Amid the COVID-19 pandemic, we've seen an increase in government contract funding projects. LSQ has a long history of helping government contractors get the working capital they need to grow and thrive. We want to share with you how BeaverFit ramped up production and doubled their revenue year after year using LSQ's invoice financing and accounts receivable management services.
Early Success with Government Contracts
Lots of purchase orders, little working capital.
When BeaverFit launched in 2014, the portable fitness and tactical training solutions company hit the ground running— landing major government contracts in year one. Their modular, easy to transport products quickly gained popularity with the U.S. military, enabling them to train up to 100 soldiers simultaneously. BeaverFit co-founder, Alex Roodhouse, soon found his company in a rapid growth stage, which presented a new set of challenges.
Like many businesses tasked with fulfilling large orders on net terms, the Nevada-based manufacturer was heavy with purchase orders, but light on working capital. Alex and his business partner had intentionally bootstrapped their operations, using personal funds to avoid taking on additional investors and debt; however, the company needed liquidity to fulfill orders.
"We would take these big orders from the government and had to buy the inventory, build the products, ship them, and then wait to get paid. That gap between our costs and our revenue was critical," recalls Alex.
With liquidity issues on the horizon, he reached out to his business banker, who recommended LSQ's working capital solutions.
Government Contract Financing
The boost BeaverFit’s cash conversion cycle needed.
BeaverFit had obtained favorable terms with their suppliers, in some cases negotiating to pay vendors net 180. This was partly due to their reliable military clientele and ‘no purchase order, no production’ policy. While it lightened their financial burden, Alex still needed capital to operate and grow the business.
Their customer portfolio consisted mostly of government debtors with net 30 terms. After reviewing BeaverFit's financial documents, LSQ was able to reduce the time it took for Alex to get paid by 27 days. This helped him quickly obtain and sustain adequate funding to fulfill existing orders and take on more business.
"We did our part, and then the money was there when we needed it. If we hadn't had it, I don't think we could have been as successful."
As a client, Alex utilized LSQ's credit engine and real-time payment data to mitigate risk and unlock additional avenues for growth. He partnered with his LSQ Portfolio Manager to make decisions that strengthened BeaverFit's balance sheet and improved his cash conversion cycle— ultimately transitioning the company to traditional financing via a bank line of credit.
Have you recently acquired a government contract and need funding? LSQ would love to help your business.