Finance Company Wants to Help Auto Suppliers

Hennessey Capital Solutions (HCS) and GE Commercial Finance have inked a deal that could make available hundreds of millions of dollars of short-term credit to automotive suppliers. Automotive suppliers are currently feeling the pinch of rising material prices, off shore competition, credit tightening and extended customer payment terms. Decreasing cash reserves force suppliers to pursue short-term working capital to fund business operations and sales growth.

From Michigan Banker

HUNTINGTON WOODS, MI — Hennessey Capital Solutions (HCS) and GE Commercial Finance have inked a deal that could make available hundreds of millions of dollars of short-term credit to automotive suppliers.

Automotive suppliers are currently feeling the pinch of rising material prices, off shore competition, credit tightening and extended customer payment terms. Decreasing cash reserves force suppliers to pursue short-term working capital to fund business operations and sales growth.

Finding this capital is difficult, as venture markets are unfavorable and banks are not always able to provide increased availability of funds.

“The HCS strategy is now ready to scale up to support a broad base of supplier requirements,” said Tom Cross, president of Hennessey Capital Solutions.

HCS gives suppliers options to accelerate payment of receivables in order to meet requirements for short-term working capital. Suppliers can sell their receivables into the HCS program – receiving cash for 100 percent of the face value less a small finance fee. The program also offers suppliers and their banks the flexibility to control which receivables are sold and the timing of these transactions.

Selling receivables into a special purpose vehicle (SPV) has historically been the tool of larger companies to generate incremental working capital at affordable rates. The expense to set up and maintain such a facility prohibits usage by most companies. By leveraging its proprietary technology platform called HCSPay, HCS makes this same strategy available to all businesses. HCSPay tracks trade transactions between suppliers and their customers and uses this information to provide suppliers with daily options to sell receivables into the HCS program.

“Our technology has been solid for some time, but the pool of funds we had to work with was small in comparison to the billions of dollars of transactional financing required by the automotive supply chain,” said Frank Hennessey, chairman of HCS. “The GE deal means we can expand exponentially, and that’s exactly what we intend to do.”

Suppliers receive cash payment from HCS within 24 hours for receivables purchased.

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