Think you can’t fund government receivables? Think again!
So often, early stage and fast growth companies need cash flow and liquidity but think they won’t qualify for receivables financing because they have government contracts. But that’s not the case at Prestige: we fund federal, state and municipal receivables.
It happened again today as I was speaking with my friend Joe Lear at Shark Branding (of Shark Tank fame). He had a client he’d been trying to help for weeks but was frustrated in finding traditional financing. Plus, he was afraid the client’s contracts with state and municipalities would kill any receivables deal. When I assured him it would not, we immediately set up a conference call and Prestige was able to help his client get the liquidity he needed.
Why are government contracts such a big deal? One problem is they can use up all your cash to get started providing products or services. Then they take a long time to pay your invoice because of bureaucratic processes and approvals. Another problem is that not all lenders understand the nuances of financing government receivables and assignment of claims (the law regarding the process for assigning the payments under a federal government contract to a financing institution.) At Prestige, we understand government payable procedures and we know how to work with them to collect payment.
Later, Joe said to me: “The best help I could give him was getting on the phone with you! You were the most refreshing call I had today. While listening to you speak to him, I learned more about what you did and how your easy style makes clients comfortable. Even though I thought that I knew what you did, I really learned so much more. A great benefit is that once approved the client has the ability to sell invoices when they want to; there are no monthly minimums. So if you need it you can use it but you don’t have to use the funding all the time. That saves the client money and gives them control, which my business owners like.”
Don’t let financing get in your way of taking advantage of new opportunities with government contracts – they can result in sale growth and a boost to your bottom line. The kind of financing Prestige provides can be the solution.
Raine Magazine – Creative Ways to Finance your Business
In the 16 years that I have been in the accounts receivable finance industry, I have worked with companies across a wide range of industries and sizes. What often surprises me is that a vast majority of business owners have never heard of using accounts receivable financing to create cash flow for their business.
Built In NYC – New York tech startups getting funding from an unusual source
These days billion dollar tech companies are no longer rare enough to be called unicorns. So many millions of dollars of VC money is sloshing around the city that you could be forgiven for thinking it’s easy for startups to raise money.
Historians vs. Fortunetellers
While giving a presentation on alternative financing options at the NYNJ Minority Council this summer, my colleague, Lewis Ross, of Chase Bank was asked why banks don’t finance early stage companies with contracts and why firms like Prestige Capital do.
Lewis’ spot on answer; “because banks are historians and factors are fortunetellers!’
What Lewis meant by that, is that banks are required to review financials, and past company performance to determine if a company is qualified to repay a loan.
A factor on the other hand is purchasing receivables which are a reflection of what the business is doing right now, as well as working in conjunction with purchase order companies to actually fill orders for future delivery.
By working with purchase order companies and factors, a company can look to their future, rather than their past to grow their businesses.
Those conversations that we often have with early stage and fast growth companies are exciting as we catch the energy of the entrepreneur who is bringing a product to market; finally receiving the orders that they were seeking and who is now finally speaking to a partner who will help move their business forward.
At Prestige, we have assisted many companies whose products are now household names, in food, beverage, liquor, consumer products, etc.
We are proud of their growth and are pleased to have assisted in providing the first rounds of financing for them.
They are also pleased when they come to understand that it is easier to obtain financing from factors and purchase order finance companies rather than equity and our financing services do not dilute the company’s equity.
That company is then a much better candidate for equity or traditional debt financing when their company has a stronger sales history.
As Lewis Ross and many of his colleagues at Chase know; “Where do you go when the bank says no?” To Prestige of course! Fortunetellers, rather than historians.
Thanks, Lewis, for all your support and for your great tag line!
When I was introduced to Mark Crames, founder of Demeter Fragrance, I was intrigued by his business and unique vision. With scents such as Vanilla Cake Batter, Grass, Rain, Dirt, Fresh Linen, Chocolate and Bubblegum, Demeter’s philosophy was to maximize the bond between scent and sense memory. If scent can make you smile…then Demeter’s fragrances surely achieved that goal. This was a perfume business very different than any I had ever worked with and whose success excited me.
Mark’s career path is unusual and one that I found quite interesting. Mark is an attorney who worked as a District Attorney for Janet Reno. When he couldn’t support his family on a state payroll, he went into private practice and specialized in representing fragrance companies who were being sued for trademark violation. After winning a ruling that allowed the sale of authentic merchandise at discounted prices, he realized that perfume needed to have very wide distribution in order to be successful. When he was introduced to an innovative brand that created scents inspired by fragrances that surround us every day, he found the right vehicle. Mark purchased Demeter Fragrance realizing that he wanted his “life to surround his work and not his work to surround his life.” In 2002, creating a virtual company unheard of but Mark knew that family came first and that the business would succeed with his hard work and creative vision. Quickly, he got product into top retailers such as Sephora, Ulta Cosmetics and Anthropologie. “Fragrance should be affordable and as comfortable to wear as a pair of jeans, not something that you save for a special occasion.” At affordable prices he soon branched out into Walgreens, Loblaw’s and Rite Aid and started exporting product all over the world. As the orders got larger and larger, his bank provided some financing, but could not support his overseas sales. When cash flow became a serious issue his bank made an introduction to me to assist in financing the large orders that they couldn’t fund within traditional loan parameters. Mark was surprised that the bank was unwilling to provide the financing that was necessary at his most critical growth period. Using cash flow from Prestige on these large orders gave Demeter the liquidity that they needed to continue to grow both domestic and foreign sales. Ultimately, he was grateful that they introduced him to a firm that was quick and nimble enough to finance specific orders so that there was no disruption in his business.
He has also taken his success to an even greater level by creating licensing deals with brands such as: Jelly Belly, Hershey’s, Tootsie Roll and Hello Kitty, creating great press for these companies through licensing in a category which would never be associated with perfume. His newest license is the 20th anniversary of Pulp Fiction! Can’t wait to see how that scent will smell!