Accounts Receivable Financing – Teddy Needs a Bath

teddy needs a bath mark cuban Accounts Receivable Financing updateIt’s always exciting to follow the success of a Shark Tank funded business. This week’s show profiled Nicole Townend of Teddy Needs A Bath ®, now available in over 450 Babies R Us stores nationwide. Sales are on track to hit $1,000,000 over the next 12 months. Originally, Nicole’s deal with Mark Cuban included $100,000 for 30% equity and a 10% royalty until his investment was recouped.

If you read Shark Tank Blog’s interview with Nicole Townend after the show aired, it shared some insider information about how the deal was ultimately structured. Instead of taking equity in the company, Cuban provided purchase order financing and accounts receivable financing (also known as factoring). These are financial tools that are readily available to any entrepreneur looking to grow their business. Swimming in the Shark Tank isn’t an entrepreneur’s only option!

Accept the Big Order

Let’s break down how these finance tools work using Teddy Needs A Bath as an example. Any time Nicole gets a purchase order from a reputable company like Babies R Us, she needs to get her product manufactured to fulfill the order. Many times manufacturers require upfront payment for large orders. If she doesn’t have cash available, she would be forced to decline this dream order. With purchase order financing, her supplier is paid to produce the product. Once Babies R Us receives their Teddy Needs A Bath order and pays Nicole’s invoice, the financing company distributes proceeds back to Nicole. She gets a short-term investment tool to support the large order and can adjust the loan basis up/down as needed. If there’s a seasonal spike in orders, she can adjust the loan up. If she’s having a slow spring, she can stop using purchase order financing. There’s no long-term commitment.

Accounts Receivable Financing

Take this example one step further. Nicole sends Babies R Us her invoice with payment due in 60 days, per her agreement with the company. She has urgent business costs. She could use accounts receivable financing to get payment on her invoice sooner. It’s another short-term financing tool where she could use her invoice to Babies R Us as collateral. She could get up to 80 – 90% of her invoice within days instead of months.

Think Like a Shark

Shark Tank only features updates on thriving businesses and these are the finance tools that Mark Cuban is using to help Nicole grow her business. If a billionaire shark believes in the power of purchase order financing and accounts receivable financing, it may be time to take a closer look at your financial options.

Dan Casey, founder and CEO of purchaseorderfinancing.com, believes every business has a story to tell. He’s been listening and helping small businesses grow exponentially since 2002 using a creative combination of finance tools. He’s been featured in publications including Entrepreneur Magazine, Entrepreneur Online, Small Business Trends Online, The Washington Post, Crain’s Chicago Business & American Express Open Forum. Visit www.purchaseorderfinancing.com and be sure to mention Shark Tank Blog to get a free subscription to Fast Company or Entrepreneur magazine.*

*Must qualify for financing to receive special offer exclusively for SharkTankBlog.com readers.

 

About Rob Merlino

Entrepreneur, auteur, raconteur. Rob Merlino is a blogger and writer who enjoys the Shark Tank TV show and Hot Dogs. A father of five who freelances in a variety of publications, Rob has a stable of websites including Shark Tank Blog, Hot Dog Stories, Rob Merlino.com and more.

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