Most companies today are in need of a little Cash Flow help now and then. Advertising Agencies are no different. One of our recent clients was one of the larger Advertising Agencies in Montreal Canada who has clients all over North America.
One day their bank came to them and told them they were having their Operating Line of Credit cut by nearly 50%. They never missed a payment, never broke covenant, were profitable, all was good, except their bank was changing the rules and now they were over what the bank considers to be an acceptable line amount.
To make matters worse, the bank told the client that they had 30 days to pay back the other 50% that was outstanding. They had to find a way to come up with $3 million dollars in before the end of the month or the bank was going to freeze their account. What would you do if this were your company?
This type of issue has happened to many companies not only in North America, but worldwide. Regardless if your company is in Canada, United States, the EU or any of the countries in Latin America, there are programs that can assist companies under these circumstances. Best of all, the Accounts Receivable Factoring can be in place in a matter of days in some cases.
Because their firm, as is with most Advertisement Agencies, did not have a very large asset pool other than their Accounts Receivable. This made them a perfect candidate for Accounts Receivable Factoring.
Their terms were net 45, the average days their Accounts Receivables were outstanding were 52 days, their average invoice amount was just over $20,000 and because their customers for the most part were repeat clients with a proven track record for payments we were able to advance them up to 90% of the face value of their invoices within 24 hours of them raising the invoice.
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