Zappos.com, an online marketplace for shoes, bags and apparel, had just bought a multimillion dollar, state-of-the art fulfillment system to improve customer service in May 2008 when the credit crunch began, and the importance of that expended cash shot up. So the company's treasury engineered a sale-leaseback deal for the new equipment and recaptured that cash, which it quickly converted to credit capacity by paying down its revolver balance.

That meant $5 million more was available in the company's $100 million revolver during its high-cash-outflow season, explains senior treasury manager Lakshan Fernando. During the company's high-cash-inflow season, it recovered capacity in its revolver and was able to use the cheaper revolver credit to retire more expensive term debt, resulting in interest savings of nearly $300,000, he estimates. To swing the deal, treasury negotiated covenant amendments with its bank lenders and its subordinated debt provider. Even with new covenants, Zappos had to persevere. The first deal fell through when a leasing company backed out at the last minute amid the credit crunch. But the credit crunch was also driving Henderson, Nev.-based Zappos to spread out the cost of its new system over time instead of nicking its available credit. So Zappos tried again and scored, after further legal work and more negotiations with lenders. It saved even more when treasury successfully pushed to have the funding date coincide with the lease commencement date, thereby avoiding a month of interim rent. "Altogether, this transaction had a favorable effect on our net working capital of approximately $3 million," says Daniel Simmons, director of treasury and risk management.

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