Rapid access to cash in a mission-critical sector: S3 Industries and Accelerated Payments
S3 Industries supplies essential components to the oil and gas industry, where competitive forces and rising costs can put finances under pressure. Invoice Financing from Accelerated Payments meant that S3 Industries could accelerate its payments by releasing cash trapped in outstanding invoices and grow its business across North America.
The petrochemical industry does more than supply fuel to the energy sector. Its products are used in everything from cosmetics to medical supplies, but the process of getting oil and gas from the ground has never been easy. S3 Industries, which has offices in Edmonton, Alberta, and Texas, supplies the sector with precision-manufactured equipment, including what is known as high-pressure iron. These components are used on the pipelines of fracking companies, who fracture the underground shale plate with high-velocity, high-pressure sand and water to extract oil. This means S3’s components come under extreme stress: they must be manufactured to the highest standard and be easily swapped out for replacements when they reach end-of-service.
The components are made by the company’s Tier-1 manufacturing partner in South Korea. However, the pandemic and rising fuel costs put pressure on S3’s cashflow. Not only did demand dip during lockdown, but logistics costs also soared. The knock-on effects on S3 were that its customers wanted longer payment terms, extending to 90 days or more, even as its shipping costs shot up. A shipping container from Korea to the US that previously cost $3,000 had jumped to nearly $15,000. S3 Industries needed a way to ease the resulting pressure on its cashflow. The solution it found was Invoice Financing from Accelerated Payments.
- Accelerated Payments provided an invoice financing facility to S3 Industries, delivering 80% of the value of an outstanding invoice that is immediately available as working capital
- An easy-to-use online portal allows S3 Industries to select which invoices it wants to finance and when
- As S3 Industries adds new customers, it can request an increase in its funding online and receive a reply in as little as 24 hours
- The funding provides much-needed financial flexibility to S3 to grow its business in North America
- Accelerated Payments makes a balance payment to S3 once a customer pays its invoice
BRIDGING THE GAP WHEN CLIENTS EXPECT MORE
Invoice Financing from Accelerated Payments became a flexible, reliable, and rapid source of funding for S3 industries, at a time when getting finance from its bank wasn’t feasible. The funds available through Accelerated Payments meant that S3 Industries was able to maintain good customer relationships in what is becoming a very competitive industry – especially post-pandemic.
“Since Covid-19 and the downturn, if we hadn’t adapted, our core customers would’ve looked at other avenues: if we didn’t extend or amortize some of our payment terms, another supplier would,” said Kyuin Shim, President of S3 Industries. He said the Invoice Finance solution provided by Accelerated Payments let him meet his clients’ demands and not lose out to the competition. “Accelerated Payments filled that gap for us.”
That became especially important because, although the company’s revenues will grow threefold this year following the rebound in trade post-Covid, Kyuin noted that ‘’customers have not gone back to paying as quickly as they had previously.’’ Logistics costs have also stayed high. S3’s ambitions to expand its reach in new markets across North America would have proven difficult to achieve had it not been flexible with the payment terms it had with its customers.
Since the company has returned to growth and has benefited from the Invoice Finance model, Kyuin sees himself continuing to work with Accelerated Payments into the future.
“Accelerated Payments is such a helpful bridge resource to us,” he said. “There are always going to be those crunch issues, so considering how easy the facility is to use, it’s definitely a facility I’ll keep using.”
BENEFITS FOR S3 INDUSTRIES AT A GLANCE
- Rapid access to funds that its bank could not deliver
- S3 receives a more flexible working capital solution on a non-recourse basis – no requirement for personal guarantees or long-term contracts
- Improved cashflow that allows S3 to meet the extended payment terms its customers wanted, with invoice financing as a bridge
- Easy-to-use software that makes it simple to submit its chosen invoices for financing
- Helps the company stay competitive as a distributor of high-quality components, even as competitors attempt to gain market share
“Accelerated Payments is such a helpful bridge resource to us. There are always going to be those crunch issues, so considering how easy the facility is to use, it’s definitely a facility I’ll keep using.”