In the field of manufacturing high-end technology, cash flow can put a strain of even successful companies. Kenneth Bloom, President and CEO of Avenir Technologies, understands this industry truth first hand. Avenir Technologies develops high tech commercial enterprise datacenter solutions and services clients such as the government, Fortune 100 companies, major air traffic control centers, and large automotive companies. Despite this impressive customer base, Avenir Technologies found themselves strapped for cash.
Bloom, a 25-year veteran of the industry, explains, “Cash flow is always an issue with small companies, but the high front-end costs of technical manufacturing make it an exceptionally cash flow intensive industry.” Not only are the front end costs substantial, but the time between investing capital and receiving payment is extreme. For Avenir Technologies, it takes between 18 months and 2 years to develop a product. Once the product is on the market and an order is received, it can take anywhere from 8-10 weeks to customize and manufacture the product. They invoice the customer once the product is shipped, and then they wait for their client to pay the invoice – and hope they do so in a timely manner. For every order, they may be forced to front the cost for production for months without seeing any return.
With that much cash tied up in development and manufacturing, Avenir Technologies needed a tailored cash flow solution beyond normal financing. Bloom states, “The banks weren’t creative enough. For a small company traditional banking doesn’t work all the time and I found the rates for asset based lending too high.” Avenir Technologies finally discovered the solution to their cash flow troubles with the help of Bibby Financial Services. Bloom describes Bibby Financial Services as “beyond cooperative” and says, “Everyone at Bibby works with you to finds creative ways to solve problems.” For Avenir Technologies, Bibby combined their Accounts Receivables Funding and Purchase Order Finance products to maximize cash flow. Raul Velarde, Bibby’s Purchase Order Finance Director explains, “Our purchase Order program helps increase cash flow by covering front end costs. Bibby will advance the cash to cover up to 80% of a confirmed purchase cost to your supplier. Once the goods are shipped and invoiced, Bibby will pay you the balance between the order value and the amount paid to the supplier, minus our fees and cost of money used.”
With the Purchase Order Finance covering their front-end costs, and the accounts receivables financing increasing their cash flow and turning their receivables faster, Avenir is no longer held back from taking on new orders and can focus on growing their business. Bloom explains, “The purchase order financing has been great, and the whole financial package is just perfect for small companies.” Avenir has experienced 25-30% growth since their relationship began.
Bloom attributes this growth to the increase in cash flow. He states, “Bibby’s solution addresses all of our problems and they have been very flexible. Every small company should have a lender that will work with you to overcome obstacles, like Bibby does with us.”