Cost Doesn’t Matter – or – Does it?

It’s not the cost that’s important – It’s the Opportunity Cost. Of all of the questions posed to factoring companies and consultants Read more

Why Factors say YES when banks say NO

Have you ever heard this from a prospect; “Don’t waste your time, I am not bankable?”

Did you then wonder why a factor would ever consider funding a company that a bank would decline? If you have, believe me, you are not alone (I get asked this all the time). Let me see if I can help clear this up.

Let me begin by defining a strong banking prospect:

• Prospect has been in business for a minimum of 2 years
• Prospect has audited financial statements reveal solid profit margins in the previous 12 month accounting period
• Prospect has steady revenue growth with no “Peaks or Valleys”
• Prospect’s management team is strong with a proven track record of success in the industry
• Prospect has absolutely no bankruptcies or judgments in the past
• Prospect’s business collateral specifically, liquid assets (Accounts Receivable and Inventory) are sufficient enough to cover any risk of default

Now, let’s move on to defining a strong factoring prospect:

• Debtors (clients) of prospect have a positive credit history
• Debtors are multiple – no concentration with any one client
• Debtors will verify that product or service has been received and there will be no setoffs against payments

Can you see the distinction?

While banks make their credit decisions by focusing on the PROSPECT, factors make their credit decisions by focusing on the DEBTOR(S).

Although the comparison seems simple in nature, the impact of this difference is monumental. For example – Will a bank fund a new start up company (No – see point #1), will a factor (Yes); Will a bank fund a company that had loses in the past 12 months (No – see point #2), will a factor (Yes); Will a bank fund a company that is growing rapidly and needs a steady flow of cash to manage its growth (No- see point #3), will a factor (Yes).

The next time a prospect tells you to “not waste your time, I am not bankable”, tell them “I know, we have been waiting for you!”

Timothy J. Sardinia – Mr. Sardinia is currently a Partner with Canfield Capital Management, LLC, a Member of Steelkilt, LLC, a Member of Millennium Automotive Group, a Member of Millennium Legal Funding. Tim can be reached at tim@millenniumfunding.com or by calling 716-204-4800.

Fred Leder

Fred Leder began his career as a factoring consultant (DCFS) in 1995. As a successful broker, he was identified by Sun Capital and was hired in 2000 as a business development officer. Today as the VP of Business Development for Sun Capital Inc and Sun Capital Healthcare, Inc. his responsibilities are to continue to prospect for new business and to interface with and train new (or seasoned) consultants.

Fred was a visiting instructor for The American Cash Flow Institute for over 5 years and has lectured at numerous Cash Flow industry conventions discussing everything from marketing techniques to the details of medical and government factoring.

Fred has also lectured at medical and financial industry events such as Medtrade, HFMA, Florida Medical Association’s Asset Protection seminar, Foster & Dunhill’s International Asset Protection Seminars, and numerous ACFA chapters throughout the country. Fred Leder can be reached via email at fred@suncapitalinc.com or by calling 1 (800) 880-1709.

FactoringInvestor is presenting a FREE Factoring Webinar..

**Second Consultant Webinar Completed – Stay Tuned for more info!**

Factoring has always been big business and with the recent economy challenges it is being utilized now more than ever.

Want to know about Factoring and how you can profit from it? Want to know what marketing methods work and what methods not to bother with? Want to know how to jump start your business and stabilize your income?

This FREE 60 minute webinar will contain the most important information you will need in taking advantage of the credit crunched economy! Read more

What is Medical Factoring?

The term “medical factoring” can be interpreted several different ways but essentially it is factoring that deals exclusively with invoices that are “medical” in nature.

For example, medical providers (such as doctors or those that sell medical supplies) may have to wait up to 90 days to get paid by an insurance company, HMO, or Medicare/Medicaid. These cash flow issues present the same challenges as traditional, non-medically related, companies.

When medical providers utilize factoring they often receive their “advance” from the factor in as little as 24-48 hours. This allows them to better manage their cash flow, increase their business, and not take on additional debt.

If you are in need of medical factoring, you will want to seek out a factor that specializes in that area.

Putting More Green in Your Wallet is as easy as 1-2-3

Being on the road as a guest speaker and instructor over the past ten years as well as my 22 plus years [boy am I getting old] in the cash flow industry has given me insight Read more

Understanding the FEES Principal to Closing Factoring Deals!

One of the most important things I learned early on in my consulting career is in order to generate revenue, commissions, fees you have to be able to follow the “FEES” Principal on the road to closing deals. Read more

Loans To Provide Medical Cash Flow-Not The Best Solution!

 

Financial products have specific characteristics that make them appropriate for some situations and inappropriate for others. To date there is no “one size fits all” cash flow solution product. Read more

How Can I Earn Commissions in Factoring?

Moneymaking opportunities abound for factoring brokers and cash flow consultants. Read more

Reviewing Financial Statements

We are often asked to comment on how a consultant can use a company’s financial statements (Balance Sheets, Income Statements and invoice aging reports) to highlight the benefits of factoring their accounts receivables.

Below, you will find those areas of the reports that you can concentrate on and how you can best use this information to improve your chances of closing the deal!

Understanding the Balance Sheet from a Selling Perspective:

• Factoring simply turns one asset (Accounts Receivable) into another asset (Cash) – said another way. Factoring is “Off Balance Sheet” financing as you don’t incur any liabilities when financing this way (nothing to balance).
• By reducing your potential liabilities, you will increase your equity in your business “remember the equation” -  Assets = Liabilities + Owners Equity, therefore, if you decrease your liabilities, you increase your Equity!

Reviewing the Income Statement from a Selling Perspective:

• Turning the Non Performing Assets -  on the balance sheet “Accounts Receivable” into cash -  can free up the working capital to:
  • Take advantage of supplier discounts
  • Meet payroll and other expenses
  • Provide the cash needed for expansion and growth
• Millennium Funding will provide ancillary services, such as, credit, collection, invoicing and payroll which will reduce administrative expenses significantly.

Reviewing the Aging report from a selling perspective

• Can the client take on more debtors as a result of now having the cash flow to buy more supplies or hire more people?
• Can the client create more business from existing customers by allowing them to extend payment terms?
• Can the client start to bid on government contracts now that they will have the cash flow to cover the delayed payments that are inherent when working with the government?