For over 18 years, Paragon Financial Group has provided working capital solutions for growing companies throughout the US. They serve small to large-size companies across a wide variety of industries through accounts receivable, invoice factoring and purchase order financing up to $3 million per month in volume. Paragon is a leading source for receivables financing, government contract financing, payroll funding, and purchase order financing. For more information visit www.paragonfinancial.net.
A start-up discount retail food broker based in New York City needed financing for a large opportunity for growth. Even established companies with great credit and a long history are being turned down for traditional bank financing. It was imperative the start-up line up financing for a large and very important order. The Company looked into alternative financing options.
The New York company purchases overstock food items from large suppliers at a discount and re-sells them to discount stores such as Dollar Tree. By ordering in bulk and drop-shipping to his retail customers, he avoids the capital-intensive needs of a warehouse and crew. The owner had long ties to the food industry and had recently leveraged his large network of contacts at food sellers to launch this new company on his own. He had an opportunity to work with Dole Food Company, Inc., but he needed working capital in order to pay Dole before he had payment in hand from his retail customers. The Company had great growth potential but had only just incorporated, so bank financing was not available.
They were able to receive a combination of $500,000 in accounts receivable financing and a purchase order financing line of credit through a factoring company. The process of accounts receivable financing was a simple, fast and efficient way for the Company to get cash when they need it without going the traditional route of getting a bank loan. The start-up discount retailer received the cash they needed and the factoring company bought the receivables at a discount. Once the receivables were collected, the money was provided to the Company minus fees from the factoring company.
Purchase order financing is when one company pays the supplier of another company, for goods that have been ordered to fulfill a job for a customer. This is a perfect option for the Company and their specific needs. Sometimes companies can qualify for 100% financing. The purchase order finance factoring company collects the invoice from the end customer.
As part of the P.O. line of credit, the factor first wired money to Dole so they would ship product. Once the Company had invoiced their retail customer, the factor began the accounts receivable financing program.
The results was paramount to their success. The multi-level funding gave the Company the ability to pay suppliers and work with large enterprises such as Dole, and gave them the working capital they needed to grow the business.