Customer Stories

How MapleX Keeps Its Balance Sheet “Clean” from Red Ink

maplex shampoos- peppermint, lavender, and tee tree

Dave Thompson left personal finance for the personal care industry. The CEO of MapleX Naturals Inc. explains how one smart accounting practice helps expand his business across Canada.

 

The personal care industry has become one of the most competitive industries in North America. The advent of online digital sales has fueled the growth of brands across the country. It has also made the fight for precious shelf space in brick-and-mortar stores even tougher. 

With longer payment terms from large retailers, it’s difficult to grow a brand. How does a startup fill new orders without the cash flow in place to do so? And what if they sell out and the retailer wants another order (even though they still haven’t paid already?) 

The solution to the challenge of managing cash flow lies in the story of the Scarborough, Ontario-based personal care company MapleX Naturals

The Who

MapleX is an emerging brand in the Personal Care market offering a variety of Castile Soap fragrances. 

The company has a lot of “Canada” in its products – seriously. Among other natural vegetable-based ingredients, the company infuses its Castile Soaps with Canadian Maple Syrup.

Canadian maple syrup is a popular topping for breakfast meals. But the syrup extract is also full of antioxidants that can improve skin health and reduce wrinkles. 

The bath and shower products market is a booming industry with a value of USD $41.33 billion in 2019 and growing. Companies that can differentiate themselves in a crowded market can quickly build market share despite the competitive landscape. 

Dave Thompson, the CEO of MapleX Naturals Inc. since January 2019, had a successful career in financial marketing and management. So, he was familiar with traditional and alternative funding options when it came to building a brand. However, a company of MapleX Naturals’ size was looking to expand its market presence beyond digital sales and broaden its retail base. 

@maplexnaturals instagram feed
@maplexnaturals

The Challenge

MapleX produces five different fragrances, ranging from Lavender, Peppermint, Coconut Lime, and its Pure Castile Body Wash soaps. It maintains a cross-border supply chain that ultimately distributes to online sales and retail distribution across Canada. Early in their growth cycle, Dave understood what happens when a small company with an increasingly popular product experiences a bottleneck in order fulfillment due to cash flow. 

What sort of funding would provide the best option to grow the business and eliminate these bottlenecks?

“Initially, we were self-funded. I started with and continued to use my own funds, but it reached a point where it wasn’t prudent anymore,” he says. 

Dave explored traditional funding options. However, banks wouldn’t provide a loan, despite the obvious, growing demand for MapleX products. 

“Even though we had proof of purchase orders from a major brand, we lacked an established legacy of credit,” Dave says. “We couldn’t get that loan, even though we had guaranteed payment. Plus, you still have to go through a 30-page agreement just to get a loan.”

Meanwhile, alternative lenders were seeking proof of rented office spaces and other specifications that didn’t align with the firm’s business plan.

That’s when MapleX explored invoice funding as a way to get access to working capital. Dave had been familiar with invoice factoring from his background in finance. He soon discovered FundThrough online, filled out an application, and quickly established a line of credit with the Express Financing Product

The Solution

With Express Financing, MapleX could finance outstanding invoices quickly up to the available limit. But as orders grew for MapleX’s increasingly popular products, so too did the need for funding to fulfill orders. MapleX soon qualified for FundThrough’s Velocity Invoice Factoring product, which enables companies to get access to unlimited funding based on the size of their invoices in as little as 24 hours. “In a growth stage, factoring has become something that we rely on despite some of the costs,” he says. 

As Dave explains, in some cases a new client will request a second order… before they’ve even paid for the first. Velocity helps give them the cash flow they need to start that second order and keep products flowing to the stores. 

Velocity, best suited for companies that invoice larger customers at least $15,000 per month, would also be critical to the company’s efforts to obtain cash flow during COVID-19

Traditionally, MapleX works with larger retailers that offer payment terms of 60 days. However, at the onset of COVID, some retailers expanded their payment terms from 90 to as many as 150 days. Rather than wait up to 10 full payroll cycles, Dave works proactively with FundThrough to optimize the timing of his invoice funding. 

“Knowing that the factoring is available, I can fund it at 60 days, or I can fund it after 30 knowing that I have that option,” he says about the flexibility of his strategy. “I can trigger that factoring at a specific period, even if I might not need the funding right away.”

Looking Ahead

Dave also notes that invoice funding helps improve MapleX’s relationship with suppliers, who expect to receive their payment within 30 days regardless of whether the larger retailer has paid its invoice on time.  

“Your expenses are monthly,” Dave says. “So to wait for a 90-day period to get paid is a fairly long time. In some cases, some companies might not survive [as they wait] for their second or third payment.”

Further, Dave says that factoring is an individual business decision, but the right one for MapleX. Velocity has helped his company execute faster, maintain better relationships with suppliers, and receive credit in a tightening market. 

“[Velocity] allows us to develop the business faster,” he says. “It gives us the confidence to go forward with cash flow to cover immediate expenses, particularly for a small business as we initially struggled with cash flow.”

Moving forward, the company plans to grow much larger in the years ahead. The benefit of repeat buyers coupled with access to credit will help it navigate the plans in its pipeline over the next 6 to 12 months, which includes new products. 

“We can do all of this based on the team we’ve built including FundThrough,” Dave says.

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