Ft. Lauderdale, FL — $1,000,000
Double decker deal.
P.O. Financing and Factoring Line
Client: An international bath textiles company with U.S. headquarters in Fort Lauderdale.
Situation: The Company supplies fine linens (towels, sheets, etc.) manufactured in Pakistan to businesses all over the world. After years of success overseas from their Switzerland base, the Company wanted to expand domestically and incorporated in the U.S. in 2011. He quickly landed a large contract supplying towels to Carnival Cruise Lines in Miami. International law required them to finance the linen shipments through Cash Against Documents (CAD) financing, so the linens would be delivered to a port in the U.S, and not released until the manufacturer was paid.
The Deal: In a multi-step deal, Paragon provided a combination of P.O. Financing and Accounts Receivable Financing with a maximum of $1 million in a factoring line of credit.
- Strict CAD rules require that payment for the product must come directly from the company and no one else. As a factoring company, providing the funds to the Company to pay the manufacturer involved too high a risk and could delay release of the product. We negotiated with the Pakistani manufacturer and came to a separate agreement that they would accept a wire payment directly from us for the Purchase Order, and release the goods to Paragon at the port.
- Once at the port, the goods are inspected and shipped by train to Carnival’s warehouse in Miami, where they undergo a second inspection before they are accepted and the invoice is approved for payment. In this second part of the deal, it became a factoring transaction with the Carnival invoice, in a sense paying Paragon back for the initial P.O. Financing.
- The challenge for our client was he had to pay for product before it was delivered and accepted by Carnival, causing cash flow issues. The entire shipping/delivery/inspection/payment process could take up to 90 days.
Result: Our innovative work-around, P.O. financing and factoring line gave the Company the ability to take on the game-changing contract from Carnival and begin to expand domestically.
About Paragon: For over 18 years, Paragon has been working with banks to provide working capital solutions for growing companies throughout the U.S. We service a wide variety of small to large-size businesses in many industries through our accounts receivable factoring and purchase order financing programs. Paragon is a leading source for receivables financing, government contract financing, payroll funding, and purchase order financing.