In the highly competitive aviation industry, maintaining consistent cash flow is essential for growth and stability. AVVIA, a company specializing in aircraft parts, faced a pivotal moment in early 2024. Despite being a reliable supplier for major international airlines, AVVIA's access to traditional bank financing was blocked due to its heavily concentrated client base. With 95% of its revenue tied to just two customers and payment terms stretching up to 120 days, AVVIA needed a more flexible financing solution to close cash flow gaps and maintain its growth trajectory.
That's when they turned to Summar Financial for the funding solutions that traditional banks couldn't provide.
The Challenge
By early 2024, AVVIA's financial health had become increasingly strained. A $1 million credit line from a domestic bank was no longer sufficient to cover the growing demands of its clients. With the bulk of its revenue concentrated on just two major customers, traditional lenders were wary of the risk. Adding to these difficulties, AVVIA had a tax backlog and unpaid IRS dues, further tightening its liquidity.
Despite generating $24.6 million in revenue in 2022 and $23.7 million in 2023, AVVIA was unable to secure additional credit. The company also didn't meet the covenant requirements for government-backed programs, leaving them with limited financing options.
The Solution
Referred by a broker, Summar Financial quickly stepped in with a tailored factoring solution. We structured a $5 million facility, leveraging AVVIA's receivables from its major clients. Central to our approach was securing credit insurance, allowing us to assess the risk of AVVIA's debtors and provide funding based on their creditworthiness. Despite the challenges of client concentration and industry-specific obstacles, Summar delivered the liquidity needed to stabilize AVVIA's operations.
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The Result
Within just three months, AVVIA was able to settle its tax obligations and refinance existing debts. The liquidity infusion not only ensured the company could continue its day-to-day operations but also helped preserve strong relationships with its clients by honoring long-term payment terms. This newfound financial flexibility enabled AVVIA to keep growing despite the challenges of extended payment cycles.
Transition to Banking
Summar's role went beyond providing immediate working capital —it set the stage for AVVIA's future financial stability. Within months of working with Summar, AVVIA secured a $8 million line of credit from a bank thanks to the liquidity and financial confidence that our factoring solution generated. This case exemplifies how factoring can serve as a vital bridge for businesses facing concentrated revenue streams and cash flow challenges. Without Summar's timely support, AVVIA might have remained undercapitalized and struggled to meet its financial obligations.
This case demonstrates how factoring can be a powerful tool for companies dealing with high client concentration and liquidity constraints. Summar Financial's proactive approach—securing credit insurance and offering customized financing—enabled AVVIA to access traditional bank credit, even when conventional funding seemed out of reach.
If your clients are facing similar challenges, we invite you to explore how Summar Financials' factoring solutions can help them bridge the gap to security and growth. Contact us today for an exploratory meeting and learn how we can work together to provide the financial flexibility your clients need.