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Guitar parts supplier no longer sings the cash flow blues

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UPS Capital Cargo Finance hits all the right notes.

Ever since he can remember, Larry Davis has loved music. He shares that passion with his wife, Wendy. One day, back in the late 1970s, they needed a new pickguard for a guitar. That’s when they realized after-market guitar parts, like pickguards, weren’t readily available. So, Wendy started making them in their home. Soon, Larry hit the road to sell them, and WD Music Products was born.

“Basically, our capital was in our inventory. And our inventory was in transit. They call it a ‘vicious cash conversion cycle.’”
 – WD Music’s Larry Davis

Today, WD Music, based in North Fort Myers, Fla., is a one-stop supplier for all things guitar – a multi-faceted manufacturing and distribution company catering to the wholesale guitar trade worldwide.

“We import the vast majority of our products from Asia,” Larry Davis says, “and over the years we’ve developed a great relationship with UPS – using the company for air freight, ground transportation, customs brokerage and cargo insurance.”

‘Losing sleep’ over cash flow

Just a few years ago, Larry began to take advantage of a new UPS Capital service, one that’s been called “the best-kept secret in alternative financing.”

“Our problem was cash flow, plain and simple,” Davis says. “And I was losing sleep over it.”

“We had to lay out a lot of money prior to receiving and shipping goods – 30 percent upfront, and the remaining 70 percent before our cargo shipped,” he adds. “That was money we couldn’t use to order more goods. Basically, our capital was in our inventory. And our inventory was in transit. They call it a ‘vicious cash conversion cycle’ and now I know why.”

WD Music already had a revolving line of credit with their bank. But, according to Davis, it just wasn’t the best product to meet their business challenges.

“We established relationships with some big new customers which challenged our cash flow even more,” Davis says. “As we worked to keep up with even higher demand, the stress was really getting to me.”

That’s when UPS Capital® account manager Greg Kleehammer told him about UPS Capital Cargo Finance®.

“Once Larry heard the details, he was immediately interested,” Kleehammer recalls. “Cargo Finance allows WD Music to borrow against the commercial invoice amount of their in-transit inventory, with no collateral required. Pricing and contract terms are simple and reasonable, and payment terms match up perfectly with Larry’s cash-conversion cycle.”

Growing the business

“I had no idea this product even existed until Greg told me about it,” Davis says. “It’s given us the working capital to buy more inventory, fill more orders and go after larger accounts that, previously, we would not even have thought about.”

Plus, it has allowed Davis to invest in new equipment and hire additional staff to handle the increase in business. So, what would he tell other businesses in a similar situation?

“This service could not be working any better for us. If you’re importing goods that have to be paid for in advance,” he says, “UPS Capital Cargo Finance makes a lot of sense.”

Learn more about one of the best-kept secrets in alternative financing.

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