Accounts Receivable financing Case Study - Data Drive Thru

The Situation:
High Demand. Low Cash Flow. Growth - It's Now or Never

Perhaps the more devastating impact of the economic turmoil will be the hundreds, if not millions, of small and mid-sized businesses that America could lose due to the extreme tightening of the credit markets. Making up more than 70% of the nation’s GDP, it is the sweat and determination of these companies that have built America into the competitive juggernaut that it is today. Unfortunately, it is exactly these businesses that are most threatened by the ongoing credit crisis.

Data Drive Thru is a Dallas-based innovator of the patented NSTL Technology^TM (No Software To Load) that enables personal computers to easily and seamlessly transfer data from one computer to another. As the CFO of Data Drive Thru, Brad Oldham knows that even when armed with very successful products such as the company’s award-winning The Tornado^TM and PC-to-PC File Transfer For Dummies^TM gaining access to credit is not always easy, even in the best of times. Further, he knows the importance of maintaining a company’s liquidity in order to take advantage of growth opportunities that often present themselves in the midst of a successful product launch.  

The Tornado^TM is a data transfer micro-computer that, when connected between two computers by its retractable USB cables, allows the user to easily swap files and folders between the two machines at transfer rates that far exceed traditional flash memory based media devices without having to load software onto either computer. Because The Tornado is a transfer device as opposed to a storage unit, there are no limitations on file size for transfers. A user can literally drag and drop a single folder between computers containing every file he wants to transfer as opposed to having to execute multiple iterations of CD burns or jump drive copy and paste operations. Data Drive Thru has developed a version to facilitate file transfers between PCs and MACs, The iTornado. As a result, the company was named ‘Best in Show’ at the 2008 Consumer Electronics show and has distributors from around the world lining up to distribute The iTornado. The Tornado^TM is in high demand and the company is in a position to realize tremendous growth. But only if it can gain access to the capital it needs to meet the demand. This is a critical time for the future of the company.

Just a little bit longer, please…

Data Drive Thru chose a conservative approach in its retail distribution strategy. The company carefully selected only the most financially sound retailers as customers, despite being wooed by all of the national big box heavyweights with enviable name recognition but less than stellar financials. Still, even the most sound account debtors are asking for extended payment terms these days. How can Data Drive Thru continue to take advantage of their newfound fame and tremendous demand, while also creating long term relationships with the customers they know are good for their invoices? In normal times, a business such as Data Drive Thru would have multiple methods by which to finance its growth. Brad could choose to grow slowly, plotting a steady but tempered path to profitability. Or, he could choose to raise capital via debt or equity to finance a more rapid pace of growth. With the capital markets all but closed for business, Brad has decided to use a new, more innovative alternative finance source for thriving, growing companies such as Data Drive Thru: The Receivables Exchange.

The TRE Solution

“Our customers are large, Fortune 500 companies with sound financials. The payability of the invoices is not a concern for us,” remarked Brad. “Still, we need a way to finance our growth as we push for greater penetration and more shelf space and bring new products to market. We’ve worked so hard to get this company to the place that we are now – with industry and consumer recognition and ever increasing demand for our products.”

By trading our highest quality receivables on the Exchange, we gained access to competitively priced capital, allowing us to increase our cash liquidity position and reinvest that capital into growth,” said Brad. “The Receivables Exchange provides me with a quick and easy way to monetize my receivables and reinvest the capital into our business. It couldn’t have come at a better time.

Having just recently joined as a Member of the Exchange, Brad has already sold portions of his receivables from recent holiday sales. He was then able to reinvest that capital into his aggressive sales and marketing efforts to continue to drive growth during the critical holiday sales months. Buyers of receivables on the Exchange focus their risk analysis on the credit quality of the obligor of the invoices. For a company like Data Drive Thru that has high-quality customers such as Staples and Office Depot, they are able to realize competitive pricing on their receivables and find Buyers that are interested in financing their invoices quickly. High quality obligors make excellent candidates for sale on The Receivables Exchange.

Every day more and more companies are turning to The Receivables Exchange as an avenue for short term finance. The Exchange serves as a capital marketplace for small and mid-sized companies that are looking for alternative ways to finance growth and optimize their working capital management.

Visit Data Drive Thru on the web at:  http://www.datadrivethru.com

Learn more about accounts receivable financing