Household Appliance Retailer Purchase Order Financing & Invoice Factoring Case Study

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

NYC Steel Erector and Fabricator Single Invoice Factoring Case Study

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

Non-Profit Advocacy Organization Single Invoice Factoring Case Study

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

Military and Emergency Services Supplier Purchase Order Financing Case Study

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

Independent Mobile Game Developer Master Factoring Facility Case Study

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

Construction Firm Master Factoring & Purchase Order Financing Case Study

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

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

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

Top 100 Contractor Purchase Order Factoring Case Study

This company is located in Pennsylvania and has active projects in 125 countries worldwide, including regional offices in Honolulu, Hawaii; Phoenix, Arizona; Fort Lauderdale, Florida; and Bataan, Philippines, and satellite offices worldwide. As a global commercial construction company, the company develops, manages, and builds projects worldwide. This means their cash flow is important; they must keep cash on hand to move onto the next project.
Capstone stepped in to help the company with its cash flow issues. We knew this company would need a customized solution enabling them to continue their work. Working together, we found the right solution to address their specific needs.

• Company is a global commercial construction company and the largest construction/ general contractor company in the Pittsburgh, PA region

• The company been in business for more than 90 years with clients including major corporations, developers, and municipalities

• Company has consistently ranked among the Top 100 Contractors in the United States

BACKGROUND

COMPANY CHALLENGES
This company was facing significant problems with cash flow. The company struggled with stretched payables demand, less profitable terms, which constricted margins, operating leverage, and the company’s ability to generate new and profitable business. This challenge had to be addressed; as a company with worldwide projects, they had to be ready to meet new opportunities head-on.

CAPSTONE’S SOLUTION
• Provided a Master Invoice Factoring Facility to inject the working capital required for supporting a larger volume of contracts
• Provided Purchase Order Financing Facility

PROGRESS & FUTURE OUTLOOK
• Eased constraints on cash flow dramatically ï Company is now paying their vendors on time
• Company focus is now on rapid company growth
• Revenues have doubled monthly since the company began factoring
• Capstone is funding projects valued at over $350 million

Top 100 Contractor - Purchase Order Factoring - Capstone Capital Group
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Engineering Staffing Company Factoring Case Study

Staffing agencies often face challenges meeting their cash flow needs; even an agency successful enough to secure a contract with Fortune 500 companies. Staffing agencies need cash flow in order to secure new contracts; this means they often need financing solutions tailor-made to their needs.

Capstone has extensive experience dealing with unique funding needs. By taking a solutions-oriented approach with each client, Capstone finds the solution that best meets their needs. Fortunately, thanks to this approach, Capstone was able to help this staffing firm.

In November 2015, Capstone met with a Temporary Staffing Company that places engineers in Fortune 500 service contracts. • • One of their main clients is Qualcomm • Engineers are placed in telecommunications centers and laboratories

• Engineers complete timesheets and turn them into a third-party monitor who submits the timesheets to Qualcomm Qualcomm pays on a monthly basis

BACKGROUND

COMPANY CHALLENGES

It is not unusual for a staffing agency to face cash flow problems; this agency was no different, but their situation was getting critical. The company lacked sufficient working capital allowing them to meet payroll. For the agency to meet four successive payroll payments, it needed to receive payments from Qualcomm. The company needed working capital, and without this capital, they would have had to exit the contract with Qualcomm.

CAPSTONE’S SOLUTION

• Entered into a Master Factoring Agreement to provide working capital for payroll

• Purchased weekly invoicing from the Company and advanced proceeds to allow the company to fund payroll

PROGRESS & FUTURE OUTLOOK

• Number of engineers employed under the Qualcomm contract is increasing

• Company is bidding on other technical staffing contracts with other Fortune 500 customers

• The company is confident it can bid on larger contracts even ones it does not have proper capital for

• Capstone intends to provide additional capital as additional contracts are won

Engineering Staffing Company - Factoring Case Study - Capstone Capital Group
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Private Label Outerwear Factoring Case Study

Capstone has solutions to a business’s most challenging financing needs. In some cases, our clients need more than one solution; we look at the challenges facing the company, identify solutions, and work with management to implement these solutions. Capstone understands the importance of cash flow, but we also understand that immediate cash flow through factoring is not always the answer.

BACKGROUND

• New York City-based outerwear company receives a $28,000,000 order from Costco Warehouse Club
• Order received in November of 2016, with goods to be delivered from March of 2017 through February of 2018

COMPANY CHALLENGES

The company had no established banking relationship that included open letters of credit resulted in a lack of working capital. This created an untenable cycle: cash collateral was needed to open a letter of credit to support the manufacture of the goods in Vietnam.

Combined with a need for logistics support for international and domestic shipments and accounts receivable collection; the company was facing numerous challenges.

CAPSTONE’S SOLUTION

• Provided Trade Financing and a Factoring Facility ï Set up a worldwide logistics platform to ship to each Costco market
• Became the vendor of record to Costco
• Issued $22,000,000 letters of credit to two Vietnamese manufacturers
• Established an inspection regime to ensure only first quality goods were shipped to Costco
• Streamlined order processing, billing, and payment through the purchase of subscription to an online database with Costco

PROGRESS & FUTURE OUTLOOK

• Costco has indicated an additional $10,000,000 of orders for lady’s wear will be placed between September 2017 and November 2017 for fall and late winter delivery
• The client has been given several additional styles from Costco to bid on for the 2018 sales cycle

Private Label Outerwear - Factoring Case Study - Capstone Capital Group
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