Meet Fundbox customer Ricardo Lopez, President of Prime Industries, a steel processing house located in Ontario, CA, since 2010. His company takes raw material from steel mills and cuts the steel, servicing a variety of businesses. He’s worked in the steel industry since he was a teenager and has tackled projects for industries ranging from automotive to construction.
You can see the results of Ricardo’s labor, and companies like his, every single day. For example, Prime Industries works frequently in the geotechnical industry. Without steel processing, the San Francisco Bay Bridge wouldn’t quite look the same, and nor would many other buildings, monuments, and manufacturing processes.
Diverse customers are a competitive advantage
Prime Industries is purposeful about working across many different industries. Where there’s a need for steel, Ricardo wants his company to help. “We don’t really necessarily focus on one particular item,” he says. “Anything we can make with steel, we’ll try and go after that industry.”
No job is too big or too small: Ricardo aims to work with many different clients, and Prime Industries works with small businesses and Fortune 100 companies alike. “It could be a contractor that comes in to buy 10,000 pounds of material just because they’re building a new patio or a deck even in a home project,” he says. “We really don’t limit ourselves to [just] big companies.”
This willingness to adapt to their clients’ needs helps keep operations under control. Ricardo explains that he appreciates diversity: “We try and be a little diverse [in our customer base],” he says. That way, if a few customers get quiet, there’s a greater chance of business with another customer. Distributing business among different types of customer relationships “makes it easier and a little less stressful” for Prime Industries.
Getting ahead of cash flow gaps
No matter how diverse his customer base, Prime Industries does occasionally experience uneven cash flow.
That’s one common problem that Fundbox aims to solve with. According to Ricardo, using Fundbox with his business customers makes it easier to get paid promptly and more predictably.
“With Fundbox, getting paid as we’re delivering materials, it makes it so much easier because we’re paying our materials at COD [cash on delivery],” says Ricardo. “I don’t have that backlog of ‘hey, I got to wait to get paid to pay this stuff’ because then you start to get a little anxious.”
While stressful days are a common part of running a business, uneven cash flow and waiting for payment on large orders can fuel an uncomfortable level of anxiety.
“The thing that always makes you lose sleep is when you have a super busy quarter and you see your payables go from $100,000 to $260,000. You look at your receivables and you say, ‘yes, it’s coming in,’” Ricardo notes.
He warns that when customers pay their Net-30 invoices after 45 days (or even later), you’ll always be paying only your oldest invoices. “It’s almost like robbing Peter to pay Paul…what you think you’re making, it doesn’t really ever hit the bank.”
Net-30 invoices are one predictable cause of delayed payments, and one way to reduce the amount of delay is to reduce invoicing on terms. To minimize risk, Ricardo is careful about which customers receive net payment terms, and how generous those terms will be.
“If we’re going to take the risk and finance you, it’s got to be really worth it,” Ricardo says.
He turns to Fundbox when working with customers that order consistently and who can benefit from longer payment terms. When these partnerships are a good fit, Prime Industries can turn their money over quicker while the customer benefits from additional time to pay. Ricardo says he prefers a win-win situation, and only uses Fundbox when it benefits both parties—even if it takes a little explaining.
Another way Ricardo cuts down stress while serving many clients is by using Fundbox for managing payments and cash flow. Ricardo learned about Fundbox through a flyer in the mail, and says that the straightforward simplicity of setting up Fundbox for both his business and his clients was what initially piqued his interest in the platform.
Previously, Ricardo had worked with invoice factoring companies to help manage client payments, but working with those types of companies (also called “factors”) didn’t feel right. According to Ricardo, working with a factor “almost feels like you’re losing control of part of your company.”
Results: Happy customers and 20% growth
Ricardo recounted one example of a time when a customer changed their mind and benefitted from signing up for a new payment process. He spoke to one of his customers about using Fundbox to pay their bills. He’d mentioned it a few months prior, but the customer wasn’t interested.
More recently, Ricardo suggested Fundbox again to the same customer, but this time he explained that the benefits would be twofold. This customer used American Express for their payments, and Ricardo felt they could both profit by switching to Fundbox.
He explained the benefits to his customer: “For me, it works out to be a little bit cheaper than processing fees on American Express. For you, it’s going to give you an extra 30 days from a normal Net 30 and on your labor jobs. It’s going to be the same thing.”
Just one day after that conversation, the customer applied for net terms with Fundbox, and they received approval for a credit line of $40,000, all by eight o’clock in the morning.
Approximately 15 percent of Prime Industries customer base currently uses Fundbox to pay. That sounds like a small number, but those customers are ones he relies on. Ricardo estimates that the 15 percent of his customers that use Fundbox generate 60 percent of sales.
Now, time for the big question. Has Fundbox helped Ricardo’s business grow? According to Ricardo, “I would say the growth on our revenue with our existing customers, we’ve been able to hit 20 percent growth.”