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Hamilton Group owners launch accelerated vendor-payment venture

By Journal Staff

Date:

SALINA  —  Kenneth Walsleben does not know how to twist time. Yet it sounds like his new business will send clocks spinning in all different directions.

The business, Hamilton Capital Resources, LLC, aims to allow clients to take longer to pay their vendors — while simultaneously shortening the amount of time it takes those vendors to receive payments from the very same clients.

“We think there’s a really big marketing opportunity here,” Walsleben says. “There are vendors out there that want to get paid promptly that the client just can’t pay promptly.”

Hamilton Capital Resources, which is launching this month, will operate a program called Early Vendor Payment (EVP) to position itself as a payment agent between clients and vendors. 

EVP will issue payments to vendors instead of those vendors’ clients making payments. Clients will then repay EVP rather than paying vendors directly.

EVP will pay vendors quickly — the service will send funds three days after a client approves an invoice. But clients will not need to pay EVP until much later — for example, 60 days after the client receives a vendor invoice, Walsleben says.

“A vendor, if he gets paid on day 13 as opposed to day 60, doesn’t have to have as much cash on hand,” he says. “If [I am a client and] I want to delay my payables, this is a good way to do it.”

EVP will charge vendors who opt to use the service. The fee will be based on the amount of time between EVP issuing payment to a vendor and receiving payment from a client. It will range between 1 percent and 5 percent but will typically be 2 percent to 3 percent, Walsleben estimates.

“Because the vendor’s the one getting the benefit, they’re the one paying the service fee,” he says. “My fee to them will approximate what they’re already willing to give to their customer. Most vendors are offering 2/10 net 30 on their invoices.”

The notation “2/10 net 30” means vendors are willing to give clients a 2 percent discount if they pay an invoice in 10 days, but that they expect full payment if a client issues funds in 30 days.

Clients will be responsible for late fees if they do not pay by an invoice-specified deadline. The deadline and fees would be spelled out in the invoice.

Walsleben is a principal of Hamilton Capital Resources, LLC along with Michael Howe. The two men are also principals of The Hamilton Group, Inc., which is headquartered in Salina and also has offices in California and Massachusetts.

The Hamilton Group is a firm offering accounts-receivable factoring, a type of financing where a business sells accounts receivable, or invoices, to a financier known as a factor. 

The factor then sends the business a percentage of the invoice amount, typically 70 percent to 80 percent. Once the factor receives invoice payment, it pays the seller the remainder of the invoice — minus a financier’s fee.

The Hamilton Group and Hamilton Capital Resources will be separate companies that share ownership, Walsleben says. Hamilton Capital Resources will not be a subsidiary company, he says.

The two businesses will share The Hamilton Group’s leased 1,200-square-foot office at 100 Elwood Davis Road in Salina. Walsleben expects Hamilton Capital Resources to require about 1,200 square feet of additional space within a year. There is space to expand in the building at Elwood Davis Road, and the companies will likely operate in side-by-side offices by next year, Walsleben says. 

They will also share employees as Hamilton Capital Resources and EVP launch. The Hamilton Group has a total of 10 employees, all full time, Walsleben says. He anticipates adding five to six employees dedicated to Hamilton Capital Resources as EVP grows.

The EVP product will likely operate with $8 million to $10 million in outstanding payments at any one time by the end of next year, Walsleben says. He did not discuss revenue, but thinks the business will quickly eclipse The Hamilton Group, which processes about $40 million annually in factoring and is holding steady, he says.

“I would expect EVP to be bigger than Hamilton in two years,” Walsleben says. 

EVP will work in any industry in any part of the country, according to Walsleben. But he is currently marketing it to hospitals in the Northeast. He plans to continue to focus on the health-care industry as the product launches.

“That’s where nobody seems to get paid in a timely way,” he says.

Walsleben plans to focus on pitching the service to clients such as hospitals, rather than vendors. Clients would then be able to offer the service to their vendors as an option, while vendors would be able to opt to be paid without EVP.

Still, Walsleben and Howe are prepared to market EVP to both clients and vendors. They set up separate websites and printed different literature for each party.

Walsleben declined to specify startup costs for EVP. The Hamilton Group has funded startup costs for Hamilton Capital Resources and EVP, and the new business will repay the loan from its operating revenues, he says. Other sources of funding include private bank financing and investors holding subordinated notes.

Hamilton Capital Resources was incorporated in Florida because Walsleben and Howe used Boca Raton, Fla.–based law firm Ullman & Ullman, P.A. to set up the company, Walsleben says. But, the company’s headquarters is in Salina.

EVP’s payments will not be counted as debt against clients, and it will not deal with liens. Instead, it will use credit insurance as protection against a client not paying. The French company Euler Hermes is providing credit insurance.

“Because we’re being judicious about who our clients are going to be, that is one problem I don’t expect to deal with,” Walsleben says.

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