$3.2M Inventory and Receivables Facility for a Wholesale Distributor

The company distributed specialty food and beverage products across a three-state region, serving a mix of restaurants, independent retailers, grocery chains, and institutional food service accounts. Revenue was strong, margins were healthy, but the business had a structural cash flow challenge driven by the mismatch between purchasing requirements and collection timing.

International suppliers required wire deposits 45-60 days before product arrival. Domestic suppliers offered net-30 terms but required payment regardless of downstream collections. Restaurant and retail customers, meanwhile, paid on 45-60 day terms. During peak seasons — Q4 holiday and summer months — the company needed to purchase 2-3 months of inventory ahead of confirmed orders to ensure product availability.

The resulting cash conversion cycle exceeded 90 days during peak periods. The company's bank line of $1.5M was insufficient to fund the full seasonal purchasing requirement, forcing management to decline large orders from existing customers and turn away new account opportunities during precisely the periods when demand was strongest. Each declined order represented not just lost revenue but potential permanent customer loss to competitors who could fulfill.

The immediate operational impact was the elimination of forced order declines. During the first Q4 holiday season after deployment, the company fulfilled 100% of customer orders for the first time in three years. The additional purchasing capacity — approximately 45% above their pre-facility baseline — meant inventory levels matched actual demand rather than available cash.

Within the first year, the company leveraged the expanded capacity to win two new regional grocery chain accounts that had previously been unpursuable due to the volume commitments required. Combined, these accounts represented approximately $4.8M in new annual revenue. The facility's revolving structure meant the additional receivables generated by these accounts actually increased borrowing base availability, creating a virtuous cycle.

Cash flow planning became predictable for the first time despite seasonal demand patterns. The finance team could commit to supplier orders months in advance, securing better pricing and preferred allocation from international producers. The company's relationship with its bank has also strengthened — the bank views the ABL facility as complementary infrastructure rather than competitive, and has discussed participating in a future syndicated facility as the company grows beyond its current credit appetite.