Mid Atlantic businesses engage Rotay Capital Finance for factoring in company growth
Receivables financing or factoring is currently helping two small business owners in construction contracting.
By: Rotay Capital Finance
Thomas is a specialty electrical contractor in IT, audio-visual, digital displays, home theaters, and electrical services. In late 2018, Thomas was awarded the contract for electrical services in a new addition at a prestigious private school. The general contractor on the project was encouraged to use Thomas on the project due to his longtime and positive relationship with the institution. However, challenges included a quick completion job turnaround time during the first quarter of 2019. The one project was equal to or greater than Thomas' annual revenue for the last few years.
The capacity to complete the project was within reach, although funding the labor and materials per the terms of the general contractor's agreement was a financial liability. Thomas could not meet the guidelines of a conventional bank or lender, and he was faced with seeking alternative solutions with finding an equity partner or losing the project. Engaging with an equity partner would be very expensive and far more intrusive than the value provided. Thomas did not want to walk away from the job which could permanently damage his relationship with the school and the general contractor.
Rotay took on the assignment to assist Thomas and propose a strategy that financed the current materials invoices to the general contractor and within days, turned around much needed cash to Thomas. Thomas was able to pay his suppliers and labor and utilized the factoring solution for several invoices on the project.
With Chaffman, the commercial masonry contractor had numerous years in the trade business with designing and building in brick, block, manufactured and natural stone, among others. Chaffman recently opened his own company which created challenges for conventional funding. His initial request to banks and lenders was for $100,000 to fund payroll until his first invoices were paid, however as a startup company owner with little collateral, he faced an imminent challenge.
Rotay proposed a business strategy and shared the benefits with Chaffman who started the process with factoring several invoices. The funds were used to make payroll on a weekly basis and helped to avoid requesting that general contractors alter their normal payment terms. With Rotay's knowledge, Chaffman was also able to address workman's comp or workers' liability insurance financial requirements with obtaining funds in days instead of months. This permitted Chaffman to continue with jobs in progress and using the factoring strategy in future projects.
"I learned about Steve and his abilities through my banker who recommended and referred me to Rotay Capital Finance. I was comfortable about the association and went ahead with the factoring strategy," said Chaffman. "For two to three months now, the invoicing structure is working well and as a small business owner, we can continue to pay our employees, vendors, suppliers, and others on time."
According to Rotay, his firm can factor for customers which allows them to sell their invoices or receivables to Rotay Capital Finance and receive cash quicker than the pay terms or actual payment timeline of their clients or debtors. "Typically, the business selling their invoice to my firm will pay a fee for the immediate receipt of cash which allows them cash flow to fund payroll, materials, and other needs to grow their business," said Rotay. "A holdback reserve from the invoice is kept until funds are paid from the debtor. Usually the reserve is 20 percent and there are no additional hidden charges. Upon payment of the invoice, the reserve is released to the customer after deducting fees."
Rotay opened Rotay Capital Finance (https://rcfinance.com/
Rotay Capital Finance offers access to lending products specializing in commercial real estate, equipment leasing in construction, mining and fracking, trucking, business acquisitions, aircraft and marine, among others. Working capital solutions and financing in sectors such as real estate and development, accounts receivable, purchase orders, and heavy equipment are available. Also, establishing unsecured lines of credit, asset-based lending and financing, and bridge and hard money loans in hotels, franchising, and private equity financing are obtainable. For more information, call 717-299-9998 or email srotay@RCFinance.com. Visit the website at https://rcfinance.com/