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Vector Global Logistics (VGL) specializes in logistics and supply chains and has offices in the United States, Mexico, and Chile. They offer supplementary services for project logistics, including an expedited shipping option, support in particularly complex regions, and assistance to various charitable organizations.
One of the reasons why Vector and Marco's relationship has been successful is that they both value establishing long-lasting and trusting relationships. The logistics company explains in its proposal, "We work hard to earn your business and your trust. The logistics and supply chain industry can be complex, but your relationship with us doesn't have to be."
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Current relationship with Marco
Vector currently has two factoring lines with Marco: one for their client Unión de Cervecerías Peruana, the local representative in Peru of AB InBev, and another with a US buyer called Detroit Diesel, a Daimler-owned engine manufacturer located in the city that bears its name. They started with an $800,000 line in August 2021, but the positive results have led to VGL's line being increased by 11x in less than a year. VGL is also planning to open new lines for buyers from LATAM.
Marco spoke with Sergio Cervantes, an executive member of the Vector Global Logistics team, to learn more about their challenges as a small and medium-sized enterprise, the solutions they have found with Marco, and their prospects.
What challenges do you face as a small and medium-sized enterprise in obtaining financing in Mexico?
I come from the banking world, and it is difficult for small and medium-sized enterprises to access these financial services, particularly for international invoices. They ask for a lot of collateral when the collateral should be the actual payor of the invoice. For example, AB InBev is AAA risk (triple A), so it is very unlikely to go bankrupt. The same goes for Detroit Diesel, which belongs to Daimler. Something catastrophic would have to happen for them to stop paying you. Despite this, in Mexico, banks ask for 'two to one' patrimonial relationships; that is, to request $11 million, I would have to show properties worth... $22 million! A house in the best neighborhood in Monterrey costs $1 million.
How did the relationship with Marco begin?
In my search for more agile factoring options, I came across Marco. My former boss had gone to a factoring company in Mexico, and I asked him for a product of this type. As his company couldn't cover it because they don't do international factoring, he recommended doing it with Marco. I am in Mexico, but my service is from Brazil, Chile, or England to Peru, for example.
Please comment on the value your relationship with Marco has brought to your business.
We started with an initial line of $800,000, and in less than a year, we grew to $11 million. I didn't increase the line just because I wanted to; the client took us there. Before taking that step, I would talk to Marco and explain that I had a project that required $3 million more but didn't have the financial muscle to do it. Marco responded quickly that it was possible, and I accepted the project. It was the same with each case. Without Marco, it would have been impossible for me, and I would have had to reject them.
The rates in Mexico are very competitive, but Marco's great advantage is the speed at which they approve a credit line. It lets you know in a very short time if you can take on the projects. The bank won't give you that solution. Instead, the bank will tell you, 'give me all the information, and we'll talk in a month or a month and a half.' That kind of flexibility to make such a crucial decision as to move forward with a project makes a tremendous difference and is why I have felt so comfortable with Marco. And also, Marco asks for more reasonable collateral than the banks.
How do you see the collaboration between Vector and Marco in the future?
Continuing to grow the client portfolio. In the case of Daimler's Detroit Diesel, the reality is that we could finance $1 million without any issues. However, we involved Marco in this case because it is part of the reciprocity we want to give as a client at the end of the day. I am bringing to Marco different AAA clients so the relationship continues and the portfolio grows.
Marco's use of insurance for the portfolio has also been beneficial. The insurers themselves tell you the risk of the client that they calculate based on the country. That kind of information that Marco provides me with about how much the client can be insured for is also vital information for me. As the owner of the company, I can measure the risk. It is one more filter.