When a machine shop in Texas secured a contract with a prominent manufacturer, the future seemed promising. This new customer was set to increase their sales tenfold, propelling them to new heights. However, the excitement was soon tempered by a challenge many businesses face when experiencing rapid growth—financing that growth.
The Challenge: Bank Hesitancy Due to Customer Concentration
The machine shop’s management was eager to ramp up production to meet the demand of their new customer. But when they approached their bank for additional financing, they encountered an obstacle. Despite the potential for substantial revenue growth, the bank was hesitant to extend further credit. The reason? The high concentration of sales with just one customer.
Banks typically view such concentration as a risk. If the relationship with that one customer were to falter, the machine shop could face serious financial difficulties. While the machine shop had confidence in their new contract, the bank’s conservative approach left them without the necessary funding to seize the opportunity.
Turning to a Factoring Company: The Perfect Solution
Realizing the bank wasn’t going to provide the financing they needed, the machine shop began exploring alternative options. That’s when they discovered American Receivable, a leading factoring company with a 45-year history of helping businesses like theirs.
Factoring, also known as accounts receivable financing, provided the perfect solution. Unlike a traditional bank loan, factoring doesn’t involve taking on debt. Instead, it allows businesses to sell their invoices to a factoring company in exchange for immediate cash. This gave the machine shop the liquidity they needed to scale their operations without waiting for their customers to pay their invoices.
Why This Machine Shop Chose American Receivable
While there are many factoring companies available, the machine shop chose American Receivable for several key reasons:
- Experience in the Manufacturing Industry: American Receivable has extensive experience working with manufacturing businesses. They understand the unique challenges faced by machine shops, including long production cycles and the need for timely cash flow to purchase raw materials and pay for labor. This industry expertise was crucial in the machine shop’s decision-making process.
- Flexibility and Speed: Time was of the essence. The machine shop needed to scale quickly to fulfill their new contract. American Receivable’s streamlined process ensured that they could get the funding they needed without unnecessary delays. Unlike banks, which often take weeks or even months to approve loans, American Receivable was able to provide funding within days.
- No Long-Term Contracts: Many factoring companies require long-term contracts, which can be a burden for businesses that only need short-term financing. American Receivable offers flexible terms without the need for long-term commitments. This was particularly appealing to the machine shop, as they could use factoring only for the duration of their rapid growth phase.
- Competitive Rates: Cost is always a consideration when choosing a financing partner. American Receivable offered competitive rates that were lower than many of their competitors. This ensured that the machine shop could maximize their profits while still getting the financing they needed.
- Personalized Service: At American Receivable, clients are more than just numbers. The machine shop appreciated the personalized service they received, including direct access to decision-makers and a dedicated account manager who understood their business. This level of attention made them feel valued and confident that they were in good hands.
The Results: Going for the Gold
With American Receivable as their factoring company, the machine shop was able to capitalize on their new contract and scale their operations significantly. The immediate cash flow provided by factoring allowed them to purchase the raw materials, hire additional staff, and invest in the equipment needed to meet the increased demand.
As their sales grew tenfold, the machine shop not only fulfilled their contract but also positioned themselves as a leading supplier in their industry. The decision to partner with American Receivable proved to be a pivotal moment in their journey, enabling them to achieve success that would have been impossible without the right financing.
Conclusion: American Receivable—Your Partner in Growth
For businesses facing similar challenges, American Receivable stands out as the factoring company of choice. With a deep understanding of the industries they serve, flexible terms, competitive rates, and unparalleled customer service, they provide the financial support businesses need to reach their full potential.
If your business is on the brink of significant growth but is held back by traditional financing options, consider partnering with American Receivable. Just like the machine shop that went for the gold, you too can achieve your goals with the right financial partner by your side.
Jack Stieber jack@americanreceivable.com 972-404-4726
Julie Adams julie@americanreceivable.com 800-297-6652
Brad Gurney brad@americanreceivable.com 972-404-4726
Dakota Stieber dakota@americanreceivable.com 800-297-6652
