| Client: |
Alpha Fixtures, Inc. |
| Industry: |
Communications |
| Result: |
Constant flow of working capital through all of our
seasonal spikes.
No more maxing out my personal credit cards to get through a sales spike. |
Even though our sales continued to spike up and down, we remained steady and strong.
Situation:
We had a $75,000 line of credit with our bank secured by accounts receivable, inventory, and a personal guarantee by
me, the owner. For the most part, we were able to handle our working capital needs with the $75,000 line of credit
and our receivables collections.
However, each year our business spiked in early fall and in late spring. During these seasons, the $75,000 credit
line was insufficient to cover our working capital needs. I had to rob Peter to pay Paul during these seasons, usually maxed
out my personal credit cards, and on some days, felt like throwing in the towel. We requested a larger credit line with our bank,
but were turned down because they said we didn't have the borrowing base to support a line increase up to $200,000
which we needed during those seasonal jumps.
Solution:
Our bank, wanting to help, referred us to 
. did
an in-depth analysis of our main customers and found that we had several Fortune
500
companies with which we did business. Three of our customers had very high
credit ratings
as well as substantial invoice balances during our spiked seasons. The
account representative called our bank, and they
jointly structured a working capital solution for our company.
Looking at our receivables base as well as our on-hand inventory, our bank
determined that our borrowing base was sufficient without receivables from
customers X, Y, and Z. This allowed the receivables of customers X, Y, and
Z to be freed to be purchased by under
their new 
program.
Our bank left our $75,000 working capital line of credit in place secured
with accounts receivable (excluding receivables from customers X, Y, and Z),
inventory, and a personal guarantee.
Additionally, set
up a $125,000 purchase
line for us secured by receivables from Customers X, Y and Z.
Summary:
This deal structure provided us with the constant working capital we needed
to fulfill the additional orders we had during our peak seasons. When the
peak seasons ended and the receivables were collected, our purchase
line remained dormant until the next peak season. This setup has worked incredibly
well for our company. In fact, we have referred 3 other businesses to Inova.
