Success Story – FinanSource, LC Helps Computer Consulting Client Grow
A computer consulting company in the Midwest had been in business for approximately 10 years and experienced significant growth over that period of time. The company’s customer base was comprised of major companies in the St. Louis market and was continually expanding. Additional services were also added to include recruiting as well as increased programming capabilities. Revenues, expenses, and profits continued to climb.
Management determined that it could leverage on its talent pool by opening offices in other large metropolitan markets. Although the operational strategy was sound, the cost of establishing a market presence coupled with a downturn in the technology sector caused the company to experience a significant financial loss over a three-year period.
The company no longer had the unqualified support of its banking relationship and was considering a financing arrangement with an annualized cost of capital (including less obvious charges) approaching 30%. The principal of the consulting company quickly engaged FinanSource, LC to help find other, more suitable financing arrangements.
After a review and analysis of the financial and collateral information, FinanSource, LC formulated a strategy to accelerate the contraction of the company’s geographic coverage, recommended an aggressive attorney be employed to handle some IRS issues, and a significantly less expensive financing source was found to provide the $300,000 in working capital financing needed for operations over the next year.
Given the very high quality service offered by this company, it was realistically on its way to achieving financial health with an anticipated net profit exceeding $200,000 in the next year.
Success Story – FinanSource, LC Helps Surgical Products Manufacturing Client Fund R&D
An innovative surgical products manufacturer in the Midwest was investing heavily in research and development activities to bring a new product to market. While the company had only been in business a few years, it quickly established a reputation for producing a high-quality, competitively priced product.
As sales for the company continued to grow, the capital requirements needed to support the account receivables and inventory levels soon strained the company’s liquidity position to the point that it was having trouble maintaining satisfactory payment experience with certain key vendors.
Further compounding the problem was a commitment to the ongoing research and development project that would give the company a dominant position in a very lucrative market. With the negative cash flow the company was experiencing, its current banking and vendor relationships started to deteriorate. A $500,000 asset based revolving working capital loan was secured for the company through FinanSource, LC, which generated sufficient availability to pay the bank debt, ease the trade payable issues, and fund the short-term requirements of the R & D project.
After the R & D project was completed and the new product was brought to market, the need for additional working capital only increased, as sales demanded an additional investment in account receivables and inventories.
The flexible line of credit funded those needs at a critical time. Shortly after, the company was able to repay the line of credit from accounts receivable proceeds and the owners were able to sell the company for a handsome profit to a larger manufacturing company in a strategic acquisition.