King Trade Capital (KTC) announced the recent funding of a $2 million purchase order finance facility for a New Jersey based importer of men’s apparel. KTC was contacted by a factoring company to help an existing client with a liquidity need spurred by sales growth and the client’s desire to diversify its international sourcing. The company did not have sufficient open credit from new vendors to support the amount of presold inventory they needed to purchase to fulfill a growing order book.  Additionally, the company had previously encountered the loss of a cash deposit provided to an overseas vendor as a prepayment for inventory to be shipped. Unfortunately, the vendor never shipped the goods related to the upfront cash deposit resulting in a loss of the cash sent to the vendor. The loss resulted in a valuable but hard lesson learned by the company.  It prompted the company’s factor to refer them to KTC to leverage its expertise in funding international inventory purchases, which includes the proper structuring of financing in-transit inventory.

KTC quickly worked in conjunction with the client and the factor to create a finance solution. This entailed issuing letters of credit in lieu of cash deposits, which alleviated the risk of providing unsecured financing in the form of cash deposits to overseas suppliers. KTC also provided funding for the customs, duties and logistics costs of importing the required inventory. KTC had already established an inter-creditor agreement with the factoring company providing credit protection and advances on the accounts receivable, enabling a seamless supply chain finance solution to be put in place quickly.

The client now has multiple finance partners working together to help achieve a common goal, fulfilling and supporting future sales growth. KTC’s unparalleled experience in providing an import finance solution along with supplying the incremental capital benefitted the company, its factor, and the overseas suppliers who can produce and ship knowing they will be paid on a timely basis. Most importantly, it allows the client to accept orders from new and existing customers, allowing them to confidently increase their amount of orders to the company knowing they have the capability to fulfill them. 

King Trade Capital is the country's oldest and largest independent and contract finance for small to middle-market companies in the U.S., UK and Canada. Since 1993, KTC has provided more than $1.5 billion of capital in over 300 public and private companies worldwide.