How We Structured a Flexible Factoring Deal to Support a Telecom Supplier’s Cash Flow Needs

Introduction

At Porter Capital, one of the things we pride ourselves on is our ability to adapt. Every business we work with has its own challenges, timelines, and internal mechanics. That was especially true in a recent deal we structured for a fast-growing telecom supplier in the middle of transitioning its account relationships and preparing for a major delivery to a Tier 1 wireless carrier. For another example of how we helped a fast-growing company overcome a financing gap, see our critical bridge financing for a fast-growing advertising firm.

They came to us with a time-sensitive need: secure working capital to support operations during a transition from a previous vendor relationship while also preparing to invoice nearly $4 million in telecom infrastructure and software work. There were moving parts everywhere—account transfers, new billing structures, and a mix of pre-build and post-build invoicing. But by keeping the conversation open and solutions-oriented, we built a factoring structure that gave them flexibility without compromising risk controls.

Understanding the Client’s Invoicing Challenge

Pre-Build vs. Post-Build Invoices

In the telecom world, invoicing isn’t always straightforward. Sometimes, vendors can bill for materials or software before the full infrastructure is installed—this is known as “pre-build” invoicing. Other times, billing only happens after everything is delivered and operational—”post-build.”

This client was working with major telecom names and was preparing to invoice a significant portion of their work as pre-build. That created complexity for us. Pre-build invoices tend to carry more performance risk, especially if the ultimate delivery or integration is delayed. So, when factoring those invoices, we have to strike a careful balance between supporting the client’s needs and managing potential exposure.

Structuring a Deal That Matches Their Cash Flow

Initial Proposal: 65% Advance on Pre-Build Invoices

We initially proposed a 65% advance rate on eligible pre-build invoices. This is fairly standard when factoring higher-risk receivables, especially in industries like telecom where delivery and acceptance milestones aren’t always clear-cut.

Our client, though, had immediate cash flow pressures. They were ready to issue millions in invoices and needed a structure that would free up working capital faster to support current obligations and future deployments.

Negotiating to 70%: Aligning with Their Immediate Needs

After a detailed discussion around the nature of the work, the names on the invoices (including two of the biggest telecom brands in the U.S.), and the supporting documentation they could provide, we revisited the advance rate. Ultimately, we agreed to go up to 70% for pre-build invoices—giving them faster access to more capital without adding unnecessary friction.

This wasn’t just about being generous—it was about listening. They made a clear, data-backed case for why a higher advance would make a meaningful difference, and we responded accordingly.

Managing Concentration Risk with a Ramp-Up Period

There was another piece we had to tackle: concentration. The client’s receivables were heavily tilted toward one customer. In most deals, we impose a 50% cap on how much pre-build AR can be concentrated in a single account compared to total eligible AR from all customers. It’s a risk management tool that helps ensure portfolio diversity.

But our client was in transition—new account relationships were forming, and the bulk of their early invoices would come from just one or two customers. Imposing the cap immediately would have effectively disqualified most of the invoices they wanted to factor.

So, we introduced a 90-day ramp-up period. During that window, the 50% cap would be waived, allowing the client to factor Verizon invoices freely while their broader customer base came online. After 90 days, the standard limits would apply. This created a bridge between their immediate funding needs and our long-term risk controls.

Planning Around $4 Million in Immediate Invoices

Identifying Eligible Invoices from Major Telecom Clients

During the meeting, we walked through a preliminary invoice pool totaling around $4 million. This included approximately $1.8 million in pre-build work already completed and another $2.8 million in software scheduled for delivery the following month.

We discussed timing, eligibility criteria, and documentation needed to approve each tranche. The goal was to make sure everyone was clear on what could be funded now, what would be eligible later, and how the cash flow projections lined up.

Addressing Transfer Delays and Limited Initial Volume

Of course, nothing ever goes exactly to plan. One of the client’s team members flagged a potential issue—delays in transferring account data within the telecom client’s systems. That could push back when some invoices actually become financeable, since we need confirmation that the account transition is complete before we can verify payment terms.

Additionally, due to their transition from a previous vendor, product shipments were expected to be light in the early months. That meant the initial factoring volume might be smaller than forecasted.

We didn’t see this as a dealbreaker. Instead, we structured flexibility into the agreement: eligibility terms that allow partial funding based on verifiable deliverables, and a schedule that aligns invoice timing with funding drawdowns. As the client ramps up operations under their new structure, they’ll have access to increasing amounts of working capital.

Simplifying the Documentation Process

Using a Side Letter or Exhibit Instead of Attorney Review

Time was of the essence in this deal. Our client wanted to move quickly and avoid unnecessary legal costs or document redlining that could drag things out for days or weeks.

To keep things streamlined, we agreed to document the unique eligibility terms—such as the 70% advance rate and 90-day ramp-up—via an appendix or side letter instead of embedding them into the main factoring agreement. This approach preserved the legal integrity of the deal while cutting down on back-and-forth with attorneys.

It’s a tactic we’ve used successfully with other clients when the terms are clear, the timeline is tight, and the working relationship is collaborative.

Final Steps Toward Funding

Our Commitment to Moving Quickly

By the end of the call, we had a clear path forward. We committed to finalizing the updated documents that same afternoon, pending internal approvals. Our client started working on transferring key customer accounts and preparing to issue their next round of invoices.

Everyone left the meeting aligned, informed, and ready to execute. That’s the kind of momentum we aim to create in every deal—because in the world of cash flow, timing isn’t just important, it’s everything.

Conclusion: Why Custom Factoring Wins in Complex Sales Cycles

This deal is a perfect example of why one-size-fits-all financing doesn’t work for companies with large, complex customers and evolving billing models. By tailoring the advance rate, concentration caps, and documentation process to match the client’s needs and constraints, we were able to unlock real value—fast.

If your business is facing similar challenges—navigating customer transitions, preparing for large software or infrastructure deliveries, or simply needing more working capital to support your growth—we’d love to talk. At Porter Capital, flexibility isn’t just a buzzword. It’s how we work.