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Financing: A New Twist

A CEO explains terms that she has with her suppliers that put a new twist on supplier financing.
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Jo Anne Schiller, CEO of the $7.2-million Everyday Learning Corp., an educa-tional publisher based in Evanston, Ill., relies on a new twist on supplier financing.

"Because our business is so highly cyclical, we've had to be inventive," she explains. After six years of operation, Everyday has a well-established pattern: orders (and revenues) are tied to the beginning of each school year, but production costs build up as much as six months earlier.

So, Schiller says, "I tell each supplier that we need longer payment terms to carry us through our slow season. To prove that, I share with them the highlights of our financial history, our projections for the upcoming year, and a graph that shows our seasonal nature." Think of it as a minipitch to an alternative banker: "I want them to understand our profitability, our growth potential, and our cyclical cash flow."

There's an extra incentive for suppliers who agree to a longer payment schedule. Schiller guarantees that "Everyday Learning will continue to bring them our repeat business so long as they don't raise their prices more than the industry average in any year."

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Last updated: Oct 1, 1995




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