“At Cosmetic Creations, we wanted to play our part in making sure supply lines of vital products such as hand sanitiser stay open. The current unfortunate situation presented by the coronavirus means that solutions have to be developed quickly. Purchase Order Finance gives us enormous scope to fulfil large scale POs inside the critical time schedule.”
A manufacturing Company in the cosmetics industry had an opportunity to solve a problem related to the outbreak of the Coronavirus.
Cosmetic Creations is supporting the fight against Covid-19 in Ireland to mass produce a range of hand sanitisers for use in clinical environments.
Time is critical. To ramp up production urgently, the company needed an immediate injection of working capital to secure raw materials and components.
The Company had recently been awarded a significant order to produce a range of hand sanitisers for use across Ireland specifically targeting the Coronavirus outbreak.
The key challenge was to fund raw material and components and be in a position to make payments upfront to secure the supply chain and increase their skilled workforce.
In the absence of an “Approved Invoice” traditional funders were struggling or unable to provide the finance required. This was compounded by the tight turnaround time.
The InvoiceFair marketplace enabled the Company to leverage their blue-chip Purchase Order (PO) to release working capital to fund raw materials and increased staff costs. This was done using Purchase Order Finance where up to 70% of the value of the PO was sold to a pool of institutional investors.
Key to the Solution
- Analysis of the contract terms, related production costs, delivery schedules and overall working capital funding requirements.
- Understanding the capability of Cosmetic Creations Management Team and their expertise and ability to perform.
- The Funding was provided within 24 hours of the company receiving their PO.
- Competitive pricing with a customised solution.
- Flexibility to access additional funding as demand increases.
The fact that Cosmetic Creations could access a pool of funders, not just one finance provider, delivered significant benefits:
- They could leverage their Future Receivable/Purchase Order to release capital to fulfil the Order.
- They had both access to, and had built a track record with funders who have an appetite for purchasing Future Receivables and understand the sector risks & complexities.
- Funding is spread across a deep pool of funders as opposed to reliance on the single Balance Sheet of a traditional funder. This eliminates the restriction around funding limits and Debtor Concentration.