This international cosmetics company faced the challenge of managing multiple accounting platforms across its worldwide locations. To consolidate these platforms into a single, unified system, the company sought to implement a global ERP system – a massive undertaking with an $800,000 price tag.
The company initially planned to finance this investment out of existing working capital. However, with project costs rising as new capital needs entered the pipeline for the coming year, the company decided to pursue outside financing to cover the costs they had incurred to date on the ERP project.
Company executives first considered their primary banking relationship, only to learn the bank did not have an appetite for intangible assets such as software. Similarly, the vendor was unable to deliver a financing option for the project.
First American provided a cash reimbursement for the ERP implementation. The project was structured as a 36-month capital lease with a low, fixed rate to create more predictable cash flows. As an added benefit, the transaction allowed the company the flexibility of keeping funds available for future needs.
Not only did the lease reimburse the company for the out-of-pocket costs of the software licensing, but also for an additional $400,000 in implementation and consulting fees incurred throughout the project.
The company was able to quickly and cost-effectively replenish cash reserves in anticipation of upcoming capital needs. Following the ERP project, the company turned to First American again to finance both a $2.5 million renovation and a $1 million warehouse management system.
Ultimately, this long-term, robust relationship has become a strategic resource for the company, providing them with the solutions they need to better manage their complex enterprise operations and drive growth.