How a Major Sinaloa Grower Expanded with ProducePay
Every produce grower wants to grow. Expansion widens the scope of the business, creates access to new commodties, and boosts revenue.
But expansion also comes with a new set of challenges. Above all, it requires additional capital – which can be challenging for growers to obtain without risking their land collateral. Generating expansion capital while maintaining cash flow to operate the business can be such a tough ask that many growers turn down opportunities to expand.
This was the situation faced by an agribusiness in Sinaloa, Mexico – until they found a solution with ProducePay.
The Challenge: Expanding a Produce Business
Focused on cultivating Roma tomatoes and American cucumbers, the Sinaloa-based grower had achieved a significant increase in yields and generated solid sales in the U.S. market.
Following this success, the company wanted to expand its business into distribution – meaning it would not only grow its own products, but would also buy and market produce from other growers.
However, achieving this goal meant increasing the frequency and volume of shipments. This required a large investment that the company could not afford – at least, not without risking its field operations. (Because the company was investing in the expansion of its cultivation area, cash flow was extra squeezed.)
Because of these financial pressures, it wasn’t possible to expand into distribution without impacting their operations and risk delaying payments to suppliers.
The Solution: Quick Pay Financing to Improve Cash Flow
As the company looked for a financing solution that would allow them to turn their distribution vision into reality, it reached out to ProducePay.
ProducePay assisted the company by offering Quick-Pay financing, which covers 50% of the value of their shipments. Under this offering, we assumed part of the financial responsibility for their shipments.
When the company began using the Quick-Pay financing service, it was able to obtain half of the payment for its shipments within 24 hours of the products’ arrival at its US distribution center. Thanks to Quick-Pay, the company unlocked the funds it needed to pay partner growers. In addition, it was also able to avoid decapitalization, continue scaling up its business, and gain the capital to execute its expansion plans.
As one of the company’s managers said:
“Since we’ve started using ProducePay’s instant financing solutions, we are able to buy more volume, while significantly increasing our margins by adding a distribution option to market our products.”
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