Client: Online marketing and lead generation brokerage business
Industry: Online marketing industry.
Situation: The company was looking for Accounts Receivables Funding Solution with flexibility. Unlike other Internet lead generation companies, most of the Company’s revenue is generated on a “cash per activity by user” basis, a higher quality lead than just pay-per-click. With the economic downturn, the Company sustained a significant drop in revenue in 2009 and 2010 and eliminated several lines of business in order to regain profitability. In the last several months as the company secured more business, the founder realized that the most significant hurdle to growth was a lack of cash flow. The bottleneck occurred when website owners and bloggers (Publishers) insisted on short payment terms for the leads that they generated, while the customers (Advertisers) stretched their payments beyond 30 days for the service. The Company’s investment banker referred the founder to Coral Capital for accounts receivable financing services.
The Deal: Coral Capital Solutions provided the Company with liquidity against its receivables for working capital and to support the growth. Coral Capital put its team together to learn the Company’s business model and created a mechanism to verify invoices without requiring calling customers. Since the Company maintains a proprietary electronic platform with abundant digital data related to Company’s performance of services and billing to its customers, Coral Capital can quickly analyze the information and match activity to invoices when making daily funding decisions, resulting in a faster verification process. In addition, Coral Capital is able to monitor the progress of services between billing cycles, which again translate to efficient funding.
The Result: Accounts receivable financing was a confidence booster for business expansion. Factoring their invoices to major brands gave this established marketing Company the working capital it needed to fuel its comeback to pre-credit crisis revenue levels.