NEW YORK — Starting a business is never easy. Starting a business in an industry that doesn’t pay up front for goods purchased is nearly impossible.
This is why many fledging firms turn to factors, which can lend them money against their accounts receivables.
Rebecca Taylor, a contemporary women’s wear company that sells its lines in major department stores and top specialty boutiques across the country and in a flagship in NoLIta, needed help getting off the ground early in its development.
“We needed financing. We started off with such little capital that three months into our business, we’d used it up. Even though you’re shipping your goods, you usually don’t get paid for at least 45 days. [By factoring], we got the money 45 days in advance, which was a really big help at that point. Every dollar we could get helped us pay for growth,” said Beth Bugdaycay, chief executive officer and co-founder of the company with designer Rebecca Taylor.
On a recommendation from industry contacts, Bugdaycay and Taylor met with Gary Wassner and Jeffrey Kapelman at Hilldun Factors. Through factoring and borrowing against its accounts receivables, Rebecca Taylor grew in 10 years from $300,000 in sales and two employees its first season to up to $6 million per season and 65 employees.
Early in Rebecca Taylor’s dealings with Hilldun, the company had a straightforward accounts receivable-based relationship. During the company’s early years, operations were “very hand to mouth,” Bugdaycay said, and the firm borrowed up to the maximum against its receivables. As the company shipped goods, Hilldun would give them payments, sometimes daily.
“They would say, ‘You’ve got $700 available,’ and I would say ‘Great, give me a $700 check.’ Back then, that meant a lot to us; $700 paid another fabric bill,” Bugdaycay recalled.”
Rebecca Taylor’s relationship with its factor has shifted some. Bugdaycay said she no longer needs those daily checks, but the company continues to factor with Hilldun. The scale of their dealings and their relationship evolved as the business grew, but the benefits of outsourcing accounts receivable have stayed the same, she said.