Case Studies
Receivables Funding True Lifeblood for Home Medical Supplies Distributor
Armed with a solid business plan, Shirish Mody launched Homeline, Inc., in Louisville, Ky., in 1999 to meet local home healthcare organizations’ growing demand for medical supplies. Homeline’s sales quickly reached levels of robust health in the Louisville market. Mody, therefore, decided to take the business national. Many would consider this a risky move in the fast-growing but increasingly competitive home health care sector.
Seeking a competitive advantage, Mody made a strategic decision to team with Bibby Financial Services, a firm specializing in receivables funding. “Utilizing Bibby at the forefront allowed us to accelerate our growth significantly and bypass many of our competitors,” said Mody, chief executive officer of Homeline.
“When I first opened the business, I knew that maintaining cash flow would be a significant strategic challenge to our profitability and growth, especially in such an aggressive industry,” said Mody.
The partnership with Bibby was the perfect prescription. Homeline has thrived. With a 400 percent sales increase in six years, the company has grown into a multi-million dollar distributor and a major player in the industry, supplying more than 15,000 products to home healthcare organizations throughout the United States.
Receivables Funding Improves Cash Flow, Sparks Growth
Bibby’s receivables funding service improves the lifeblood of any business – cash flow – by providing an immediate advance of cash against the value of outstanding invoices. As Homeline processes orders for medical supplies, Bibby funds the company up to 92 percent of the value of that invoice within 24 hours. The remaining balance is paid to Homeline, less a small service fee, once the customer payment is received.
“As our business grows, so does the amount of funding we have available, thereby allowing us to constantly meet increasing demand,” said Mody. “It enables us to buy new product and utilize our vertical distribution partners to ship additional product for new orders immediately.”
The partnership also frees up valuable management resources for new business and other critical initiatives. Bibby manages account receivables by contacting customers and collecting outstanding invoice payments on Homeline’s behalf, removing this time-consuming task from company staff. This process includes preparing and distributing statements, telephone contact with customers, payment collection and professional and detailed accounts of all transactions.
Homeline then can maintain its focus on processing orders, customer service and billing. “By managing our receivables, Bibby has taken away all my day-to-day headaches, so I can constantly focus on growing my business,” said Mody.
Many Ancillary Benefits Realized
Teaming with a financial solutions company like Bibby offers many additional benefits for Homeline. Bibby works with Homeline to determine the creditworthiness of its customers, eliminating the need for Homeline to maintain its own internal credit check department.
The company’s reputation with its vendors is enhanced as well. “Because of our relationship with Bibby, we can pay our vendors on time and maintain a solid reputation with this important group,” said Mody.
Another benefit: Impressing new customers. “When we meet with potential new business, we tell them that we have financial support from an international conglomerate,” said Mody. “The relationship with Bibby allows us to take on additional business much easier than it would be working with a traditional bank.”
Today, Mody’s main focus is business growth, and he’s quick to point out that the company is still growing. “We plan to continue our partnership with Bibby for many more years, and are on target to double our current revenue within the next two years,” he said. “I recommend that any small or medium-sized business partner with Bibby.”