A/R Financing – Vegetable Oil Distributor

Deal Summary

Product: Factoring Line
Funding Line Amount: $3.5 million
Company Type: Distributor of Vegetable Oil and Derivatives
Industry Type: Fats and Oils
Annual Revenue: $21 million
Location: Colombia

Colombia produces more palm oil than any other country in Latin America and is considered the fourth largest producer worldwide. The palm oil business is one of large volumes and low profit margins and is subject to international market prices. Our client is a market leader that specializes in the commercialization, import and export of vegetable oil and its derivatives, mainly palm oil in Latin America.  The company’s owners have substantial experience in the industry.

Challenge

The company is relatively new and needs to accelerate its cash flow to account for its clients’ payment terms of 30-45 days. Palm oil prices have been controlled by the government in Colombia, but the product is a commodity that is subject to international market prices in other countries.

Solution

Despite being young, the company has experienced rapid growth and strong market penetration. It has a solid customer portfolio of large, well-positioned Colombian companies, whom it has been able to attract because they prefer to buy locally.
It is able to transport large volumes of product with competitive freight rates. Because Colombia has stabilized palm oil prices, the company is able to control its profit margins. Recently, it has been able to diversify its product offerings from crude palm oil products to several types of palm derivatives, which will allow it to expand to new markets. ExpoCredit was able to demonstrate its confidence in this company by granting it $3.5MM in financing and offering it a better rate than the competition.

Benefit

With the factoring line, the company will be able to maintain its leadership position in Colombia and continue its expansion into other markets.

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