A/R Financing – Fresh Fruits and Vegetables Exporter

Deal Summary

Product Line: Factoring Line
Funding Line Amount: $400,000
Company Type: Fresh Produce Exporter
Industry Type: Perishables
Location: Peru

Our client is a fresh produce distributor with sizeable contracts in the retail market in Peru and abroad. There are two ways the company conducts business. It acts as an intermediary between the agricultural producer and the retailer, connecting them and then collecting a fee for brokering the deal. The company also acts an exporter whereby it receives an order, purchases fresh fruits and vegetables from the agricultural producer and exports them in a traditional way to the retailer. The company has been able to effectively take advantage of the unique variety of produce available in Peru to establish relationships with customers in other countries.

Challenge

Cash flow was an issue for the company because its debtors can take up to 90 days to pay their invoices. Additionally, the company’s annual gross margins are variable because these are largely dependent on the type of business it is doing from month to month (intermediary vs. direct buyer).

Solution

The company is successful despite only being a few years in the market. It has a strong client portfolio of large, well-known retailers and has maintained high gross margins with a very simple operating structure. Additionally, it does not carry any inventory because it either acts as a broker or it purchases product directly against a confirmed purchase order. The company has positive equity and good payment history. Based on the company’s successful, low-risk business model, ExpoCredit was able to grant the company’s request for a factoring line of $400,000.

Benefit

Thanks to ExpoCredit’s faith in this young company, it now has the cash it needs to grow and continue conducting business as both a broker and a direct buyer for its large clients.

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