Small Business Case Studies
A printer broker doubles his revenue
A printer brokerage is a business that helps companies to streamline their printing needs. There are specialty printers for banners, forms, collateral, labels, tradeshow graphics, etc. and some companies probably need a combination of these services on a day-to-day basis. The broker has a long list of specialty printers he works with and can facilitate the best solution for his clients for a relatively small margin, saving them time, aggravation and often money. The broker, however, pays the printer before the client pays him, so there is always a lag time with the associated cash flow problems.
Let’s look at an example:
A client needs to print 20,000 multi-page brochures. After finding the printer, the broker quotes $13,000 for the job. The printer requires full payment at delivery of $11,700 (the broker makes 10%). The broker’s client has payment terms of net 30, so the broker has to carry the $11,700 for a full 30 days before getting paid the $13,000. This severely restricts how many clients the broker can take on.
Solution:
Catham Holdings. As soon as we have verified that the client has taken delivery of the brochures and is satisfied with the product, we buy the $13,000 invoice and write a check to the broker for $12,200 (5%, plus $150 due diligence fee*). The broker has immediate cash and can turn around and sell the next job, reducing his selling cycle by up to 30 days! By the end of the year, this broker had more than doubled his revenue.*calculations vary depending on industry risk and other financial ratios
A Small Parts Manufacturer gets out of a bind
This manufacturer placed an order for a raw material ingredient in his product. The invoice amount was $12,500. This invoice is $5,000 higher than cash-on-hand, raising the subject of late fees and reduction of credit terms with this supplier. The manufacturer did have a customer “A” who took delivery of a substantial shipment of small parts for $20,000 30 days ago. Since “A” is one of the manufacturer’s best customers he has the privilege of net 60 terms.
The $12,500 invoice of the supplier is due and the $20,000 invoice to the manufacturer’s client won’t be due until 30 days from now.
Solution:
Catham Holdings. After verifying the invoice and delivery of goods, we write a check for $18,500 (5%, plus $150 due diligence fee). The manufacturer pays the supplier without penalty and increases cash-on-hand to $11,000. This increased cash flow allows the manufacturer to order more supplies to produce more small parts for more clients or to buy more equipment or to pay past-due invoices (building a better credit rating).
There are so many examples of how we can help you with cash flow bottlenecks but you already get the idea. Having been on the receiving end of discount invoicing (it saved the day for a company I used to work for) I know we can help you. That is the main reason why we founded Catham Holdings. After working in corporate America and not knowing how we contributed at the end of the day, we wanted to see first hand how we could change the fortunes of a small business for the better. You took the plunge and opened your doors to customers, you sat late at night figuring out how and to whom to market your product, you worried about paying suppliers and the kid’s college, but you still have your own business. You don’t report to anyone and you are rightfully proud of what you built. Let us help you grow and prosper – from one family business to another.