Liquid Capital of Arizona is part of an international finance company. President Joel Gottesman explains that the company’s focus is on providing financial services for small and mid-sized businesses. The company also has a product called a Purchase Finance Program geared to businesses that have bank lines that may not be adequate to fund growth.
As Gottesman explains it, the program works like this: Liquid Capital purchases inventory of all kinds for clients in the program. The inventory can be raw materials, parts, finished goods—anything a participating client needs to produce a sale. Liquid Capital will buy the inventory for cash from a client’s vendor. If a cash discount is received, it is passed along to the client. The client then has ninety days to produce a sale from whatever inventory was purchased for them. Liquid Capital then gets paid from the cash generated from the sale.
For example, if a client has gotten a big supply chain contract, the Purchase Finance Program enables the client to stretch its bank line further and support growth through Liquid Capital’s inventory finance program. Banks like the product because they have first security interests in all the assets of borrowing customers—including inventory—and the banks are not asked to subordinate their loans to Liquid Capital. “It works hand in hand” with bank financing.
The Purchase Finance Program was a new product for Liquid Capital, introduced in 2014. The new program has been well received and a success for clients.