together for girls and has plans to open an additional home for boys later this year
  • Invoices have been increasing as they foster and tutor additional children, thereby creating more cash flow for them to continue expanding

 

Non-Profit Organization Single Invoice Factoring

Military and Emergency Services Supplier Purchase Order Financing Case Study

06:02 22 November in Case Studies

A recent client of ours is a Spokane, WA based company that offers over one million products nationwide servicing the military, police, fire, tactical and emergency markets. The Client is known for their long-lasting relationships and continues to build relationships by providing additional services and information about products in the market to their customers.

Background

  • Formed in 1987, the client sells products to the U.S. Government
  • Was awarded a $4 billion extension to their existing contract with the
  • Defense Logistics Agency (DLA) Troop Support in 2019, expiring in 2020

Company Challenges

  • The Client was going through an acquisition and lacked sufficient credit to purchase goods ordered by the United States government
  • Needed a PO Financing Facility to continue to fulfill their obligations under the government contract
  • Certain purchase orders were partially funded by working capital but needed additional funds to get the goods released by the manufacturers and meet the significant increase in supply opportunities

Capstone’s Solution

  • Provided a temporary PO Financing Facility of up to $1 million, followed by a $20 million PO Financing Facility after their merger transaction closed
  • Introduced the Client to a new factor that specializes in buying U.S. government accounts receivables

Progress and Future Outlook

  • A Tri-Party Agreement was negotiated between Capstone, the Client, and the Factor
  • Capstone has received all funds on the financed POs on schedule
  • The Client is projected to expand rapidly and utilize much more of the
  • Purchase Order line on a going-forward basis once the new factoring relationship begins

 

Military-Emergency Services Supplier Purchase Order Financing _ Introduction to Specialty Factor Partner

Independent Mobile Game Developer Master Factoring Facility Case Study

05:43 22 November in Case Studies

This California based client develops mobile games for major companies in the entertainment industry and has recently launched their own free-to-play mobile game for a blockbuster movie. Without sufficient cash flow, the company could have trouble covering payroll and software development related expenses needed to complete their milestones on time. Capstone provided the additional working capital they needed through a Master Factoring Facility.

Background

Projects are mainly work-for-hire service contracts that require software development and operational milestones to be met

Clients include global toy production company and a major entertainment companies

Since early 2018, the company has factored over 60 invoices totaling $7.3 million

Company Challenges

The company in the past had an exclusive customer for its software development. In order to grow, they decided to diversify their development revenues and bid on work-for-hire service contracts with major entertainment companies. Additionally, they self-published their own game which gave them additional expenses such as royalties and marketing. This produced a cash crunch and limited the amount of work-for-hire contracts they had for 2018. These work-for-hire contracts were potentially much more profitable.

Capstone’s Solution

  • Provided a Master Factoring Facility to inject the working capital required to support their work-for-hire contracts and self-published game
  • Progress and Future Outlook
  • The client has compared the performance of their work-for-hire contracts vs self-publishing and found that their work-for-hire is much more profitable
  • The client has been awarded five additional work-for-hire contracts in 2019 and will phase out self-publishing
  • Revenue is projected to increase by 50% during 2019

 

Independent Mobile Game Developer

Construction Firm Master Factoring & Purchase Order Financing Case Study

04:34 22 November in Case Studies

Background

The Client is the largest construction/ general contractor company in the Pittsburgh, PA region

Industries served by the client include hospitality, timeshare, multifamily/ senior living, energy, sports, and retail

The Client has consistently ranked among the Top 10 Contractors in the United States

 

Company Challenges

Highly cash flow constrained

The Client struggled with stretched payables demand and less profitable terms, which constricted margins, operating leverage, and the company’s ability to generate new and profitable business

 

Capstone’s Solution

Began with a $15 million Master Factoring Facility and a $5 million Purchase Order Financing Facility to inject the working capital required for supporting their backlog of projects

Progress and Future Outlook

Constraints drastically eased on cash flow

Timely payments are being made to vendors

Currently doing $20 million on a monthly basis on both Factoring / PO

 

Facilities

The Client can now focus on the rapid growth of their company-revenues have doubled on a monthly basis

Capstone is funding 6 active projects:

  • Four Seasons Resort in Bermuda- $173 million contract
  • Half Moon Bay Hotel in Jamaica- $50 million contract
  • Ritz-Carlton Napa Valley in Calistoga, CA – $123 million contract
  • Belmond Cap Juluca in Maundays Bay, Anguilla – $75 million contract
  • Ritz Carlton Resort in St Thomas, US Virgin Islands – $55 million contract
  • Rosewood Little Dix Bay Resort in Virgin Gorda, BVI – $73 million contract

 

Construction Firm Master Factoring _ Purchase Order Financing

Coal Production and Re-seller of Bulk Packaging Products Case Study on Purchase Order and Invoice Factoring

07:49 21 November in Case Studies

This client provides a large publicly-traded company with coal needed for the production of specialized chemical products. The client’s company was growing and had the ability to secure large purchase orders with creditworthy companies but was unable to fulfill orders without financial assistance. Capstone knew that an Invoice Factoring Line coupled with a PO Facility would be the optimal solution to aid in the client’s growth.

Background

  • Wyoming based company providing coal to Advansix, a large publicly traded chemical company, and local coal plants
  • Coal is of a specialized type with a very limited amount of mines producing
  • The client has access to an abundant amount of coal through ownership of a mine
  • Since the start of the relationship in December 2018, the client has done over $1 million in volume

Company Challenges

The client was going through a growth phase as they recently secured a large contract to supply coal. They were also in the midst of a bond raise, but needed immediate capital infusion to fulfill the new larger purchase order obligations.

Capstone’s Solution

  • Provided a medium seven-figure Purchase Order Financing line and Factoring Facility to pay key vendors needed in order to extract, clean and deliver coal to their customers

Progress and Future Outlook

  • Cash flow constraints have been drastically eased and now the client is focusing on increasing production to meet aggressive demands by their existing customers
  • Client in conversations about rolling into a larger, multi-year contract with existing client

 

Coal Production and Reseller of Bulk Packaging Products
music royalty funding

Musicians and Songwriters: Access to Royalties Faster Through Factoring

09:46 29 October in Blog

Musicians and songwriters often depend on their income derived from royalty payments to cover living expenses. The problem with royalty income is the time between knowing what royalties are due and receiving the actual payment. The span of time between notification of royalties due and receipt of payment can be as long as 90 days.

Even after this initial waiting period, collecting ongoing royalty payments involve substantial waiting periods since artists often work with some who pay quarterly, others pay twice a year, and still others pay annually. This is problematic because let’s face it, while waiting for your royalty payments, your bills are not going to stop arriving and your due dates are unlikely to change.

Improving Your Bottom Line

One of the options you have available is selling off your intellectual property for an upfront lump-sum payment against your future royalties. The problem with this is once you do that, you often lose the rights to the underlying song(s). Some of these transactions involve turning over all the rights you have to future royalties. Imagine losing future income for the potential of getting cash today to pay taxes, your mortgage, or to help make sure your child’s tuition is paid for.

WE HAVE A BETTER OPTION!

What Capstone Does Different

No one knows better than you when your royalty payments can be expected. However, if you do not want to wait for months to collect on those payments, you are probably looking for options. Capstone offers an option we are sure you can live with. Here’s what we can do for you that others may not be willing to do:

  • You retain the rights to your music
  • You decide which royalties you want to use as collateral for cash advances
  • You get cash against your royalties in as little as a week from an application being approved
  • After the first transaction, you can use your royalties as often or as little as you choose and funding can occur within 24 to 48 hours of your request.

You might be wondering how any of this is possible. That’s because at Capstone, we have built our company on serving those industries that banks can no longer service due to regulatory changes.  If you are in one of those industries you may have few options to access the working capital you need.

Never Again Worry About Cash Flow

We know that when cash is a problem you are often forced to borrow from friends, family, or take out loans with onerous interest rates just to make ends meet. Our goal has always been to make sure we are offering services to those who might not find a bank is their best option for getting immediate cash.

At Capstone, we help those who need immediate cash flow for paying taxes and other bills. We will work with you to leverage the royalties you are anticipating in a way that is most feasible for your needs and you always retain complete control over the process.

Whether you need to fulfill a one-time need, or you are looking for a long-term cash flow based on your royalties, Capstone can help. We will take the time to understand your goals and your needs and help put a plan in place that helps you fulfill them. No more worrying about whether you can meet your next month’s financial needs, no more guessing whether a royalty check will arrive in time to pay the next tax bill, and no risk of losing your intellectual property rights.

Capstone is here to help! Learn more about our innovative way to obtain instant cash flow for royalties factoring for musicians. We can help you ease your cash flow concerns today. Contact us at (212) 755-3636, or fill out our online contact form. Let us show you how simple this process can be and help you get access today for the royalties you have worked so hard to develop.

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