FGX specializes in shipping millions of dollars of IT hardware all over the world for its clients. It’s the type of business that excels in the complexities of dealing with issues such as customs, compliance and logistics. In fact, according to Joseph Lynch, Chief Financial Officer for FGX, the trade wars that happened in 2018 between the U.S. and other countries have created an increase in demand for the company.
“The more difficult it is to move stuff around the world, the better it is for us,” Joseph explained. “Any kind of volatility is good for us, as difficult shipping environments are where we thrive. Handling challenges such as customs clearance and technology deployments across multiple countries and currencies are not straightforward and it's not really something that the big shippers or even the freight forwarders are set up to handle.”
Dealing with millions of dollars in technology shipments also means paying hundreds of thousands of dollars in taxes, which are often due before invoices are paid by the client. FGX had reached their limit on being able to carry the debt of these often significant tax bill amounts internally and needed to seek the help of a partner that would be able to help them with this cash flow challenge.
“I'm very old school, very much into paper ledgers, and this really wasn't conducive to expanding our business from a risk tolerance standpoint,” Joseph admitted. “Large organizations can front large tax amounts but we were basically covering what we could on our own. The result was that we were losing business on some of our larger clients if we couldn't extend a few hundred thousand dollars of credit to them. This didn’t really allow us to grow.”
FGX turned to Bibby Financial Services (BFS) for specialized financing known as invoice factoring. By providing funding based on invoices in advance, FGX can meet tax demands and keep deliveries moving. “Obviously we wanted somebody with expertise in funding transportation because they could wrap their head around our unique business, step up and handle it,” shared Joseph. “BFS really fits this description and they work well with us as a tandem unit.”
Joseph explained that while Bibby Financial Services typically handles the invoice collections process, they are willing to work with both FGX sales teams and Accounts Payable to handle unique client situations ensuring FGX’s critical relationships are protected and managed without strain. FGX meets with BFS often when new business deals are in the works so the company can forecast how BFS’s factoring services will support the business in advance of presenting a comprehensive package to a prospect.
After two years, Joseph has witnessed firsthand how his company’s competitive advantage has increased as a result of having a funding partner that understands FGX’s unique challenges. “In our business, it’s a simple fact that if you cannot front debt for a client, they may question your ability to handle other parts of the relationship,” Joseph declared. “Bibby Financial Services helps us overcome hurdles and just makes things easier. Equipment gets dropped off, we pick it up and handle everything—right across borders—until it reaches its destination. And now, we don’t have to ask our clients for money up front. We can send them a single invoice at 30 or 45 days that covers everything. And that makes a really strong impact on client procurement departments.”
Joseph explained how BFS flexibility is important for their operations. “With smaller shipments, let’s say a $50,000 tax bill, BFS can get that money back to us the same day in some cases. In many other cases, it’s the large tax bills, as high as $600,000-$800,000 to help move millions of dollars in technology hardware, where BFS really makes a difference. In these cases, the tax bill is often higher than what we’re actually going to invoice for our services. With BFS, we have the financial confidence to take on that work.”
FGX is now expanding their relationship with larger clients and moving into new markets which is supported by the working capital they receive from Bibby Financial Services. “This new flexibility is giving us the room to add clients, because of the reputation we’re building across industries,” said Joseph. “We’ve got a great name now and that’s really helping to accelerate our growth.”