Typical vendors who benefit from invoice factoring include: temporary medical staffing agencies, medical transcription services, janitorial companies, and even medical supply companies.

All of these businesses routinely provide services and/or sell goods to medical providers and then have to wait weeks or months to be paid. However, there is another type of vendor that can benefit from invoice factoring that you may not know about—Outsourced Medical Billing Services.

Medical billing is one of the fastest-growing and most dynamic sectors of the healthcare industry. In a nutshell, providers wouldn’t be able to get paid by third-party insurance if it weren’t for medical billing. Because the medical billing preparation and submission process is an immense task, so many medical providers choose to outsource their medical billing. Therefore, outsourced medical billing services act as intermediaries between medical providers and insurance companies.
Of course, medical billing companies charge a fee for their services. Typically, a medical billing company charges a percentage of what the medical provider collects from insurance companies. Moreover, a medical billing service strives to submit claims quickly and correctly to the insurance companies to ensure a speedy reimbursement to the provider.

So if an outsourced medical billing company works hard to get the provider paid quickly, it only makes sense that the provider will pay the medical billing company quickly as well, right? Unfortunately, this is not always the case. Hence, it’s not uncommon for outsourced medical billing companies to run into cash flow problems. Enter outsourced medical billing invoice factoring.

Even though you may not be familiar with the outsourced medical billing industry, the factoring process is virtually the same:

1. The outsourced medical billing service submits an invoice to the factoring firm.

2. The factor verifies that the billing services were performed, and in some cases, verifies that the medical provider has received payment for the processed claims listed on the invoice.

3. Once the factor is comfortable with the verification, it purchases the invoice and funds are advanced electronically to the outsourced medical billing service.

4. When the factor receives payment from the medical provider, it applies the factoring fee and releases the rest back to the medical billing company.

It’s easy to see how these unique medical vendors can benefit by factoring their invoices. The most important thing to remember is that outsourced medical billing factoring is the perfect way for a new or growing business owner to maintain a healthy cash flow. Rather than wasting time and resources chasing providers for prompt payment, outsourced medical billing business owners can factor invoices to access capital immediately. Then he/she can use that incoming cash to focus on business growth efforts.

Keep in mind that as the medical billing industry continues to grow, more players will certainly enter the market. As more outsourced medical billing companies pop up, their need for financing will also increase. When reviewing potential factoring candidates, factoring brokers should definitely include medical billing companies in their portfolio.

Nikki Flores is a Consultant Liaison for PRN Funding, LLC, which is an extraordinarily focused niche player in healthcare factoring.

PRN Funding exclusively factors the accounts receivable of companies that sell goods or provide services to healthcare providers.

Factoring Broker Training Tips!

One of the first marketing skills to master as a factoring broker is creating and delivering your personal 30-second infomercial.

No, we’re not talking about late night television. Rather it is your practiced introduction that lets people know what you can do for them!

Commonly called the “elevator speech,” it is the mainstay of networking groups and a must for any one-to-one marketing. A great elevator speech should generate quick interest from people that need your service or know someone that does. It should be short, direct, and ready to deliver with a friendly handshake and business card.

Jeff Callender, Owner of Dash Point Financial and Author of the Small Factor Series, shares four elevator speeches he has used in his factoring business:

Factoring Speech #1

“My company provides financing for very small-business owners who are turned away by banks. Instead of providing loans, we purchase our clients’ invoices for immediate cash which enables them to meet payroll, pay bills, accept larger customers, and many other business necessities.”

Factoring Speech #2

“My business supplies something every company needs: money! Our clients have invoices that take 30 days to pay, and we purchase their invoices with cash advances within 24 hours of the invoices being created. We’ve helped hundreds of businesses get started, grow quickly, and operate profitably.”

Factoring Speech #3

“I finance very small companies by buying their receivables at a small discount, as soon as their invoices are created. This enables my clients to increase their cash flow quickly, without generating debt. Our clients are small-business owners who have been turned down for bank loans.”

Factoring Speech #4

“My name is Jeff Callender, my company is Dash Point Financial Services, and I get paid to wait! My clients are very small-business owners who wait 30 days to receive payment from their business or government customers. I buy the rights to their payments, give them an up-front advance, and then wait for their customers to pay me. This enables my clients to give 30 day terms yet still get paid tomorrow.

Source: Small Factor Series by Jeff Callender Available in the Factoring Bookstore

Now take these ideas and personalize them for your business and targeted clients. Just remember these important points:

• Make it benefits oriented

• No more than 2-4 sentences.

• Keep it 30 seconds or less.

• Practice saying it out loud, before a mirror, and in front of friends and family until it rolls off your tongue with ease.

Over time you’ll develop several versions of your personal factoring broker commercial depending on the type of business contacts you are meeting.

Have your own favorite elevator speech? Please share in the comments section below!

Looking for more great factoring broker training and tips?

Be sure to grab your copy of the Small Factor Series. These 6 powerful factoring eBooks are packed with unique ready-to-use ideas and strategies!

Starting a Factoring Business

Those of us that own a business know that turning this dream into a reality takes a few steps. I promise not to make this article about writing a business plan or how to acquire capital from investors. That is not to say that either of these is not important if not crucial to getting a business off the ground. As a matter of fact, there are fantastic resources for free at the U.S. Small Business Administration’s website at www.sba.gov. Besides advice on business plans and loans, you can find great information on managing a business, marketing, law and much more.

I remember when I had first come up with the idea for my factoring company. As a former Chief Financial Officer of a publicly traded company, I figured this factoring thing would be a piece of cake. Nothing was further from the truth.

Where do you start? First, there is no true set of factoring standards. Being an accountant for over twenty years, the industry adheres to a set of accounting standards called “GAAP” (Generally Accepted Accounting Principles) which are how CPA firms and corporations prepare and present their business income and expense, assets and liabilities on their financial statements. By having this set of rules, it provides consistency for individuals and businesses that review financial statements whether for informational or investment purposes.

Finding Factoring Business Training

For those new to the factoring industry there are many associations, professionals and publications that provide educational guidance and useful information about the factoring industry. To start, I would recommend reading a series of factoring training books written by Jeff Callender collectively called the “Small Factor Series”. This series is made up of six books that pretty much tell you what you need to know about factoring account receivables.

The International Factoring Association regularly schedules events on how to factor niche industries such as trucking, workshops for small factoring companies, sales training and other useful tools. For more information, go to www.factoring.org and click on the “Events” tab. While you’re at it, check out this publication for great insight from professionals giving you their perspectives and experiences on a wide range of factoring topics.

Learning the Ropes as a Factoring Broker

My experience has been to start slow and learn the ropes as you go along. Before factoring my first invoice directly, I worked as a factoring broker. I didn’t fund many deals but the experience of working with different factoring companies allowed me to gain valuable information.

If you do get the opportunity to work as a factoring broker, ask the factoring company what they require to fund an invoice. You will be surprised how cooperative the funder can be since your success equates to more business for them.

Also, if you have experience working in a specific industry that could use your factoring services, that may be a good place to start. I have a colleague who only factors small airline commercial receivables. Having worked in this industry for over thirty years, he is familiar with both the clients and customers giving him a tremendous edge over competing factors.

Becoming a Factoring Company

We are all aware of the risks involved with factoring receivables for a living. Talk to anyone who has been in this industry for a substantial period of time and most will usually give you at least one tale of a deal that may have gone just a bit differently than originally intended.

I like to look at my business from the other side of the coin. Obviously there are the rewards in terms of fees and profits — there is no denying that fact. I like to focus on the client. Maybe it’s just a small local manufacturer that needed cash flow to meet payroll or a startup business that has a winning formula but no capital to fuel their growth. You funded them giving them an opportunity to grow and potentially get their company to the next level.

It is basically up to you to chart your own course if you plan on starting a factoring business. Utilize the resources that are available to you, ask lots of questions because at the end of the day it’s your business and your call.

About the Author: Don D’Ambrosio is the president of Oxygen Funding, Inc., an invoice factoring company located in Lake Forest, California. For more information, he can be reached at don.dambrosio@oxygenfunding.com or you can visit his company’s website at www.oxygenfunding.com

New Factoring Broker Promotion!

We all know that factoring brokers normally get paid a referral fee after the factoring companies fund the invoices.  But PRN Funding is currently running a special offer to factoring brokers that pays a $50 gift card upon referral of a qualified medical staffing lead!

It doesn’t matter if it turns into a closed deal… you still get paid! It just has to meet these requirements:

Upon evaluation and approval that the following criteria have been met for a referral, PRN Funding will mail out a $50 gift card (of the broker’s choosing) directly to the referral source:

1. The prospect must be an organized entity (Corporation, LLC). Sole proprietorships, general partnerships and DBA’s do not qualify for this promotion.
2. Broker/cash flow consultant must, at minimum, informally introduce PRN Funding, LLC to the prospect. In other words, PRN Funding will not make any cold calls as part of this promotion.
3. The prospect must have a legitimate need and interest in accounts receivable factoring.
4. PRN Funding must receive a completed application and accounts receivable aging report from the prospect.

Source: Get all the details from Nikki Flores of PRN Funding at Factoring Broker Summer Promo.

Gift card choices include popular places like Amazon, AMC Movie Theaters, Starbucks, iTunes, Golfsmith, Olive Garden, and many more.

Want more good factoring news?

You can also be eligible to win an iPad if you refer the most potential clients (with at least 3 leads needed to qualify).

But hurry, factoring brokers have until September 30, 2011 to take advantage of this great offer.

Need marketing ideas to jump start your factoring business?

Grab your copy of Marketing Tools for Small Factors and Consultants.

You’ll get instant access to this incredible ebook filled with 45 marketing strategies from 7 successful factoring brokers, consultants, and companies.

Comparing Factoring Companies

1. Application Fee

Some companies charge a “fee” to see if they will work with you. Although we are on the fence on this one, you shouldn’t have to pay more than $100-$150. Avoid companies charging big fees to “evaluate” what you have.

2. Due Diligence Fee

Basically the same fee as #1, but just by another name in our opinion. That doesn’t mean you pay for both. One flat fee (or no fee) is ok. Any reputable company is in it to do business with you over the long haul, not make money on upfront fees.

3. Minimum Number of Invoices

Factoring companies might require a minimum number of invoices to be factored – some will even require ALL your invoices be factored. We believe you should have the flexibility to pick and choose when you need to factor. Try to find a company that does not have a minimum.

4. Reserve Amount

All factors are going to have a reserve amount. They fund a certain amount upfront (say 80%) and the difference (20%) is the reseve. A reserve is typically 20-30% of the invoice amount, depending on the transaction. Anything greater and you may want to shop around. While you get a portion of the reserve back, you don’t want too much tied up on the back end.

5. Renewal Fee

This is a junk fee that some factoring agents charge annually. Either they want your business or they don’t. If they have this, make them waive it.

6. Invoice Copy Fee

Some funding companies will try and charge you to copy your own invoice. Really? Skip this funder altogether – it is a good indication there are a lot more hidden fees.

7. Long-Term Contract

Factoring companies would love to have you sign you to a long-term contract. Although it would not be fair for them to get you going and then have you jump ship right away, it is cost of doing business. If you are going for a contract, don’t go for anything longer than 6-12 months.

8. Help Screening New Accounts

Before taking on a new account, some factors will help you screen their credit worthiness. This can be a big plus and you should look for this when choosing factoring programs.

9. Discount Fee

Of course you want a low factoring or discount fee!  Just be sure to consider the overall picture and realize some factoring companies will advertise low factoring fees to lure in business only to hit you with some of these hidden fees or contract clauses before funding.

Although there are many things to consider when choosing a Factor, the above items should get you on the right track.

It is also helpful to make sure you are dealing with a professional funding company or factoring broker. Check out our updated Directory of Factoring Companies and Services Providers for more details.

Additionally, I was told that this bath tub had no plug in the drain, so water was continually escaping from it.

The riddle was finally completed with the question, “How therefore can you maintain water in half the tub with the constant outflow of water?”

The answer was obvious once I thought about it……I have to make sure that water was steadily and continually running into the tub from the faucet at the same rate by which it was exiting down the drain!

With that thought in mind, we now see that sales/marketing is an ever moving target. The factoring client that you have securely established with ABC Factoring Company today may have just been offered a factoring rate less than he is paying now, and will be gone tomorrow. If he moves to that new finance vehicle, so moves your commission as well.

Your pipeline of new transactions is vital to your financial survival as a factoring broker!

The question then should be asked; do I want to pursue the “elephant” sized deals that will occupy huge amounts of time, require highly competitive pricing and have less than a 10% chance of closing?

Think of that bathtub getting lower and lower in water volume. The answer by now should be obvious. The smaller less competitive, higher priced (more commission) transactions are truly the low hanging fruit. Let’s look at the math.

Suppose you manage to bring to a factor a client doing $1MM in monthly sales and he is eager to factor the entire portfolio of invoices. A deal of this size is not a slam dunk to underwrite as the funder is going to make sure all “i’s” are dotted and “t’s” are crossed.

Where will a transaction like that be priced?

On a discount basis, the fee certainly cannot be any higher than perhaps 1.25% to 1.375% on a monthly basis (probably pro-rated to a daily discount fee). So, you’ve consummated a one million dollar deal and you are getting (based on a 10% commission of gross fees) $1,375.00 in monthly commissions. The factor probably took the better part of a month to close the transaction.

Suppose you provide the factor with the same monthly volume of business, however the source was 20 transactions of $50K per month. Transactions of that size are quick to close, and can easily be done in two weeks. Where is the factor pricing a deal of that size? Even if the factor was very aggressive in pricing, it would not be too far from about 2.75% to 3% monthly discount fee (very aggressive for a deal that small, however I am trying to make a conservative point). The math then works out to be $150 per deal for the broker X 20 deals = $3000 in monthly commissions.

Now let’s look at the bathtub losing its water…..if your elephant client goes down the drain (which is highly likely due to the competitive nature of the transaction and other companies being very interested in swiping that deal) you’ve lost the full $1,375 per month in commissions. However in order to lose the same $1,375 per month with the 20 smaller deals you would have to see approximately 9 of your clients go through the bathtub drain.

How likely is that?

Smaller companies find it almost impossible to acquire financing, and they tend to stay with factoring much longer! Oh, and by the way….even if you did lose the 9 deals, you would still have remaining income of $1,625 per month, still more than the one million dollar client would have provided in revenue for your business.

As a factor, I look at my business that way as well. By now readers may know that Xynergy Healthcare Capital focuses on medical factoring. My brokers readily ask; Fred, why not hospitals?

Putting my risk per transaction, and my exposure to high concentrations in the larger clients (the hospitals), I do not see the risk/reward relationship tilting in my favor. My approach has always been and will continue to be “fast nickels rather than slow dimes.” When I put $2MM out in the street for factoring transactions, I would rather have 10 to 20 (or even more) factoring clients. My fees are larger my risk is smaller and more manageable, and my brokers are much happier (more $$). Factoring Brokers close more deals, and ultimately, that’s the name of the game! As always I welcome your comments.

About the Author: Fred Leder has been actively involved in the specialized healthcare financing niche for over a decade. Xynergy Healthcare Capital LLC is a factoring organization focused on small to mid-sized healthcare providers nationwide. For more information contact Fred at (954) 489-6460 or by email at fleder@xynergyhealth.com.

Are we getting too impersonal when it comes to making offers or negotiation?

Despite the technological advances over the years the rules of negotiation have not changed. They have a set of “best practices” that the conveniences of technology can derail.

So, can you negotiate Factoring deals online?

To answer, let’s look at three basic negotiation techniques (that apply to factoring and business in general):

1. It must be personal.

Well, despite your ongoing political debates with friends and the numerous jokes being passed around by co-workers, email is anything but personal. Here’s a hint, when the proposal is being sent to BullDOG345@wherever.com, you are already losing the deal.

2. It must allow for interaction.

Don’t mistake emails going back and forth as meaningful interaction. Although the English language is powerful in the hands of a gifted writer, all bets are off when it comes to sending emails back and forth. There is no room for error when it comes to interpretation. Sarcasm, humor, and a host of other real-life emotions not only get lost, they get abused.

3. Sharing becomes easy.

This one is relatively new, but if you are up against someone else, expect your offer to be immediately forwarded to several of your competitors. I am going to guess you didn’t want them in on your best offer letter if you could help it. It also gives the competition to “one-up” your deal out of context. That is not to suggest that you don’t put an offer in writing but a potential client is far less apt to fax on your offer versus just hit “forward” on the email.

Email is a great “foot in the door” vehicle – at most. People want to do business with people, not computers. I receive numerous business proposals on an almost daily basis. Although I like them from a screening process, I would never continue ongoing communication from someone online. Sometimes you just need to get on the phone or meet face to face.

Modern technology can help us cut numerous corners, but the subtlety and importance of the negotiation process is just not one of them.

So, what do you think?  Should a factoring broker or factoring company use email to make and negotiate offers?  Tell us what you think in the comments below!

If you can’t think of any off hand it’s because it hasn’t happened. The most recent example of such inefficiency has been the “cash for clunkers” program.

This program started almost two years ago (July 2009) and many car dealerships are still awaiting payments! The government stepped into the healthcare industry some 45 years ago and things have regressed to what we have today; and inefficient, overregulated, underfunded, bureaucratic nightmare soon to be encumbered with more regulations and less financial infusion….results…medical professionals can’t get paid efficiently or sufficiently.

Borrowing and/or Factoring are the only solutions to get cash flow moving.

On a grandiose scale, factors and other finance organizations seek to bring on clients with a monthly funding facility requirement well over one million dollars. Wells Fargo, CIT, Textron GE, and other huge commercial lenders have their “pick of the litter” when it comes to these higher volume potential clients (borrowers). In many occasions medical providers generating over one million dollars per month in receivables have credit profiles sufficiently strong for a bank, and if not, certainly strong enough for a non-bank asset based lender. Therefore the question can be posed; as a financial intermediary, factoring broker, referral agent..etc…how can I find the best way to participate in the ever-growing healthcare finance market?

Flying way below the radar of the massive lenders cited above, are the modest sized medical providers such as durable/home medical equipment providers, home health providers, single or multiple physician practices, imaging centers, dialysis centers, labs, ambulatory surgery centers, drug dependency and rehabilitation centers, physical rehabilitation centers, urgent care clinics…and a plethora of others. These modest healthcare providers ARE the opportunity to develop a good business as a factoring broker referral source. Who among the finance community would entertain a factoring transaction as small as $25,000 per month in volume, up to $400,000 (or higher)? In the highly specialized field of healthcare finance, Factors with sweet-spots of $100K-$300K are very few.

We at Xynergy Healthcare Capital LLC (XHC) have been in the healthcare factoring industry for over a decade and our team members have been some of the first pioneers in healthcare factoring. XHC is a new name, but, with highly experienced professionals.

Focusing on the modest sized providers as listed above, XHC wants to be your first call when you’ve found a prospect. You find the interested provider, set up the conference call and XHC takes it from there. You can participate as little or as much in the process as you want….but the industry pro’s at XHC will do that first conference call to correctly and positively explain the process and qualify the prospect.

No up-front fees, all underwriting costs taken from first funding. Factoring Broker kits are always available. Stepping into a new market may be uncomfortable; however XHC will hold your hand through it all. This industry is ready for explosion, join in with us.

For more information contact Fred Leder of Xynergy Healthcare Capital at (954) 489-6460 or by email at fleder@xynergyhealth.com.

About the Author: Fred Leder, a name well recognized in the healthcare finance industry, has been actively involved in this highly specialized niche for over a decade. Following fifteen years as a fixed income securities trader with a regional securities dealer firm. Leder joined and helped build Sun Capital HealthCare Inc. in Boca Raton Florida, and remained there over ten years until starting Xynergy Healthcare Capital LLC in early January of 2011. He has been guest speaker at numerous medical industry conferences, to include, The Florida Medical Association, Wealth Management Group of the Florida Bar Association, Hospital Finance Management Association, MedTrade, Florida Association of Certified Public Accountants, many ACFA Conventions, and regional training and educational seminars.

Mike Ponomarew reveals the Factoring Broker Action Plan in his next webinar. Read the article and save your seat today!

There are two types of business models a) “Opportunity” and b) “Industry.” The “Opportunity” focused business model concentrates on making money fast, get in and get out, short term results. These types of businesses seem to come and go quickly as people jump in and jump out of the “Opportunity.” Little emphasis is placed on a product.

The “Industry” focused business model concentrates on the promotion of products or services within an economy. Educating the prospect about “What Is In It For Them (WIIFT),” promoting the Features & Benefits of using the product or service. Through the movement of products and / or rendering of services comes the opportunity to generate income. The focus is placed on short term gain with emphasis on long term growth.

The Factoring “FEES” Principle

Factoring fits into an “Industry” focused business model. If you read my article titled “2011 The State of the Factoring Industry” you understand the economic trends and why Factoring has become the Financing Tool of Choice.

To generate income as a Factoring Broker you have to learn how to “Educate” the prospect about “What Is In It For Them (WIIFT).” Notice I did not say selling, I said educating. There is a major difference.

For many companies following an “Industry” business model, selling becomes an important ingredient in their strategy. Brokering factoring transactions is different successful.  Factoring Brokers learn to adapt a “Consultative Mindset” versus selling. The consumer (prospect) has become marketing resistant. If you have attended one of my speaker sessions, webinars or conference calls you will often here me reference the “FEES” principle

The Factoring Broker Action Plan

1. Find them…

2. Expose them…

3. Educate them…

4. Support them…

Understand if any one of these steps breaks down during the “FEES” Principle – the Factor will not generate Factoring Fees, which means no broker commissions will be paid. Learning to Educate your prospect about WIIFT will produce positive results.

Implementing your Action Plan requires the following;

a) Education

b) Tools & Systems

c) Marketing

Through all of my experience as an entrepreneur and business owner I can tell you this, “There is absolutely, positively no getting around in spending (investing) money in your business.” If you are skeptical to what I saying, immune to circumstance (see my article titled “Factoring Brokers Create Momentum for Success”) you must pay the utmost attention to what I am about to tell you!

If you want to build a Real business, in a Real world, in a Real Industry – Here is the Real Deal – it is going to require Your Time, Your Effort, Your Energy, Your Patience and Money.

Yep money! Like a Website, auto responders, landing or capture pages, squeeze pages, support etc. I can show you how to do it inexpensively but, you have to have Funnel Vision (see my article “A Word of Caution to Factoring Brokers“).

Some will argue that they have already been educated via a course, books etc. Claiming they know the Definition of Factoring and how it works (there is more to it than that guys). Guess what? If you haven’t taken action with the education that you have received up to this point…I hate to tell you but, you really don’t know it! You have probably let your emotions and circumstance get in the way. Working the business (applying knowledge) breeds confidence, overcoming insecurities, neutralizing fear, anxiety and making best use of your time and money.

Be honest with yourself…

The most successful brokers turn off the TV. Instead of sitting in front of the TV for countless hours they are on-line, attending workshops, educating themselves how to harness the power of the internet. Investing time developing their skill set learning to stay ahead of the competition.

If you are reading this article one of three things exist:

1. You believe that something “Bigger” is out there for you
2. You are a seasoned professional looking to maintain momentum, or
3. You’re an information monger lol.

Here is what I know – after working with thousands of factoring brokers, Change happens in a moment. There is a moment when people make a decision to change. Some choose to do nothing and continue to become victims of circumstance. For those that make a change that change takes place from inspiration or desperation. Understand this; Inspiration without a plan, a goal, and a strategy is a fallacy. I am not using this forum as a means to pump you up and get you excited. Like I said in a previous article I believe in intelligence versus hype. The time to be working in the Factoring Industry is right now!

Learning to do the Right Things Right!

The core mission of “TFI” is to educate, enlighten, inspire and support individuals like you to transform your actions into success. “TFI” is poised to revolutionize the Factoring Industry and Factoring Broker Training!

If you believe that something “Bigger” is out there for you. Then this may be the place that you want to start….I invite you to begin the process of “Capitalizing on Your Potential” next Wednesday, February 2nd at 9 p.m. – 9:30 p.m. eastern time

“TFI” Exposed Pre-launch Presentation Webinar

To register for this exclusive presentation please click on this link: https://www2.gotomeeting.com/register/583893731

You will be extremely happy you did!

About the Author: Michael Ponomarew joined the Factoring Industry in 1999. He brings with him more than 27 years of experience in entrepreneurship, marketing, and business management. Mike can be reached at mikep@millenniumfunding.com or by calling 888.652.8298 ext. 45.

With the New Year, comes resolutions, renewed hope, a time to refocus, re-energize our efforts in hopes they come to fruition. With the New Year comes a season of change. This is not about pumping you up, I believe in intelligence vs. hype, facing reality and becoming aware of what could be in store for us in 2011.

Over the next fifteen days I am going to share a special message with you, send a special note of caution, and expose you to “TFI” – that I believe will revolutionize the Factoring Industry.

So what is this special message I wanted to share with all of you? That message begins with telling you that people converge on making money when the economy is strong and things are going well. When consumer confidence is high so is motivation in making money, it doesn’t matter on the type of business. When the economy starts to turn for the worst and consumer confidence begins to decline so does the urge to make money.

Given the credit crisis and the greatest economic meltdown since the great depression many businesses and people have begun to think these hard times will go on forever. Not to depress you but, all indicators point to a bleak 2011. When times get tough people become complacent and worried they become reactive instead of proactive, their focus changes to survival vs. making money.

The Financial services industry has undergone radical changes that have shaped the way we spend, save and invest. One thing that I have learned from other successful people is to be successful and remain successful you must try to anticipate the road ahead.

Let me explain by using an example of playing video games with my son. It is usually a sobering, humbling experience for me because it seems that my son always creams me. It is not because he is bigger, stronger, faster or smarter than me – it is because he has played the video games before…he knows what twists and turns are coming next which pitfalls, bad guys etc. to avoid. You see he has played the game before and he knows what is coming. He has learned to anticipate what to do next in the video game vs. me reacting to what is happening.

Truth be told this reaction causes me a little stress (lol) and ultimately losing the game. So why am I telling you this? It doesn’t matter to me what business you are involved with learning to become proactive vs. reactive and learning to anticipate what is going to happen in the future will help you become and remain successful. In my opinion if you learn to anticipate what is going to happen, you can learn to take advantage of the hard times and profit during these hard times. Take time to educate yourself, understand the trends, why these trends happen and your skepticism, your fear will turn into reality and confidence.

We have to learn to see the world as it is, not worse than it is, be smart and understand where our economy is going, why is it going that way and how do you fit in that world.  I don’t want to be the bearer of bad news but, I believe that the economy could still grow worse than it already is – However, if we can anticipate what is going to happen then we can look at ways that we can make money in any market place. That is what my message is all about.

Here is a question for you – “What drives the economy?”

Is it interest rates? In my opinion interest rates are at the lowest that can be offered. Mortgage rates are at their lowest but, no homes are being sold. So what is it that drives the economy?  It is spending!

When people are spending money they have a different mindset. The mode is different and people behave differently. The higher the demand the more businesses have customers, the more they expand, the more employees they hire. The economy moves in a positive direction. Statistics show that 70% of spending is consumer spending.

Understand the trends – Over the past 30 years this consumer spending has taken place by the baby boomers (largest middle class in history). Did you know that 10,000 baby boomers will turn 65 each day for the next fifteen years! Statistics show an individual’s highest earning capacity comes between the ages of 35 – 55. When these baby boomers aged to this bracket they spent more money why? They developed more disposable income, they were raising families, bought bigger houses, accessories etc. which all costs money (spending).

When the baby boomers aged to over 55 they began to focus more on saving money for their retirement vs. lavish spending. Fast forward to today the baby boomer generation a major percentage of population is saving vs. spending. They are aging, retiring which has already caused a strain on health care and it will become more expensive as time goes on.

Now, consider the unemployment rate is at the highest it has ever been and the average person that is unemployed has been out of work for at least nine months. You now have this staggering amount of people holding onto the money that they have versus spending. What about the real estate and stock market disaster wow! The demand for credit has shrunk amongst consumers in spite of the stimulus plan and bank bail outs.

Over the last year we have seen the single biggest drop in over 60 years for demand of credit. People are focusing on trying to pay back more than they borrow which means consumers are not spending using credit.

This is a great strategy for the individual versus improving the economy. Look at the banks, they are not lending money therefore, they are not earning interest. Small business lending continues to be slashed and individuals are not borrowing because they are focusing on repaying their debts. Businesses are not receiving loans because banks are skeptical when profitability is on the decline. Banks now focus on earning money through ancillary services and securitization.

So what are we left with?

Small business which is the back bone of the economy is not receiving bank financing. Small business which is the major employer in the economy is not expanding do to the lack of spending. Consumer confidence is on the decline and higher unemployment is on the rise.

So why am I telling you all this?

With all the uncertainty what remains strong and profitable is the Factoring Industry. When the economy is weak companies use factoring to help them survive. Over 82% of small businesses are reporting poor cash flow. Customers are taking longer to pay for their invoices. Over the past few years factoring has become the financing tool of choice. In many cases it is the only choice.

If you are reading this then you believe that something bigger is out there for you. Well, you are right – It is time to get smart and decide that you are going to take advantage of this situation. See yourself as part of a solution, with all the free technology available out there building a small portfolio of factoring clients now will translate to larger commissions when the economy improves.

Learn to leverage your skills, background and contacts whether you are employed / unemployed. The stock market will come back like it did in the 1930‘s and 1970‘s. Things will improve but, it will take time. Put yourself in a position that you are going to educate yourself. I don’t care how you do it…Learn to take advantage of all the tools and information available to you.

You need to know what you are doing in the factoring industry or in any other industry.

This is not an industry where you have to carry inventory or exhaust large amounts of money. If you don’t know what you are doing then it is better to do nothing. You will save yourself frustration. If you lack confidence have anxiety find yourself some role models that have done well in this market place. History tells us you can do well in very tough times if you are not fearful, become educated and you learn to anticipate, be proactive, do the right things right.

Wealth is not all about money; it is physiological, spiritual, emotional and physical. You can have all the money in the world but, if your health is gone you’re done. So my message concludes by saying this – “You may want refocus and consider helping small to medium sized business (through such difficult times) which is the back bone of this country get back on its feet. Understand the road ahead taking advantage of this time, this opportunity. Learning to add more value to your family, to your business and in other people’s lives can help you do well emotionally and financially.”

With all this said, I must share a special note of caution with all of you – watch for it over the next few days.

About the Author: Michael Ponomarew brings with him more than 24 years of experience in entrepreneurship, marketing, and business management. Mike can be reached at mikep@millenniumfunding.com or by calling 888.652.8298 ext. 45.