Case Study: Tactical Solutions Mfg – PO Financing

Need: PO Financing

EXECUTIVE SUMMARY

This company’s owners have a background in both the carbon fiber industry and the military. With in-field, working knowledge of tactical gun parts, they sought to improve on a century’s old design. This company has been able to bootstrap their operations from concept to the completed research and development phase. After one trade show, they had their first order. While in mid-production, a second larger order was received. Sufficient funds were not there to cover the costs of production. PO financing (purchase order financing) and invoice financing was needed to bridge the gap until payment could be received.

ABOUT THE COMPANY

HQ Location: Tennessee

In Business For: less than 2 years

Annual Revenues: $0, No revenue to date

Customer Base: Domestic, Law Enforcement Nationwide.

CHALLENGES

 > No revenue on the books yet.

> Just out of the research and development (R&D) stage, this company was in mid-production on it’s first order and needed financing to cover the cost of production for a second, larger order.

SOLUTION

> 60 day, non-recourse invoice financing was arranged for the initial order. This provided payment within 2 days for the purchace order. A healthy profit margin on the product offset the low interest rate charge for the financing option that allowed the company to move forward; hence the company still made a solid profit on this first order.

> With the second order being a goverment contract (B2G) PO financing was arranged which allowed the company to obtain the materials needed to produce that order.

> A revenue stream has been created forming a financial foundation for future funding. With additional orders coming in, they are in the process of transitioning to a Line of Credit. Should they again experience a surge in sales that outpace their incoming revenues, they can return to using both PO financing/invoice financing on an as needed basis.

PO Financing is one way Leap Kapital fills the financial gaps in businessFinancing the first order for this company provided the opportunity to move forward, using the order as collateral. Next step in the strategy will include a Line of Credit.

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