......... no money for 30, 60, 90 days.
Welcome to the oil patch.
Once one is established and running right, it's no big deal.
And the oil patch isn't unique, it's common everywhere.
While you wait for 90 days to come due, pay comes from the jobs 3 months ago.
The issue with stopping factoring is you got paid 80% of what jobs you did
30-90 days ago.
So now, there is nothing, (not a single dime) coming in for 1-3 months.
To a factory.
The owner is a shady corporate raider type.
Buys well capitalized small factories, at good prices. (Simple, smart)
Maneuver the real estate into one of his shells, and leverage the business to the max.
If the business starts paying the debt down, he borrows more.
If it fails. GREAT! He bankrupts the business, let's the lenders clean the
equipment out of HIS building, and rents the space. While walking away
With the borrowed money in his pockets.
He got into this factoring deal when too many things went bad at once,
now he is stuck. Not an office guy, but my mental calculations based off occasional monthly sale numbers and knowledge of factoring puts us at
$3-5million annually lost to "interest".
Not a big outfit, that's quite a bit every year. For something that only payed off for a few months, years ago.
