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Cash flow: How Xero + Kabbage power a bright idea

Posted 4 years ago in Xero news by Guest
Posted by Guest

When your hobby is making lamps, it’s only a matter of time before you run out of space for your designs.

Adam Gatchel of Southern Lights Electric found he had a knack for creating custom lighting while employed as a musician. In between tours, he began selling lamps on Etsy. When he realized the potential the business had — without the hectic touring schedule — he transitioned to working on Southern Lights Electric full-time.

As the business grew, Adam and his wife, Jamie, opened a showroom and began taking on increasingly bigger projects. But like many small businesses, their success came with cash flow challenges.

kabbage and southern lights electric

“Working with larger clients like restaurants and hotels was a completely different pace than we were used to,” Adam said. “We’re responsible for filling huge orders, but we don’t get paid for six to 24 months after we start the project.”

Kabbage and cash flow

Enter Kabbage, a lender that lets customers link their business information online to get a decision right away. When the couple took on a contract with a local hotel, they needed to purchase materials for 185 fixtures up front.

southern lights electric designs

“We researched our funding options. Everything from online lenders to traditional banks. Kabbage was by far our best option,” Adam said. “Their process of approving us online was a lifesaver. It allowed us to access the money we needed quickly.”

Since getting approved, they’ve used their line of credit to cover the costs of filling large orders.

“Having a fixed monthly payment schedule let us know up front what our costs will be,”Jamie said. “Being able to see everything clearly summarized up front gave us a lot of confidence that the payments would work for us.”

Kabbage + Xero

Since a lot of their cash flow is tied up in materials, they needed a system to manage ongoing orders and expenses. A friend recommended Xero as a more intuitive alternative to traditional desktop accounting software. They used Xero for invoicing, reporting, paying bills, organizing contacts and tracking profit and loss.

“Because Xero’s services are so comprehensive, we always know what’s going on with our business,” Jamie said.

By combining Xero’s business insights with Kabbage’s flexible access to funding, Adam and Jamie can effectively understand and manage their cash flow needs to avoid dipping into their profits as they grow.

“Whether it’s seasonality or project scheduling, sometimes our cash flow is a little light,” Adam said. “Xero’s easy-to-digest reports help us assess when to expect payments so we know how much extra Kabbage funding we might need to cover costs. These two companies were designed to help small businesses manage the day-to-day business operations. This means we can focus on making sure our products are the best they can be.”

Learn more about how Kabbage has helped more than 100,000 businesses get $2.5 billion in funding.


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