PO Financing success story |

PO Financing

Cocoa exporter
$1.5 million in financing

Context

One of the leading Ecuadorian cocoa exporter was selling large volumes of both semi- processed cocoa and cocoa beans to reputable buyers throughout the world. The cocoa exporter exclusively sells high-quality Arriba cocoa products, of which Ecuador produces over 60% of the world’s supply.

Due to volatile worldwide cocoa prices, the cocoa exporter needed a flexible financing solution. As most cocoa sales are paid upon delivery of the product, factoring was not an optimal source of capital. Additionally, a bank loan was not sufficiently flexible to meet the exporter’s needs.

The cocoa exporter and EHB Capital discussed the potential for purchase order financing. On average it took the exporter around 30 days from receipt of the purchase order to when it processed the beans for sale. At this point EHB Capital would be paid immediately.

Solution

Although EHB Capital prefers to offer its clients a factoring service, given the transaction’s low risk profile, EHB Capital gave the exporter a $1 million purchase order financing deal.

The cocoa exporter has been our client for almost a year. We continuously adjust their threshold from $500,000 to $1.5 million to meet the seasonality of our client’s business cycle.

 

Success

EHB Capital has been able to help the cocoa exporter to find cheap financing that matches its exact needs. The export can now take full advantage of the cocoa pricing cycles. It can sell more when the prices are high and sell less when the prices are low.