The Numbers: P&L Analysis & Profits

Leveraging Trade Finance for Financial Growth at Sunrise Distributors Company

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Overview Sunrise Distributors is a small U.S.-based domestic distributor specializing in wholesale consumer widgets. Operating with annual revenues of $5 million, the company sources products from manufacturers and sells to regional retailers. With a lean team and limited cash reserves, Sunrise often faces cash flow constraints due to delayed payments from customers, who typically pay invoices on 60-day terms. To address this, Sunrise engaged a trade finance factoring service to improve liquidity and fuel growth. In Q2 2025, Sunrise secured a $500,000 order from a regional retail chain for a batch of consumer widgets. The retailer agreed to pay the invoice in 60 days. The cost of goods sold (COGS) for this deal was $350,000, with payment to the supplier due within 30 days. Without sufficient cash on hand to cover the supplier payment while awaiting the retailer’s payment, Sunrise risked losing the deal or straining its cash flow.

 

Trade Finance Factoring

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Solution Sunrise partnered with a factoring company, Hundred Point, which offered to purchase the $500,000 invoice at a 3% fee ($15,000). The factoring service provided an immediate advance of 80% of the invoice value ($400,000) within 48 hours, with the remaining 20% ($100,000) paid upon the retailer’s settlement, less the factoring fee.

 

Financial Structure of the Deal

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• Invoice Value: $500,000

• Factoring Fee: 3% = $15,000

• Advance Received: 80% of $500,000 = $400,000

• Reserve Amount: 20% of $500,000 = $100,000

• Net Received After Retailer Payment: $100,000 - $15,000 = $85,000

• Total Cash Received: $400,000 (advance) + $85,000 (reserve less fee) = $485,000

• COGS: $350,000 (paid to supplier within 30 days)

• Gross Profit Before Factoring: $500,000 - $350,000 = $150,000

• Net Profit After Factoring Fee: $150,000 - $15,000 = $135,000

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P&L Impact

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Without factoring, Sunrise would have faced a 60-day cash flow gap, potentially requiring a high-interest short-term loan or delaying supplier payment, risking penalties or strained relationships. By using factoring, Sunrise maintained liquidity and completed the deal without additional debt.

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Financial Gains from Factoring

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1. Improved Cash Flow: The $400,000 advance allowed Sunrise to pay the supplier within 30 days, securing the deal and maintaining supplier trust. Without factoring, Sunrise would have needed to borrow funds, likely at a higher cost (e.g., a 18% annual interest rate on a 60-day loan, costing ~$6,000 for $350,000, plus administrative fees).

2. Opportunity Cost Savings: With immediate cash, Sunrise could pursue additional orders. For example, the $400,000 advance covered the $350,000 COGS, leaving $50,000 for operational expenses or new inventory purchases, potentially generating further revenue within the 60-day period.

3. Risk Mitigation: The factoring company assumed the credit risk of the retailer’s payment. If the retailer defaulted, Sunrise would not be liable to repay the advance, unlike a traditional loan.

4. Shareholder Profits: Hundred Point trade finance significantly increases Return On Operating Cash (ROOC) plus Return on Equity (ROE) which directly translates into higher share prices. For detailed equity analysis contact a Hundred Point client executive, click here.

5. Cost-Effectiveness: The 3% factoring fee ($15,000) was competitive compared to alternative financing options like bank loans or lines of credit, which often carry higher interest rates or require collateral Sunrise lacked.

6. Shareholder Profits: Hundred Point trade finance significantly increases Return On Operating Cash (ROOC) plus Return on Equity (ROE) which directly translates into higher share prices. For detailed equity analysis contact a Hundred Point client executive, click here.

7. Scalability: By unlocking working capital, Sunrise could take on larger or more frequent orders without waiting for prior invoices to clear, driving revenue growth. For instance, if Sunrise used factoring for 10 similar deals annually, the additional liquidity could increase annual revenues by $5 million, with net profits of $1.35 million after factoring fees.

8. No bank, traditional debt paperwork, credit checks or financial histories.

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Strategic Benefits

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• Customer Relationships: Hundred Point enabled Sunrise to offer 60-day terms to the retailer, strengthening the partnership and securing repeat business.

• Operational Efficiency: The factoring process was seamless, with Hundred Point handling invoice collection, reducing Sunrise’s administrative burden.

• Growth Enablement: The immediate cash flow allowed Sunrise to negotiate better terms with suppliers (e.g., early payment discounts) and invest in marketing to attract new clients.​

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Conclusion

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Sunrise Distributors turned a potential cash flow bottleneck into a growth opportunity. The 3% factoring fee was a small price to pay for immediate liquidity, risk mitigation, and the ability to scale operations. The $135,000 net profit on the $500,000 deal, combined with the ability to pursue additional orders, positioned Sunrise for sustainable growth. Factoring proved to be a strategic tool for managing working capital, enabling Sunrise to compete with larger distributors and strengthen its market position.