Catamount Glassware Co. Inc.
Over the past 31 years, Alain Karyo President of Catamount Glassware, has learned invaluable lessons while growing his niche Vermont-based specialty glassware company. Catamount is the only U.S. manufacturer of certified heat-resistant glassware, creating customized bottles for popular breweries such as, Magic Hat and Otter Creek. Its high-quality glass cookware is also sold by national retailers, including William Sonoma and Crate and Barrel.
‘Painful’ Traditional Financing
In 1998, Catamount decided to recapitalize their business through a long-term SBA loan. The process left Alain with a firm distaste for the traditional financing process. “They wanted to take absolutely everything as collateral, leaving us with zero flexibility,” remarks Alain. As a result of that experience, the company has avoided debt financing, despite lenders interest and availability. “We probably could have grown at a more rapid rate, but I was never willing to take on the level of risk and the additional workload associated with disclosure to the lenders.” Still, Catamount has maintained its focus on quality products and has been fortunate to grow organically at a steady pace.
‘Efficient Way to Improve Cash Flow’
In the spring of 2009, Alain discovered The Receivables Exchange, and was quickly impressed by the flexibility and ease of use of the trading platform. Still, he was skeptical about selling receivables to fund growth. “I loved the concept, but knew the devil would be in the details. I decided to give it a shot and after only a few auctions, I was amazed at how efficiently I could improve my cash flow. And, by selling the receivables of my best customers, it was a very cost-effective way to increase our liquidity,” says Alain.
Flexibility to Grow
Alain’s customers don’t operate on particularly onerous terms of credit, but because Catamount’s raw materials are highly commoditized, suppliers to Catamount tend to compete fairly aggressively. As such, the ability to have flexibility in managing his working capital allows him to take advantage of opportunities to purchase materials at a discount from his suppliers. “Previously, I would watch these great deals pass us by because I did not have sufficient cash available. And, I would have to pay the rack rates once my customers remitted payment on their outstanding invoices.” We have been able to take advantage of some very significant raw material discounts as a result of having this new-found flexibility in our working capital management.”
A 'No-brainer' Way to Manage Cash Flow
“Financing raw material purchases through receivables financing contributes a significant and positive impact to my business and to my bottom line. Transaction costs are lower than the aggregate discount I can achieve on the materials purchase, making it a no-brainer for our company. I would do these all day long if I could.”
Alain plans to use The Receivables Exchange flexibility to widen his operating margins and enhance his cash flow position. Unlike with traditional financing, he is not required to give up control of his collateral base.
Taking advantage of raw material discounts is just one of many ways small and medium sized businesses are utilizing The Receivables Exchange. Because the Exchange does not require personal guarantees, excessive collateral pledges, or contracted volume guarantees, businesses can quickly and easily gain access to affordable working capital – on their own terms. And, because transactions are structured as open, competitive auctions, and bid upon by a global network of accredited institutional investors, businesses can drive down their cost of capital and be assured they are receiving an efficient price.