CASE STUDY THREE: Trade Finance

A $25 million outerwear manufacturer had a collection factoring arrangement with another factor, preferring to borrow and issue letters of credit through their bank. Although the bank had supported the company in the past, it became uncomfortable after the business reported its first loss for the most recent fiscal year. Furthermore, they felt that the company's financing needs were too large for a business this size.

Milberg, however, was not put off by the company's requirements. Our due diligence revealed an essentially sound business, and we were able to get comfortable where others could not. We understood the financing needs reflected the nature of this business – the import of a seasonal product line, which required a long lead time for production.

Since the manufacturer's bank was no longer comfortable with the credit, instead of continuing to split the financing and factoring between two institutions, Milberg recommended a total package which included an advance factoring arrangement, with accommodations for large seasonal overadvances, and a substantial Letter of Credit line.

Result: The proposal from Milberg provided the flexible financing the manufacturer needed – significantly in excess of what the bank was willing to do. Furthermore, Milberg's timely response and the convenience of "one-stop shopping" freed up more time for the client to run his business. And Milberg's trade finance specialists helped the company to obtain better Letter of Credit terms from their suppliers and to better protect the client from manufacturing mistakes overseas.