Zucchini, like all squash, was originally brought over to Europe from the Americas after the initial waves of exploration and colonization in the 16th century. The variety of squash that are commonly referred to as the zucchinis were curated in the Northern Italy in the latter 19th century.
Factoring and ABL’s story are extraordinarily similar. Beginning around the 16th century, merchants, explorers, and importers needed some type of way to facilitate cash-flow between all parties. Wealthier merchants would purchase the agreements at a discount between the importer and the chartered shipping company to ensure money was available to pay the product and the workers to complete the deal. When the product arrived, the merchant would collect the product from the charter and payment from the importer while keeping the discount as his fee. By purchasing the agreed sale, the investor became secured for payback as long as there was no act of God during the trip or fraud within the deal.
Over the last 500-years, this was the common practice of lending. Given that there were not very many business banking options at the time (or really any time until the 20th century), this allowed independent entrepreneurs to get access to capital and grow a successful business even if they did not originate from royalty or the ruling oligarchs. The security of the agreement also helped investors feel safe regarding their monies lent.
Just like with the curation of zucchini, Asset-based Lending (ABL) began to take hold as the primary source of secured lending in the latter half of 20th century. Purchasing individual invoices became burdensome as a globalized economy created the ability for a local supplier to ship to thousands of customers across the nation and the world.
Asset borrowing-base certificates replaced purchase agreements and companies were now able to use their receivables as more of a credit line than an outright sale. This not only saved on cost of capital but also allowed for more streamlined lending opportunities with current and fixed business-assets such as inventory, PO’s, and equipment.
So, what is the difference between the factoring and ABL? While both are focused primarily on AR, ABL companies also take into consideration the company’s financial performance, all current assets, and the overall debt structure. This allows for additional flexibility if the strength of the debtors is not acceptable and creates additional borrowing capacity if the eligible AR falls short of funding needs.
Cost structures also vary depending on the performance of the receivables. If a company collects well and within or before terms, an ABL credit line will be much more affordable than a traditional factoring relationship because interest charges are based on an average daily balance not the net-face value of the invoice.
While the processes are different, the bottom line is that cash is king. Give Camel Financial a call and see how we can find the right facility for you!
From Helena’s Garden: My Zucchini plant is chugging along this year some years the plant goes wild but this year it is contained itself to a small area, rearing a decent amount of squash. Also growing in the garden is several sweet basil my most favorite herb, along with a very prolific Roma tomato plant that I jarred sun dried tomato’s a few weeks ago.
Zucchini Roll-up Appetizer
- 2 medium zucchini
- 2 tablespoons olive oil
- 1 cup ricotta cheese or Burrata Mozzarella
- Jar of Sun-dried tomatoes ( I made my own this year.)
- 1/4 cup fresh basil, finely chopped
- 1/4 cup Pesto (I prefer to make my own but from a jar is ok)
- Salt & pepper
- Preheat a grill or grill pan to medium-high heat.
- Remove both ends from the zucchini. Use a mandolin or sharp chef’s knife to slice the zucchini lengthwise into slices 1/4-inch thick. Lightly brush each side of the zucchini slices with olive oil. Season with salt and pepper just before placing on the grill. Place zucchini on the grill in a single layer; don’t let the slices overlap – cook in batches if necessary. Cook for about 1-2 minutes. Flip and cook for another 1-2 minutes on the other side. When done, the zucchini should feel soft enough to roll and have light grill marks. Remove the zucchini from the grill, and place on a baking sheet to cool completely.
- Meanwhile, in a medium bowl, combine the cheese, basil, 1/4 teaspoon salt, and freshly ground black pepper, stir together.
- At this point, both the zucchini and cheese mixture can be refrigerated for a few days, until you’re ready to serve.
- To assemble, spread a thin layer of cheese mixture, place a dab of pesto in center of zucchini strip, ad sun dried tomatoes, roll up the zucchini. Set aside, and repeat with the remainder of the slices.