In Accounts Receivable Factoring, Case Study

Case Study One: Government Contract Financing

The deadline was looming for an 8(a) pallet manufacturer to complete a large sale to the U.S. Government totaling $310,000. The U.S. Navy had just released the contract, and while our client had sold to the government before, they had since experienced a decline in sales volume and profits. Their bank (for the first time) was unable to provide the company with financing. The company, at the bank’s suggestion, called A/R Funding. We were notified of the tightening time constraints, but we took on the job. A/R Funding provided a rapid turnaround of due diligence, with approval in just a few days. We were able to give the government the necessary approval documents, which in turn allowed them to approve our new client for the order. The bank was happy,the client was happy and the U.S. Navy was happy. A/R Funding met all deadlines, and the sale went on to completion.

Case Study Two: Bank Loan Workout Department

The Manager of the Commercial Loan Workout DepartmentAR Article Image 1 knew that their customer’s upcoming FDIC audit would reveal the serious condition into which their business had fallen. The workout programs of the bank had not produced the desired results. The company’s art supply sales had decreased so significantly that profits had eroded, and the company’s equity position moved to a 1:1 leverage situation. The bank worked with the borrower as they attempted to locate additional equity within their family and externally, to no avail. Eventually, the bank found it necessary to make a request they do not take lightly — they asked their customer to find other financing. The bank officer then called A/R Funding; we responded by visiting the company. We met the owners and alleviated their fears of leaving their long-time lender. We toured their plant and obtained the full package of information for due diligence. After spending time with us, the company was at ease with A/R Funding, and we approved the transaction in record time. We were able to pay the bank in full, well before the FDIC commenced their audit. All involved parties are looking forward to the day when the customer’s balance sheet improves and they can move back to their friends at the bank. Until that time, A/R Funding is proud to be a part of the company’s success.

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