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Ever Dream Of The Big Sale?
Ever dreamed of that bug sales? You know the one I am talking about, the one that would put your company on the map in your industry as a player. Be careful for what you wish for. Many companies have wished for that very thing until it actually happens. What would you do if you received that order and it was for more than you entire last 2 yeas of sales in one Purchase Order?
This exact thing happened to a Telecom Distribution Company in New York State, USA. They went from sales of the last 2 years of nearly $600,000 to an order of $650,000 in one shot. Their Line of Credit was for $200,000 so the owner of the company promptly went to the bank to get it increased so he could take the order. I am sure you already know what happened. He was denied the increase in credit.
With this order, the customer had to have terms on the invoice of 30 days, and to make it worse the supplier required payment prior to shipping. The time to deliver the goods from the time it leaves the supplier dock is 10 days. In this case we have a 10 day delivery time plus a 30 day collection time from the customer, so we have a 40 time span of where we do not have the financial capacity to handle the order. So what now? Decline the order?
The owner of the company did talk to a couple Accounts Receivable Factoring Companies but the time lag was the biggest issue because they could not Factor the Invoice until the product was delivered, and he could not deliver the product without being financed.
The owner of the Company was then referred to a Commercial Finance Brokerage who immediately assembled a Purchase Order Finance and Accounts Receivable Factoring facility. Now the order was able to be processed and now the door is open for future orders from and large buyers.
About the Author Wade Henderson - very Professional - 15 yrs in the Business Finance Field - reputation for getting the deal done. IMMFinancial.com a r factoring freight capital
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