TradeCap Partners recently closed a letter of credit facility for a West coast women’s apparel importer. The $1MM facility was established based on purchase orders the importer receives from customers.

Many businesses were hit hard by the pandemic, particularly those selling apparel and seasonal goods into brick and mortar retail. Despite lower sales, constrained cash flow and losses, the client’s factoring company stood by their side. As reopening of nonessential retailers occurred, the client started receiving orders to restock inventory with its customers. They needed money to complete production with their overseas suppliers. In an overadvance position, the factor was unable to help and turned to their trusted PO Finance partner, TradeCap, for the solution.  

TradeCap worked quickly to understand supplier payment terms and logistics of the trade cycle. Through collaboration with all parties, a letter of credit structure was implemented providing the guarantee of payment suppliers needed to commence production. Due to timing, goods needed to be air shipped in order to meet delivery dates and avoid delays others were experiencing with ocean shipments. Although the change in freight impacted margins, TradeCap and the client developed a plan allowing air freight costs to be included in the availability formula.

With the supply chain restarted through TradeCap’s financing, the client was able to successfully fill  restocking orders and has a facility in place to support future operations. TradeCap’s solution benefitted the factor by shoring up the overadvance following fulfillment and invoicing of the initial orders.
 
Clinton Stanton, TradCap’s Managing Partner remarked, “This was a great win for all parties and exemplifies the benefits of collaborating with trusted partners within the specialty finance niche. We’re grateful for the trust our factoring, ABL and bank partners place in us to provide purchase order and trade finance solutions for their clients.”