Fash flow for manufacturing companies is crucial, especially when government contracts come onto the scene. A few years ago, Flexent provided an accounts receivable working capital facility for a manufacturer of surge protection devices. The company, based out of North Carolina, maintained strong commercial customer relationships, but in 2018 sales declined and projects came to a close. Our client began diversifying their business in 2019 by taking on government contracts.
History:
The company was established in 1996 as a Woman-Owned Small Business and specializes in manufacturing high-quality surge protection products
These devices safeguard sensitive equipment against potential damage caused by lightning strikes and other electrical surges, and thus help prevent costly repairs and down-times. Our client also produces sealed cable assemblies for use under harsh conditions. The US government has used our client’s product in military installations as well as on the battlefield.
Problem: Manufacturing & Government Contracts
By diversifying and taking on government contracts as a prime and sub-prime contractor, our client grew by 20%. This sudden growth revealed the need for a working capital solution. Additionally, although the company experienced vigorous growth, losses from 2017, as well as a small tax lien, pressed for the balance sheet to be restructured.
Solution:
Our client leveraged an SBA loan to refinance real estate and retire the tax lien. Meanwhile, Flexent provided a $100k working capital facility, enabling our client to maintain steady growth as a manufacturer, but also as a government contractor.
Shortly after starting with Flexent, the company secured new federal contracts, expanding their horizons further. In response, Flexent increased their AR capital facility to $450K, allowing them to continue growing without cash restraints.
