Machining Company

Case study #2: A million-dollar facility for a machining company.

Client: A machining company with a varied customer base ranging from small local companies to Fortune 500 companies. Most of their customers have payment terms of 90 days, which created a significant cash gap.

Situation: Their previous factoring company would only fund receivables through 90 days. The company was experiencing high growth due to new product offerings and increased orders from existing customers. They could not qualify for a traditional operating line due to leverage and equity: they were profitable but didn’t meet a 1.25% debt service coverage ratio.

Solution: A $1,000,000 accounts receivable facility. Cash Flow’s ability to fund longer payment terms and advance 90% helped eliminate the cash gap.

Result: The company improved profitability and can continue to grow without cash constraints, and they saved $50,000 in interest and fees annually over the previous factoring company. The owner and his staff have been very pleased with Cash Flow’s operational ease and they enjoy many of our features and services. Traditional factoring was not only expensive, but very intrusive and the company often received complaints from customers regarding the heavy verifications.

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