CASE STUDY: Path to Exponential Growth, Provided by United Capital Funding


Estimated reading time: 2 minutes

Background

Credit facility limit:
$4,500,000

General description: Utility contractor

State of formation:

Tennessee

Customer type:

Telecommunication companies

Issue

This Tennessee-based utility service contractor began experiencing accelerated growth as its business operations increased. The company sought to increase its line of credit with its bank, however, it was unfortunately unable to secure an increased line limit due to its past overall financial performance.

Proposed Solutions

United Capital Funding proposed an accounts receivable factoring facility; which would provide a flexible and elastic form of working capital sufficient enough to grow along with increasing customer demand. Through this form of financing, the company was able to:

  1. Secure a larger credit facility collateralized by their accounts receivable; then they could have achieved by leveraging their current balance sheet.
  2. Gain greater liquidity without the corresponding debt on their balance sheet.
  3. Grow at an integral part of the company’s life cycle without restrictive covenants.
  4. Work with an institution that has been in business for 25 years supporting its customers with professional AR management services to help reduce overall Days Sales Outstanding.
  5. Reduce senior management’s time and energy on cash flow management and therefore, allowing an even greater focus on growing revenues and ensuring customer satisfaction.

Conclusion

The company accepted the proposal and was approved for factoring with United Capital Funding. The above relationship between UCF and its client will prove to be a very profitable capital structure.

Due to stable gross margins and relatively flat fixed expenses, our client has expanded into nine states and continues its goal of increasing its presence in the Southeast. By working with UCF; our customers gain the additional working capital necessary to support continued growth and seek additional business in new verticals and markets.


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