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How Cadence Bank Helped Dermatec Direct Meet Financing Challenges

How Cadence Bank Helped Dermatec Direct Meet Financing Challenges

Dermatec Direct is a developer and distributor of high-quality disposable gloves that help prevent the spread of infection among medical professionals and their patients. The company has grown dramatically since it was founded in 1999, with current annual sales of $10 million and 42 employees.

 

Unique business challenges leads Dermatec to Cadence Bank

 

In 2013, CEO and Chairman Tony Singleton and Executive Vice President and CFO Craig Greenberg met with Cadence Bank for financing assistance. According to Greenberg, their previous bank was unable to increase their line of credit to meet their growing financing needs.

 

Part of the challenge, says Greenberg, was that their former bank didn’t understand their business. Dermatec had two unique business features:

 

  • Large inventory needs. “We import our gloves from overseas, so it can take from eight to 12 weeks from the time gloves are manufactured until they’re delivered,” Greenberg explains. “Therefore, we have to keep at least three months of inventory on hand at all times — because we can’t just run out of gloves.”
  • Pricing opportunities. Because Dermatec knows the overseas markets for latex rubber so well, they will sometimes buy a year’s worth of inventory to take advantage of good rubber pricing. “Our former bank said our inventory turns weren’t good enough, but they hadn’t taken the time to understand why our turns were longer,” Greenberg adds.

 

Line of credit & loan helps Dermatec capitalize on pricing discounts 

 

Fortunately, Cadence Bank, led by business banker Susan Teslicko, did take the time to understand Dermatec Direct’s unique situation. Not only did Cadence Bank increase their line of credit, they also provided an additional $200,000 loan that helped the company deal with a short-term cash flow challenge.

 

Greenberg explains: "Last year we bought additional inventory to support an existing client who had informed us they would be purchasing 30 percent more than their current level due to an acquisition. Being proactive, and given the delivery time on inventory from overseas, we ordered additional inventory. However, the client then pushed back the order a few months, creating a short-term strain on our cash flow.

 

“Susan and the Cadence team came to the rescue with a short-term loan that helped us pay the additional inventory bills at that time."

 

Treasury management services reduce fraud risk 

 

In addition to financing, Dermatec Direct also uses treasury management services from Cadence Bank. Greenberg says three of these have proven especially beneficial:

 

  • Positive Pay. “Positive Pay has significantly reduced our exposure to fraud,” Greenberg says. “If any check is presented to Cadence for payment that doesn’t match the check-issued file we provide, Cadence sends us an email noting the exception item and asking us to approve or disapprove it.” Positive Pay also reduces the company’s exposure to fraud in the payment of state sales taxes, Greenberg adds.
  • Online banking. With online banking, Greenberg is able to download bank statements immediately at the end of each month instead of waiting for them to arrive in the mail. “This enables me to close out the month much faster and more efficiently,” he says.
  • AllegroSM. The sweep account feature of Allegro – Cadence Bank’s single sign-on digital portal – eliminates the need to move cash around manually to pay down Dermatec Direct’s line of credit. “This is done automatically now, which is easier and more efficient and saves us interest expense,” says Greenberg.

 

Remote deposit capture Is a huge time-saver  

 

But Greenberg’s favorite Cadence Bank treasury management tool might be Remote Deposit Capture. This service enables Dermatec Direct to deposit checks right from the office using a special scanner provided by Cadence Bank, thus saving countless hours of employee time spent driving to and from the bank.

 

When factoring in the company’s growth, he believes this service has saved them from having to hire an additional accounting employee.

 

Flexibility and responsiveness summarize banking relationship 

 

Both Greenberg and Singleton say they have been very pleased with Cadence Bank since they began working with the bank four years ago. “Susan and the Cadence Bank team are both flexible and responsive,” says Greenberg. “We always get fast replies to our phone calls and emails — usually within an hour, which really makes a big difference when we’re dealing with timely situations. 

 

“We have a great relationship with Cadence Bank and look forward to continuing to work together.”

 

You may also be interested in our e-book explaining how lockbox for accounts receivable works. Cadence Bank specializes in helping small and middle-market companies meet a wide range of financing and treasury management challenges. To see how we can help, contact us at Cadence Bank or visit cadencebank.com

 

 

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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