Sooner or later, your efforts are going to turn to the Internet to find ways to leverage new clients.

In the beginning you will be faced with two big options…FACEBOOK® or GOOGLE+1™.

There seems to be a lot of confusion out there on whether your business should be using Facebook or Google+1 as a way to bolster up some marketing efforts.

Although both Facebook and Google+1 should have a place in your efforts (you don’t have to pick just one), most likely, one outshines the other as a good fit.

Here are a couple things to pay attention to when marketing your factoring company online.

If you are looking for interaction, you want Facebook.

But this assumes TRUE interaction. In other words, just because you have 3000 Facebook fans doesn’t mean they are reading anything you are putting up.

Are they leaving comments?

Are they sharing your posts?

If they are leaving comments, hitting the “like” button, and interacting, Facebook may be well suited for you. You just need to find a way to convert them to clients. If there is not a lot of interaction, you may just be wasting your time.

Fans work well when the “page” is a product or celebrity – not so much a company. A “company” is just too broad.

For example, how many raving fans would there be if I had a fan page on “Farms?” I am sure I would have some. Now, how many fans would I have if my page were the subject of “bacon.” – lots I imagine (who doesn’t like bacon) – and it is way more targeted.

The other downside on Facebook is that your efforts are limited to your ability to keep the content coming – and it won’t, for the most part, help you in the search rankings.

So, if you have interaction, go with Facebook. Otherwise think of Google+1.

Are you looking for “hands off” marketing?

Google+1 has two big advantages over Facebook when it comes to increasing your Internet exposure (and hopefully factoring business).

One, it does not require an ongoing amount of content from you. If people click the “+1” button their additional “circles” will be in on the action. It doesn’t require more content from you or more people “sharing” like Facebook.

Secondly, that little plus button can help you in the search rankings. Although Google does not formally release all the ins and outs behind their programming, one thing is clear: the more people “+1” your site, the higher up you may get in the search rankings.

As popular as Facebook is, it has yet to make a big “business” impact. Many Fan Pages are dead on arrival and do nothing for actual business.

Google +1 seems more in the thick of it when it comes to business. If someone is searching for your company the +1 can give you some extra credibility (Facebook can’t really help you there).

(Note: FACEBOOK is a registered trademark of Facebook, Inc. and GOOGLE is a registered trademark of Google Inc. This article was written based on research and professional experience.  This author, company, and website are not endorsed by or affiliated with either FACEBOOK, Inc. or GOOGLE Inc).

So, who is right for your factoring business?

As we mentioned in the beginning, we really thing you need to keep both on your radar…but for now, we give the edge to Google +1 if you are talking about getting more business.

Facebook is personal. But until users can separate business from personal on Facebook (as in two separate accounts) the business side just seems to be an after thought.

Nearly 50% of Retail Executives say their ability to secure financing has not improved or has worsened in the past year, according to a recent study released by CIT Group and Forbes Insights.

As banks continue to restrict business lending the need for factoring invoices remains strong.

Overall the study shows retailers generally pessimistic about the U.S. economy with 76% expecting the financial crisis to extend into 2012 or beyond.

Here are some additional results from the news wire that may also impact your factoring business.

Press Release: October 19, 2011 08:30 AM Eastern Daylight Time

NEW YORK–(BUSINESS WIRE)–Middle market retail executives are bearish on a short-term U.S. economic recovery, even though many expect their own companies to improve faster than the industry, according to the third annual Retail Finance Outlook study released by CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of financing to small businesses and middle market companies. While a majority of retail executives expect business to improve in the coming months, they remain cautious when it comes to increasing staff levels, building inventory, and assessing the availability of credit—especially for their customers.

These are some of the findings detailed in the research study, “Retail Finance Outlook 2011” (cit.com/retailoutlook2011), which was prepared in association with Forbes Insights. The study gathered the views of more than 100 middle market retail executives to assess their opinions on the U.S. economy and retail financing, as well as their views concerning prospects for their own companies and the retail industry as a whole.

“Retail executives maintain a sense of optimism about their own business growth prospects, even while they continue to sour on the idea of a quick recovery of the U.S. economy,” said Burt Feinberg, Group Head of CIT Commercial & Industrial. “This study highlights some of the key factors affecting the retail sector, including the price-conscious consumer, waning consumer confidence, the increased influence of social media, rising commodity costs, and consumer access to credit.”

Key Findings from the Study:

• NO END IN SIGHT TO FINANCIAL CRISIS: Retail executives remain pessimistic about the U.S. economy, with three-quarters expecting the crisis to extend into 2012 or beyond. A return to growth in the financial markets is also seen as taking some time, as 58% of retail executives don’t see growth resuming until 2013 or later.
• FUTURE SALES GROWTH TO INCREASE: Retail executives remain cautiously optimistic about their outlook for the coming 12 months. Nearly 60% predict sales will either grow (51%) or grow significantly (8%), with just 9% of executives predicting a sales decline in the next 12 months. Compared with the Retail Finance Outlook 2010 study, retailer optimism has been tempered. Last year, 22% of executives foresaw significant growth, and 68% predicted overall expected growth. The number of executives who predicted any decline in sales was just 2% in 2010.
• CAUTIOUS OPTIMISM FOR THE HOLIDAY SEASON: Nearly three-quarters of executives see sales improving slightly (38%) or staying about the same (36%) as last year for the overall season. Sensing that price-conscious consumers will be looking for bargains this year, 37% of executives predict an increase in last-minute shopping, while 38% expect post-Christmas shopping days to be stronger. On a related note, nearly half of executives believe both broad discounting and the price of fuel will be driving factors in consumers’ decision to spend.
• NEW MEDIA MARKETING LEADING GROWTH OPPORTUNITIES: Nearly six in ten executives report their companies are shifting marketing dollars away from old media toward new media, such as social media campaigns. As part of that shift, 68% of respondents report increases in marketing and deals through social media channels, including Facebook and Twitter. In addition, 63% report that their Web sales are growing (28%) or growing faster than other channels (35%).
• SHIFT TO NEW MEDIA WILL CONTINUE: In a sign that this trend will continue, some 58% of retail executives believe they need to improve their new media marketing strategies, while a further 7% characterize their companies as “late starters” in the new media game.
• HEALTH CARE COSTS AND REGULATIONS WIDELY SEEN AS NEGATIVE: More than any other topic presented, health care costs and regulations appear to weigh most heavily on the minds of retail executives. Over the next 12 months, nearly two-thirds of executives believe changes in health care costs and regulations will be negative (38%) or strongly negative (25%) for their businesses. Just 6% of executives view them as positive for their businesses.
• RETAIL FINANCING AVAILABILTY: Nearly half of retail executives say their ability to secure financing has not improved or has worsened in the past year. For the year ahead, half of executives expect the availability of financing to be stable, while 30% expect availability to improve and only 10% expect it to worsen.
• SKEPTICISM AROUND CONSUMER ACCESS TO CREDIT: Retail executives expressed concern about consumers’ ability to finance their own purchases and household costs. When looking ahead to the next 12 months, a third of retailers see consumer access to credit worsening and 22% see it improving, while the remaining 44% expect little change. Interestingly, 22% of executives expect to increase the lines of credit they can extend to consumers in the coming year as well. A smaller percentage (17%) foresees restricting credit to their customers.
• COMMODITY COSTS CAUSING CONCERN: More than half of retail executives see rising energy costs as being negative (47%) or strongly negative (8%) for business in the 12 months ahead. When asked about raw materials costs, 59% of executives said they feel either negative (48%) or strongly negative (11%) about non-energy commodity costs in the coming year.

Source: Press Release and full copy of the Retail Finance Outlook Study are available at: http://www.cit.com/media-room/press-releases/index.htm

When business owners need access to working capital without bank loans they can turn to accounts receivable factoring.

To learn more about the factoring business check out the Small Factor Series by Jeff Callender of Dash Point Financial in the Factoring Investor training center.

We are honored to get insights from Bert Goldberg, Executive Director and founder of the International Factoring Association, in this issue of the Factoring Company spotlight.

Dedicated to providing training, information, and valuable resources to members of the factoring industry, IFA is well-known for its annual conference and publication of The Commercial Factor magazine.

1. How did you personally get started in the factoring business?

I began my factoring career in 1982 as a computer programmer for Distinctive Solutions (DSC). DSC was developing a new Asset Based Lending System, a product similar to factoring.

About 10 years later, DSC decided to develop a Factoring software product. I was initially as a programmer, but I worked my way up the corporate ladder and was promoted to President in 1994.

2. What prompted you to start the International Factoring Association in 1999?

When I became President of Distinctive Solutions, I started conducting user group meetings to help educate our customers on both our software and Factoring. I brought in experts from the factoring industry to lead some of the sessions. The speaking sessions turned out to be so popular that factors that did not have our software wanted to attend our meetings.

So that we could market the meetings to non customers, I created the International Factoring Association. From those humble beginnings, the IFA has grown to be the largest association for commercial finance companies in the world.

3. Please share some of the unique benefits the IFA organization provides to members.

Some of the benefits that we offer are:

• Access to FactorSearch, a service designed to let businesses that are seeking factoring the ability to e-mail specifics regarding their business to IFA members
• Membership in the IFA’ Social Media Website
• Access to IFA web site Forums
• Access to the IFA Membership List
• Discounts from IFA Preferred Vendors
• Annual Factoring Conference discount
• Discount on IFA Conference Calls
• Discounts in the IFA Store
• Discount listings on the IFA Job Board
• Discounts on IFA Training Classes
• Ability to submit legal briefs to the Amicus Brief program
• Use of the IFA logo for advertising, web sites, etc.

4. Who is eligible for membership and can factoring brokers participate?

Membership is open to any companies that conduct factoring or asset based lending. Brokers may participate in any and all of the courses and meetings that the IFA offers.

5. What factoring training events are scheduled for the year?

Account Executive / Loan Officer Training
October 18 – 19 – Planet Hollywood – Las Vegas, NV

Small Factors Meeting
October 20 – 21 – Planet Hollywood – Las Vegas, NV

Sales & Marketing
October 27 – 28 – Planet Hollywood – Las Vegas, NV

Negotiations with Märianne Eby, Esq.
December 8 – 9 – Planet Hollywood – Las Vegas, NV

Presidents & Senior Executives Meeting
January 26 – 27 – JW Marriott Guanacaste – Costa Rica

6. Where will you hold the 2012 IFA convention and how many people usually attend?

We are expecting over 600 attendees at the 2012 convention to be held April 18 – 21st at the Hyatt Regency Resort & Spa in Huntington Beach, CA.

This is the largest gathering of people and companies involved with the factoring industry in the world.

7. What do you consider the best methods for finding factoring leads?

Network, Network, Network.

Meet with accountants and attorneys in your area. Attend business meetings such as chamber of commerce mixers. Also, be persistent with your message, timing is important.

8. What advice would you give to new factoring professionals just starting out in the industry?

Do what you know.

If you’re background is in manufacturing, contact companies in that industry. You will know the buzzwords and be able to communicate with them more effectively than you could in an industry that you don’t understand. Also, spend the time to learn about factoring. Attend an IFA training course or meeting. The knowledge you gain will enable you to talk intelligently with both the factoring community and businesses.

9. What is the most common business mistake you see factoring companies make?

Factors should always follow their procedures and then not get too greedy. Factors go out of business because their insufficient due diligence and they were over concentrated with a single client / debtor.

10. Are there any changes or concerns currently facing the factoring industry?

The biggest concern to the factoring industry is the threat of being legislated out of existence. Fraud may put one factor out of business; legislation could put all factors out of business. I created the American Factoring Association (AFA) for the sole purpose of educating policy makers in Washington DC on the benefits of the factoring industry. Information about the AFA is at www.americanfactoring.org.

11. Where can people contact you to obtain more information?

International Factoring Association Website: www.factoring.org
Email: bert[@]factoring.org
Phone: 805-773-0011 x 12

12. Is there anything else you would like to share with our readers?

Factoring is a wonderful industry, but it does have its own set of challenges. If you become involved with this industry, learn all you can about it. If you plan to broker, learn what factors do and how they run their business.

The more you learn, the better broker you will become. The IFA offers a Sales & Marketing course specifically for the factoring industry. If you are serious about this industry, take the time to educate yourself by attending our training courses and our annual factoring conference.

Every business owner wants to succeed and have their company flourish which is why we took the leap of faith in the first place. Sometimes however, our actions or lack thereof can answer that question in ways that may surprise even the savviest entrepreneur.

Anyone familiar with the asset based lending industry knows there are numerous risks associated with invoice factoring. How many times have we heard from our salespeople,

“This prospect is a no brainer and we should be able to fund him in less than a day.”

Those of us that fund accounts receivable know that what may look like the perfect prospect could be your worst nightmare.

As I have previously written in our June 13th  article, “Factoring: Is It Always About the Account Debtor?” we all know that there is no substitute for good underwriting policies and procedures that focus your due diligence on both the client and the account debtor. However, besides focusing strictly on underwriting guidelines, every now and then common sense can play a very large factor in determining if a certain deal is right for you. Below are a few common sense suggestions you may want to consider before you send out that next ACH or wire:

1) Does the factoring deal make sense?

I realize this may sound foolish, but I cannot tell you how many times there are conflicts between what the prospect says and the paperwork gathered with the application. If you cannot understand the deal flow, run it by a colleague or professional in that field who may have more experience and continue to ask questions.

2) How long has the prospect been in business?

Even though the debtor has excellent credit, if your client has no track record and produces faulty goods or delivers shabby services, chances are pretty good that you will wind up in a dispute and not get paid.

3) Why is the prospect looking for a new factoring company?

Whenever a prospect is leaving a factor and wanting to start a relationship with a new factor, be cautious. The prospect has every right to shop around because they may have received poor customer service or they feel they can get a more competitive rate from another factor. It may be worth your while to put a call into the current factoring company to see if they could provide some background on the client. Even though it may be an uncomfortable call, you will be surprised how many times factors cooperate with one another in buyout situations.

4) Is it best to just walk away?

This is probably the toughest one of all. You’ve worked so hard to bring in this lead, gather the paperwork and the returns look amazing. Unfortunately, the deal just doesn’t fit your company’s profile. As a very good friend and colleague of mine once told me when I first started my business, “Sometimes the best deal is no deal.”

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

Take advantage of these…

Free Tools to Grow Your Factoring Business Online!

1. Google Places Page for Factoring

Believe it or not Google is providing a free web page for local businesses through their Google Places Pages. This allows a business to be found on Google Maps and also helps ranking for local search results.

Visit Google Places and click on the link for “Get Your Business Found on Google”. Follow the instructions for claiming your site. If your business is not currently listed it will walk you through adding the business.

Google then sends a confirmation letter to your physical address to verify the party claiming the business is really the owner (that is a good thing). The letter will have a confirmation code you’ll need to go back and input later. Once your business is verified you can optimize the page with photos, videos, keywords, services offered, and a link to your company website.

 2. WordPress Platform

If you think blogs are just for sharing what you had for lunch…then you haven’t been on Facebook.

On a more serious note, the blog has matured and it provides a cost effective way to build an Internet site. WordPress makes it easy and free to use their open platform. Check out some of the impressive business sites that have been built in their WP showcase gallery.

Just one word of caution. While you can set up a free blog hosted on their site, you are better off using the free WP software to install under your own domain name and hosting account. For about $10 to register your domain at GoDaddy and $9 a month hosting fees at HostGator, you can now have a professional looking site with your own URL. That means your web address will be www.yourcompanyname.com and not www.yourcompanyname.wordpress.com

3. Keyword Research Tool

Wondering just what words and phrases people are using online to find factoring help? The Google Keyword Tool will tell you exactly how many people search for a certain phrase along with other related phrases. This knowledge will help optimize your company website and marketing materials so they can be found by the Internet search engines.

4. Linked In

Want to network with over 100 million business professionals? Linkedin provides a free professional profile that helps you manage your online identity. You can also network with specific groups like business owners or factoring companies. There are over 50 groups on Linked in that are related to factoring.

 5. Factoring Company Sites

I’m always impressed with the amount of free factoring broker training some of the factoring companies make available online. Here are just a few of the ones to check out:

6 Common Factoring Objections and How to Answer

Factoring News Quarterly Magazine from IFA

Old School Factoring Broker Tips That Still Work in Today’s World

Find hundreds more with a simple online search or get our top picks in the Factoring Company Directory. Want to receive the latest in factoring news first? Set your profile in Google Alerts (yes that Goliath again) to receive an automatic email notification whenever a new factoring article is published online.

So what are you waiting for? Start using these free tools to boost your factoring broker business online!

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.

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.

Knowing the right contacts not only makes things easier, it can make you more money.

Gain access to our personal Rolodex of experienced factoring funders that took years to develop. Work direct with knowledgeable investors, educators, and mentors.

Grab your copy of the 2012 Factoring Directory today!

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Business owners and factoring brokers will gain instant access to:

• Factoring Funding Sources (cut out the middle man)
• Invoice Buyers
• Medical Factoring Specialists
• Construction Factoring Companies
• Staffing Factoring
• Freight and Transportation Factoring
• Small Business Factoring
• Non recourse Factoring
• Preferred Transaction Types and Invoice sizes
• Broker Friendly Factoring Companies
• Master Consultants Willing to Mentor New Brokers
• Updated listings for over 60 factoring companies including  email, phone numbers, and websites (with easy one click access).

This directory alone could save you hundreds, even thousands of dollars when you go to sell an invoice or broker an accounts receivable funding deal.

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