At some stage of almost every growing small business, cash flow always becomes an issue. Companies require increasing amounts of cash to grow and many times these important investments need to be made in advance of when customers pay for these products or services. Other times, emergencies from unexpected events happen where a quick short-term infusion is required for cash flow.
One of my clients, Charlie Baggs Culinary Innovation (CBCI) found themselves in an unusual situation. For over 15 years, their skilled corporate chefs have provided flavor development for food companies. The culinary scientists and research chefs have created new products.
While their business has grown steadily, they hit a unanticipated “speed bump” this past year; the CEO’s email address and all his contacts were attacked by a “spear phisherman”. In this incident, the hacker pretended to be the trusted CEO by using his email address and the signature of another officer in the company. In the phishing email, they asked all their customers in the contact database to send their payments to a “new bank” (which was controlled by the perpetrator). They gave wiring instructions so “payments” could be made directly to the spear phisherman’s bank. Kathy Baggs, Vice President said “unfortunately, several clients were tricked into sending their payments to this fake bank which resulted in a significant loss of cash flow for the company”.
CBCI turned to Kabbage for a $50,000 line of credit to supplement their cash flow as they went through the forensic investigation to get the lost payments back. “If it was not for how quickly we could get cash from Kabbage, says Kathy, “I am afraid that we would have not been able to meet our financial obligations. After being in business for over 15 years, our employees and vendors have come to trust us and our ongoing reputation is critical to our growth with large brands.”
While CBIC has not yet recovered all the funds from the spear phishing incident, they did get their line of credit paid off to zero at Kabbage this month. They are now thinking of other ways they can draw on the line of credit for additional cash flow to grow their company which will include investing in new marketing initiatives and additional culinary resources for their company.
