Overview
Advantageous Systems (“ADS”) manufactures and services water purification systems that remove pollutants from well and waste water. ADS’ water treatment technology is critical for farmers, especially in drought-affected regions where water reusability is vital to keep costs low.
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Problem: Growing with Constrained Cash Flow
Manufacturing water treatment systems is capital intensive and ADS suffered from cash flow constraints due to slow payment speeds and capex requirements. As ADS scaled production, they faced three major challenges:
- ADS’s agricultural customers typically paid invoices via check, or manually remitted an ACH or wire. Additionally, agricultural payment cycles typically occur just twice a month, causing 15+ day payment delays.
- ADS systems frequently cost $250,000+, forcing many potential ADS customers to forego the purchase or request long payment terms which resulted in lost revenue for ADS.
- Many customers attempted to finance their purchase to avoid large upfront costs; however, securing a traditional equipment loan can be incredibly time-consuming, which delayed production and increased collection times.
“We’ve never been able to capture this much cash flow upfront. And we’ve actualized meaningful revenue growth by offering Financing“
Solution: Alternative Payments
ADS wanted to improve cash flow without raising debt or equity to finance new water treatment systems. Alternative was able to accelerate end-customer payment speed while offering flexible invoice financing, driving working capital improvements and revenue growth for ADS.
Highlights of the partnership include:
Flexible Invoice Financing
ADS now offers 30 – 150 day invoice financing to customers. This increased flexibility allows ADS to drive new business and close deals faster. ADS also leverages Alternative’s financing option to upsell customers on larger systems and strengthen customer relationships.
Payment Time and Collections
The Alternative Financing payout time of less than 24 hours has dramatically improved collection times. ADS also utilizes auto-pay to automate customer payments and improve collection speed by 15+ days.
Cash Flow Improvement
Alternative is driving meaningful cash flow for ADS by:
- Improving payment collection times
- Providing capital to build new systems through invoice financing; and
- Increasing revenue through new business wins and upsells
Results: 15%+ New Revenue Growth
ADS experienced significant improvements just months after introducing Alternative’s invoice financing option to customers.
- $1MM+ Financing volume approved
- 40% of customers requiring Alternative Financing for payment
- 15% increase in annualized revenue from new business wins
- 70% decrease in invoice collection times
“Customers are now demanding to pay with Alternative Financing given the flexibility and convenience it offers”
