Q&A

The Real Facts:

Approximately 40% of new clients who come to Silverblade are trying to escape a maxed-out bank revolver, while facing down penalty fees and restrictive covenants.

With an industry average A/R tenor of 70+ days, ABLs do not fit the advertising industry very well. Worse, ABLs do not easily scale, so rapidly growing adtech companies will easily get stuck because of their growth — and using venture capital to finance A/R is a mistake — venture capital deployed against A/R will underperform, disappointing investors. Some of our clients choose to pair a term loan facility, secured against enterprise value, with our A/R program — these clients enjoy a large pool of low-cost capital. Overall this has proven to be a more efficient approach than those who rely solely on an ABL.

At Silverblade, we approve credit limits at 2-3x current spend and seamlessly scale with our clients. Our approach is off balance sheet with zero debt, no penalties, and covenant light. We can arrange to fully satisfy an existing ABL in 30-90 days.

“We have an ABL with a diminished borrowing base and are in real danger of default; we need help ASAP.”

— CFO, Adtech Company

The Real Facts:

Silverblade was founded to work exclusively with ad media, publishers, and adtech companies, and we understand exactly how media is planned, bought, and sold — we’ve actually done these things ourselves, so we only work within industry best practices. Our team has so much practical industry expertise, we probably already know your clients.

Our purchases of A/R are done as a “true sale” and we insure what underwriting identifies as having exposure to higher levels of risk — but all risk resides with us. Cost of insurance is wrapped into the APR, it is not separately passed on to our clients.

Silverblade never acts as a collections agency. We simply wait for the invoices to be paid into a lockbox that we control. We don’t contact your clients. 

In fact, we are extending 120-day terms to select clients in exchange for increased spend, so we, unlike traditional factoring organizations are comfortable with extended terms. 

“Extended credit terms from Silverblade will improve our client relationships and dramatically increase our revenue in a short period of time.”

— CRO, Adtech Company

The Real Facts:

Factoring indeed can be costly — when you choose the wrong partner.

Companies who factor invoices are generally engaged in the finance of tangible goods in risk-laden categories. When faced with the prospect of working with media, while these firms may initially talk the talk, they simply do not perform. 

We say we purchase media A/R advantageously — so what does this mean? It means we purchase 100% of our client’s invoices on an annual basis using a cash dominion structure — the money only flows to our clients. We offer a fixed interest rate + 3mo. SOFR, similar to a bank ABL, or other comparable facilities. However, interest is calculated to the day against the amount advanced (usually 90%) and the balance performs as cash. This is a “true sale” of the invoices and takes all risk and debt from our client’s balance sheet.  

Our clients enjoy better managed risk, strong margins, positive free cash flow, and a more competitive posture in the marketplace.

“The interest is exactly the same as our former ABL — but with no covenants or fees, Silverblade is actually a more cost-efficient alternative.”

— CEO, Publisher