Do your clients need working capital?

A Factoring Success Story

Lee Doernberg

By Guest Author Lee Doernberg of Liquid Capital Funding

In this month’s newsletter, we share a story about how a company with a major cash challenge partnered with Liquid Capital and achieved significant growth. This is a powerful example of how companies can benefit from a relationship with us. Please circulate this newsletter to anyone you know who might find this case study of interest!

In the fall of 2009, a small business with a contract to handle waste disposal at a US Air Force Base wanted to bid on a contract to handle waste disposal and recycling for eight additional US Air Force Bases.

The challenge: In 2008, when a hurricane hit the Texas Gulf Coast and flooded large parts of downtown Houston for several weeks, this company, whose other services include supplying lunches to Charter Schools, experienced significant damage to some of their kitchens. A number of their Charter School clients were also flooded out. The damages resulted in a loss of $15,000 on annual revenues of approximately $3.9 million. The following year, when the financial meltdown hit the United States, consistent with the behavior of other banks at the time, the company’s bank froze their credit line of $280,000.

Determined to find a way to pursue the waste disposal and recycling contracts for the additional US Air Force Bases, the company turned to Liquid Capital for assistance.

Liquid Capital arranged for a non-profit community loan fund to issue a loan to the organization for $75,000 without tying up its accounts receivables in a UCC-1 financing statement. Along with the closing of the $75,000 loan, Liquid Capital factored the company’s $450,000 of receivables and paid off the balance due on their line-of-credit.

These efforts assured the company that if they won the US Air Force Base contracts Liquid Capital would provide the necessary working capital to enable them to fulfill the contracts.

  • In September 2010, the company was awarded a contract for the first of the additional US Air Force Bases — approximately $47,000 per month.
  • In December 2010, the company was awarded an additional contract for $400,000 per month to service two other US Air Force Bases and a large military medical training facility.

This company is one of three contenders for the contracts for the five outstanding military bases. Based on the decision to pay off its line-of-credit and factor receivables with Liquid Capital, they grew from a $4.8 million company to a $10 million company and doubled profits in less than one year.

Don’t overlook the role proper capitalization and availability of financing plays in a company’s success. Borrowing from banks is still not an option for many organizations. We can provide businesses with working capital. To learn more about how we can help, just call me or send me an e-mail.

As always, thank you in advance for considering Liquid Capital as a source of capital for your audience. To learn more about how we can help businesses finance purchase orders, call me or send me an e-mail.
Lee Doernberg
Liquid Capital Funding

Leave a Reply