Resources | Customer Success | July 29, 2022

Cash on Hand: How C2FO Helped 7 Suppliers Relieve Pressure on Liquidity With Its Early Payment Program

Early payment programs are helping companies boost cash flow as their customers lengthen payment terms to cope with economic uncertainty.

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Early payment programs are helping companies boost cash flow as their customers lengthen payment terms to cope with economic uncertainty.

Today’s small to mid-sized businesses face a variety of challenges, from navigating economic volatility to supply chain disruptions. This uncertainty makes it even more important to have a reliable cash flow and increase your working capital. While businesses are optimistic about the economy, rising inflation and interest rates mean that building your liquidity is crucial for growth.

Increasing cash on hand relieves pressure on your business during times of uncertainty and gives you the capital needed to access new opportunities. Even if your business is growing, your customers have likely extended invoice payment terms in the last couple of years.

Early payment programs, which give your customers discounts for early invoice payments, are one of the fastest and easiest ways to increase your working capital. These programs accelerate your cash flow and are more cost-effective than other financing options that businesses often use to obtain working capital — such as lines of credit or business loans.

C2FO offers an early payment platform to help companies relieve pressure on liquidity. Are you interested in using an early payment program but not sure how this would apply to your business? Here’s how C2FO helped seven other small to mid-sized companies achieve cash flow stability in uncertain times.

1. Alder Creek Gift Baskets

California-based Alder Creek Gift Baskets provides America’s largest retailers, as well as global online customers, with fun and fashionable gift baskets for life’s special occasions. During the pandemic, the business started seeing longer payment terms — some up to 90 days — from its customers, and the fees associated with credit lines, loans and other working capital programs meant these were not a viable way to increase liquidity.

Alder Creek started using C2FO’s Early Payment program to reduce customer payment periods. Through the program, the business was able to pay its suppliers on time and get better vendor pricing, which increased profit margins and helped it compete. It also allowed Alder Creek to become more financially stable and is helping it pursue its goals of opening a brick-and-mortar store and a second distribution center on the East Coast.

2. MightyGood Solutions

MightyGood Solutions started attracting the attention of major retailers such as Walmart, Target and Kroger after developing its first product: an anchor-shaped piece of plastic that’s used to comfortably carry multiple shopping bags. After the pandemic hit, the company pivoted from handy plastic products to health care supplies such as hand sanitizer, disinfectant and three-ply face masks.

The shift helped the company grow by almost 8,000% between 2019 and 2020, but despite the spike, not all profits turned into the immediate working capital it needed to grow further. C2FO’s Early Payment Program allowed MightyGood Solutions to accelerate its customer invoices and increase cash on hand. The increased liquidity enabled the company to work with supply chain partners that would improve its margins and help it access new opportunities amidst economic uncertainty.

3. Harbor Industries

For Harbor Industries, which builds high-tech displays for major retailers, the pandemic prompted a pivot from manufacturing store displays to essential hand sanitizer kiosks. Even as the company adapted, customers reduced orders and extended payment terms, impacting cash flow.

Harbor Industries used C2FO’s Early Payment platform to cope with cash flow shortages by providing more visibility and control over working capital. This helped the company recover from pandemic-related disruptions. But the benefits didn’t end there. Harbor Industries’ unique offering means that customers sometimes require upfront project investments with six- to eight-month lead times for invoicing. C2FO gave the company flexibility to take on these projects as well as work from customers that don’t offer early payment.

4. GoGo Quinoa

Based in Montreal, GoGo Quinoa processes and imports organic, plant-based, allergen-free products from Bolivian quinoa. The company’s products are available in natural food stores and major retailers throughout Canada and parts of the United States. In addition to GoGo Quinoa’s Andean farm-to-table concept, the company sets itself apart by researching and developing cutting-edge products such as trending meal solutions and sustainable packaging.

But this strategy requires a healthy amount of liquidity to fund new R&D, branding and marketing initiatives. Many of GoGo Quinoa’s biggest customers were already using the C2FO platform, making it easy for the company to set up early payments. This made a huge difference in its cash flow and ability to invest in new offerings.

As a Canadian company, GoGo Quinoa also saw benefits with its US customers. Rather than borrowing US funds from Canadian banks, the C2FO platform allowed the company to make money from American transactions because customers can accept early payment offers at the US rate.

5. The Lemon Ad Stand

At the height of the pandemic, The Lemon Ad Stand had just landed its largest contract ever — but balked at the customer’s 90-day invoice payment terms. The full-service digital agency, which specializes in web and app development, content strategy and social media, needed more reliable cash flow to sustain its operations.

The agency decided to take advantage of C2FO’s Early Payment program, which the customer already supported. The Lemon Ad Stand received its first invoice payment within a week and started seeing the value of offering invoice discounts in exchange for long-term growth and financial security. The company now credits C2FO’s Early Payment program for its ability to grow and achieve financial stability in an uncertain economic environment.

6. DMI Music

Research shows that in-store music can influence sales and customer buying behavior. This is the idea behind one of the key offerings from DMI Music, a full-service music and entertainment agency headquartered in California.

DMI Music uses a subscription model for in-store radio services that give stores a carefully curated soundtrack to enhance customer experiences. However, the subscription approach impacted the company’s working capital as invoice payments from its customers were often delayed by 30-, 60- or 90-day terms.

C2FO’s Early Payment program helped DMI Music reduce these payment terms and gain more control over when and how customers make invoice payments. This enabled the company to build liquidity and keep business operations running smoothly.

7. Baz Brothers Unlimited

In spring 2020, Baz Brothers Unlimited was able to keep one of its clothing manufacturing facilities open by using part of the business to produce personal protective equipment. The wholesale vintage clothing company kept its contracted sewists employed, turning excess fabric into masks and gowns while filling purchase orders for home goods and mail-order retail. This setup not only enabled Baz Brothers to continue operating but also boosted sales as more consumers acquired furniture and home decor during lockdowns.

But like other small businesses during the pandemic, the company started seeing longer payment terms from its customers and needed a way to bridge cash flow gaps. C2FO’s Early Payment program helped Baz Brothers increase working capital and gain more certainty around payment timelines so the company could plan for cash shortages. Accelerated payments also helped the company access the capital to create more inventory to meet customer demand and grow the business.

The payoff

Cash flow issues are probably familiar to you if you’re a small to mid-sized business navigating pandemic recovery and economic changes such as rising inflation. Even if your sales are high, late invoice payments can tie up working capital in accounts receivable and impact your business operations and growth.

For many businesses, C2FO’s Early Payment program is a tried-and-tested solution for establishing a reliable cash flow and providing the working capital needed to grow.

Need immediate access to working capital? Find out if you have any invoices you can request early payment for right now.

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