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Andy Cagle

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Hybrid credit facility includes both AR and AP finance and management

ORLANDO, Fla. (Dec. 6, 2022) – LSQ, the leading provider of working capital finance and payments solutions, recently partnered with a large pet care and nutrition company to create a revolutionary supply chain and accounts receivable finance program that includes the first B2B “FlexTerm” offering in the industry.

“Traditionally, enterprises participating in a supply chain finance program gain the working capital lift by extending payment terms and offering early payments through a third-party funder,” said LSQ Chief Revenue Officer, Vikas Shah. “But in today’s economic environment with tighter supply chains, we are seeing little appetite for supplier terms extensions, so companies are having to find new ways to improve near term cash flow. And that’s what LSQ FlexTerm is.”

The Need for More Flexible Liquidity

According to the company’s controller, the manufacturer built higher inventory levels than normal to keep up with demand during the pandemic. Then, as market dynamics changed, they were left with excess inventory that put a strain on cash flow as they worked to clear their excess product.

“We were looking for an alternative short-term solution that could help us through the crunch of where we were forecasting to be and allow us to pay our vendors early or on time while maintaining working capital when we needed it,” the controller said.

A Flexible Solution with LSQ

“When we started talking with the company, we realized a FlexTerm solution solves that problem,” said Shah, “It improves liquidity for both buyers and suppliers and helps maintain healthy supply chains and business relationships.”

With LSQ FlexTerm, the manufacturer is able to enjoy a working capital lift while still providing their suppliers with early invoice payments without implementing a terms extension with those suppliers. Through FlexTerm, they are able to repay LSQ, the third-party funder of their SCF program, past the original invoice due date.

FlexTerm, when combined with the structure of the accounts receivable finance facility, offers the company the utmost control and flexibility to manage their working capital across inventory, payables, and receivables.

“Our business has a degree of seasonality and having a finance program that allows us to use the facility in a way that best suits our needs was crucial,” the controller said. “FlexTerm is an important piece to that. But beyond that, having an accounts receivable credit line that can expand when we need it sealed the deal for us.

“Then having both our accounts receivable and supply chain finance facilities under the same roof [at LSQ] definitely improves the efficiency for us. It expands our overall capacity and gives us a couple different levers when needed. Having it all into one system and being able to see the snapshots at any given point has been beneficial.”

About LSQ | lsq.com

LSQ is a market leader and pioneer in working capital finance and payments solutions. For more than 25 years, LSQ has leveraged innovative technology, credit and risk expertise, and proprietary data that empowers thousands of businesses to optimize their working capital, automate and accelerate payments, manage collections, and mitigate risk. Every year, we accelerate billions of dollars in payments to businesses and their suppliers through our LSQ FastTrack platform to help them obtain the funds they need to grow and thrive. LSQ is headquartered in Orlando, Florida. Learn more at www.lsq.com.

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