How a Snack Brand Is Navigating Retail Growth and Cash Flow with Invoice Factoring

Hitting the Retail Big Leagues: The Challenge of Scaling Fast

Not every day does a growing consumer packaged goods brand land a deal with a national grocery chain. But when it happens, the celebration is often tempered by a looming question: how do we fund the next steps?

That was the case for one of our recent prospects, a snack company specializing in date-based products. They had just secured shelf space with a major grocery retailer, with talks in progress for another deal with a famously discerning national chain. This growth moment was huge—but it also meant they needed to rapidly ramp up manufacturing and inventory. And that takes capital.

Preparing for a Major Launch with Kroger

Their first major deal was with a top grocery chain that required a significant production increase. The purchase order would add roughly $200,000 to their accounts receivable, doubling their current AR. Their business was healthy and profitable, but like many in this stage, they were cash-strapped when it came to funding this surge in demand.

The Promise (and Complication) of a Trader Joe’s Partnership

On top of that, the brand was in talks with another well-known retailer, one with strict internal policies about factoring. This created a wrinkle—they could potentially lock in more revenue, but would need to do so without the help of a factoring partner for that specific relationship.

Why This Snack Brand Turned to Porter Capital

We spoke with their executive team about options. What they needed was clear: funding to bridge the gap between delivering goods and waiting for payment. A $150,000 revolving line of credit with their bank wasn’t cutting it anymore. That’s where invoice factoring came into the conversation.

The Reality of Growing Pains

They had around $200,000 in outstanding receivables and were expecting that to double with their upcoming PO. They didn’t want to dilute equity, and traditional loans weren’t keeping pace with their speed of growth. Factoring, which allows a business to turn receivables into immediate working capital, offered a path forward without taking on more debt or giving up ownership.

Understanding the AR Landscape

We reviewed their accounts receivable structure. The current ledger was clean, and the customer base included large, reliable retailers. That meant lower risk on our end and potentially better rates for them—we estimated 1-2% per month, depending on volume and frequency.

The Lien Hurdle: When Your Bank Holds the Keys

Factoring is a flexible tool, but it comes with one key requirement: we need to be in the first lien position on the receivables. In this case, their current lender—a traditional bank—already held a blanket lien on all assets.

First Position on Receivables Explained

In simple terms, that means the bank has the first right to collect on any money owed to the business. For us to advance funds against those same receivables, we’d either need the bank to release their claim on just the receivables, or for the business to pay off the existing credit line.

Exploring Options: Pay Off or Partial Release

We walked them through both scenarios. The partial lien release is more common than many business owners realize. Some banks are open to adjusting their UCC filing to carve out receivables, especially if they retain liens on other assets like inventory or equipment. The team agreed to speak with their banker and explore this option.

Can Factoring Still Work If Some Retailers Say No?

One point of concern was that a potential future customer had a policy against working with factoring companies. This is rare, but not unheard of. Some retailers require direct payment to vendors and won’t re-route payments through third-party factors.

How Porter Helps Navigate Retail Policies

We reassured the team that factoring doesn’t have to be all or nothing. We can work selectively with the customers who allow it, funding only the receivables that are eligible. That still injects crucial capital into the business without impacting the accounts that must remain direct.

Strategic Factoring: It Doesn’t Have to Be All or Nothing

In this case, even if one retailer couldn’t be factored, the company still had a large, growing portfolio of AR that could be leveraged. That partial approach can still unlock significant funds, especially when combined with a volume-based rate structure.

Next Steps: What This Company Is Doing Now

We left the conversation with a plan. The company would:

• Reach out to their bank to ask about releasing the lien on receivables.
• Explore whether paying off the credit line and transitioning fully to factoring made sense.
• Consider a hybrid approach to manage different retailer policies.

Working with the Bank

The biggest immediate hurdle is the lien. But we’ve seen it resolved many times before. With a little legal coordination and transparency, banks often agree to modify their position—especially if it helps their client grow and stay solvent.

Preparing for the Next Big Push

Assuming the lien issue is resolved, we’re positioned to help them scale quickly. With factoring, they could receive cash upfront for invoices as soon as they deliver product. That means less waiting, more agility, and a faster path to meeting future demand.

Final Thoughts: Scaling with the Right Financial Tools

Not every financial tool fits every situation. But for companies on the cusp of major retail growth, invoice factoring can be the bridge between opportunity and execution. It offers flexibility, speed, and peace of mind—without the burden of long-term debt or giving up equity.

If you’re in a similar position, facing exciting growth but unsure how to fund the next step, we’re here to talk through your options. Whether it’s a full factoring program or a strategic supplement to your existing financing, we tailor solutions to fit your needs.

Your success story could be next.