A&G Packaging combines obtaining liquidity through banks with financing customer invoices through Inversa Invoice Market
«The man well prepared for the fight has already achieved half a triumph.» With these words, Miguel de Cervantes, one of the greatest geniuses of Universal Literature, wielded a valuable piece of advice. To successfully face challenges, whether personal, professional or business, it is essential to have the foresight and to equip oneself with the necessary tools to come out of any scenario with flying colors.
Let's take this reflection to the business world. First, companies need financing to meet unexpected expenses and make investments to consolidate and manage growth successfully in a highly competitive market.
This is what A&G Packaging, a company that manufactures cartons and successfully combines obtaining liquidity through banks with a commitment to alternative financing, by financing its customers' invoices in the Inversa Invoice Marketplace.
In this article, we will discuss how the relationship between A&G Packaging and Inversa works, the importance of diversifying financing channels to manage growth and the future of alternative financing. To do so, we rely on the knowledge and experience of Javier Sánchez Rey, CEO of A&G Packaging and business consultant.
A&G Packaging, seven years dressing multiple products
The A&G Packaging project started at the end of 2015 with the aim of manufacturing cartons to dress all kinds of products for sale. From canned food to clothing. From beverages and frozen products to bakery products. The concept of dressing the product combines the practical aspect of packaging with a purely commercial and marketing point of view to achieve an attractive result. Hence, they are considered the «Silent Seller» of many brands and products.
The company owns four production units in Vigo, Granada, Alicante and Ferrol. In addition, it is acquiring a factory in the north of Spain and another in the peninsula's center. This geographical distribution has enabled A&G Packaging to work with a wide range of customers from different economic sectors.
Thus, customer diversification has become a strategic issue for the company. A diversification that, as we will see below, has also been transferred to the field of financing.
Beyond these issues, Javier Sánchez Rey emphasizes that the differential values of A&G Packaging are service and knowing how to understand the needs of its customers and satisfy them. He highlights its products' short delivery times and the final product's quality. Two signs of identity have helped the company to continue growing in sales, even in a period as complex as the current one, marked by the pandemic, the shortage of supplies and the high electricity and transport prices.
The origin of the relationship with Inversa: Diversifying financing channels
A&G Packaging's growth is precisely one of the main reasons the company decided to finance its customers' invoices through the Inversa platform. In the words of Sánchez Rey, «the company's growth levels require a lot of financing capacity.»
This successful collaboration, which began at the end of 2019, has allowed the carton manufacturing company to have an alternative financing channel to banks and, thus, an additional liquidity line.
In such a way, throughout these four years of relationship, A&G Packaging has traded in Inversa's marketplace invoices of its customers, obtaining liquidity in the short term and mitigating cash flow tensions. This is especially interesting for companies, such as A&G Packaging, that are growing quickly. But unfortunately, the way banking institutions work means they are sometimes too slow to provide financial availability that grows at the same rate as the companies.
That is why Javier Sánchez Rey maintains that for his company, «Inversa has been a good alternative for obtaining additional financing, based fundamentally on the risk and the client's payment capacity.»
Issues to take into account to get the most out of crowdfactoring
However, the CEO of A&G Packaging says that once you start using Inversa's platform, you can see that the risk of the transaction and the customer's credit score are not the only factors that investors consider when investing their money in a particular invoice. A critical asset of any company comes into play: the brand.
So it is quicker to finance the invoices of an established and well-known company among investors than those of a new business or one that needs a well-established brand. All this, even though the latter has a higher solvency rating.
Sánchez Rey also points out that, as we all know, humans are creatures of habit. Hence, if a company regularly uploads invoices from the same clients, the platform's investors become accustomed to such business, and the ability to finance them is greater.
The value of the trust
This behavior evidences the importance of companies generating trust in investors. As a result, trust is a key factor in the functioning of the economy, the financial sector and alternative financing.
Hence, working with crowdfactoring platforms such as Inversa Invoice Market is also a constant exercise in building a relationship of trust with investors who finance business invoices.
This trust, moreover, goes beyond the mere scope of financing. Thus, through crowdfactoring, many companies can make their services known to investors, build a reputation and transform them into potential customers. This strengthens their brand image and market position through word of mouth.
This brings us to a key issue when considering the future of alternative financing: the circular economy. Investors who become customers of the products they finance. And customers who invest in the products and services they consume.
The future of alternative financing
Companies that resort to crowdfactoring as a financing tool and platforms that offer these services are capital in the present and future of alternative financing. But we must include the third pillar of this financing model that complements the traditional one: investors.
Javier Sánchez Rey considers, based on the experience accumulated by A&G Packaging financing invoices in Inversa, that the actors who invest in crowdfactoring are, above all, small investors. People who «put small amounts of money at stake and diversify them a lot.» People who help companies in the real economy to finance themselves. People invest in people.
Beyond the profitability or the confidence inspired by the company to which an invoice is financed, these small investors want to invest in the real economy and bet on non-speculative products.
Alternative financing platforms such as Inversa Invoice Market make it possible to eliminate the opaque intermediary in the contracting of investment products. The CEO of A&G Packaging sums up this paradigm shift perfectly: through crowdfactoring, «you decide what you do with your money, where you invest it and where you don't.»
The power of micro-decisions
Thus, small investors can make micro-decisions about how they invest their money and what business projects they finance with it. For example, in a context where sustainability has become a central issue socially and economically, many people want to invest in companies with a strong environmental commitment. Or to support, as we noted earlier, the consolidation of a circular economy.
The rise of alternative financing will depend, according to Sánchez Rey, on a change of culture favored by the growing desire of small investors to make micro-decisions about what is done with their money and by word of mouth. A satisfied investor is the best possible ambassador for the benefits of alternative financing.
From a business point of view, having additional financing channels beyond the banking sector is of great interest for managing growth and dealing quickly with macroeconomic changes. Javier Sánchez Rey is clear: «I recommend that companies, to a greater or lesser extent, have an alternative financing platform.»
New solutions to be always ready for the fight.