Raise over a million dollars via public offerings: logistics firm's journey

Raise over a million dollars via public offerings: logistics firm's journey

Logistics firm RTL Alliance raises $1 million through token issuance, improving financial services and cash flow management

In a break from traditional bank financing and factoring, RTL Alliance, a logistics company, has successfully raised $1 million in capital by issuing digital bonds, or tokens, over the past three years. This move not only provides clients with superior financial services but also enhances risk management in the logistics sector.

Bank financing and factoring fail to meet the company's needs due to the nature of its business, which operates on a brokerage model without its own fleet. RTL Alliance's financial director, Maxim Dodelev, explains that the model is capital-intensive in intermodal transportation and involves consolidating goods from various suppliers, packaging, container loading, delivery to ports or railway stations, and customs clearance.

The transportation cost is calculated based on the brokerage fee, which is recognized as revenue under Belarusian legislation. This results in a lower revenue indicator when compared to companies in other industries, even with similar turnover, as bank financing is tied to a certain percentage of revenue.

Factoring is still gaining popularity in Belarus, but it presents two challenges for logisticians: banks and factoring companies are selective in their client base, and many debtors are reluctant to engage in factoring. Token issuance, in contrast, provides a wide range of investors without a single dominant creditor.

The cost of resources is not the most critical factor when evaluating the debt placement project. Instead, the urgency and conditions under which the money is provided should be considered. RTL Alliance was initially content with a "pilot issue" of tokens for $200,000 at an annual interest rate of 15%, which seemed high at the time. As the market rates dropped, the company was able to secure the next two issuances at an annual interest rate of 8.5% for three years.

RTL Alliance has obtained high business reputation and service reliability ratings from Bik Ratings, which demonstrate its credibility to investors. The company's leadership in industry projects, such as winning multiple national business awards and participating in over 100 international events, also underscores its expertise and potential.

To manage client financing tools and reduce risks in its business, RTL Alliance has a credit policy – a set of conditions under which it works with clients. Responding to changes in sales or client payment discipline, managers can tighten or loosen the credit policy accordingly. Internal automated procedures are also in place to reduce risks, such as the onboarding process for new clients, agreement of payment terms, specific deals, their economics, monitoring of concluded deals, and debt collection.

RTL Alliance's tokens are voluntarily bought by some of its employees, reflecting high employee loyalty, trust in the business, and its profitability. This investment opportunity is extended to external investors through an open finance policy: the company publishes its quarterly financial statements on its corporate website, accessible to everyone without registration.

The funds raised through token issuance have been used to replenish RTL Alliance's working capital, allowing an increase in cargo transportation volumes and growth in key business indicators. Improved financial services are reflected in more comfortable payment terms for clients, as exemplified by a hypothetical case: if Company A transports 500 containers from China to Belarus each month, with each container worth $5,000, $2.5 million in financing is needed monthly to provide clients with payment delays.

For companies considering issuing tokens to fund their investment projects, Maxim Dodolev offers three pieces of advice: fundraising should be in the currency in which revenue is generated, the term of the tokens should match the project's duration, and profitability must be carefully considered to avoid making debt too expensive to cover interest expenses.

Alternatively, logistics firms can explore asset-based solutions such as asset-based lending, sale-leaseback arrangements, and freight factoring to unlock capital tied up in assets and improve cash flow. However, each option presents its own set of considerations and challenges.

In the rapidly evolving financial landscape, logistics companies can diversify their funding strategies by considering both asset-based solutions and digital bond markets to position themselves for growth.

relevant Enrichment Data has been integrated into the article to provide additional context and examples of alternative funding options.

1. RTL Alliance's move to raise $1 million through token issuance indicates a shift towards investing in technology for business growth, as traditional bank financing and factoring didn't meet the company's needs.
2. The financial director, Maxim Dodelev, explains that token issuance offers a wider range of investors without a single dominant creditor, addressing the challenges faced in factoring.
3. Addressing the need for improved cash flow management, RTL Alliance has employed technology-based solutions like token issuance, and by doing so, they've also embarked on a path of lifestyle transformation, revolutionizing the way logistics firms fund their businesses.

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