What do you need for day-to-day operations in terms of equipment, technology, documentation, and know-how?

Factoring receivables can be a lucrative business with high returns, but you need to know how to manage the business with minimal overhead. Overseeing employees adds significant additional costs and responsibilities.

This informative ebook is written in the first-person by Jeff Callender, a well-respected small ticket factor who has been in the business since the mid-90s.

Jeff shows simply and clearly how he has run his company year after year with no employees.

Discover how his use of current technology, outsourcing, and common sense can enable you to manage a full portfolio of clients without the expense and complications of a big payroll.

Learn his numerous tips and secrets as to how you can not only enjoy running a very small factoring operation from practically anywhere, but thrive as you do!

Yes, – I want my copy of How I Run My One Person Factoring Business AND the Factoring Company Directory!   Special Bundle Price: $29.96 (Retail $50.90)

Yes, – I want just the copy of How I Run My One Person Factoring Business!  Retail Price: $10.95

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About the Author: Jeff Callender began doing what this book teaches in 1994. He has written books and numerous articles, consulted, and been a public speaker to thousands of people about how to profitably factor small receivables. No one comes close to providing as much information on the subject as he has.

About the Ebook: This book is delivered in PDF format via instant download upon completion of your order.  If you prefer a hard copy please feel free to print for your own use from your printer.

Table of Contents

If you are like most factoring brokers you may wonder:

“Which marketing methods are most effective?”

“Which are a waste of time and money?”

“Which should I use?”

“Which do you use?”

After hearing these questions time and again, Jeff Callender decided to deliver a hands-on guide of marketing methods that produce results.

But he didn’t just stop at using his own proven system for finding factoring clients. He also interviewed 7 other successful small factors and brokers on the marketing methods that worked (and sometimes didn’t work) for their cash flow business.

I recently reread Marketing Tools for Small Factors and Consultants and was impressed all over again by the candor and ready to implement ideas.

One of the best sections is the summary of over 45 marketing methods that provides a detailed ranking system by:

1. effectiveness, and
2. cost

This handy chart lets you see at a glance that networking was a top producer but direct mail was costly with minimal results. It then goes into detail with the best places to network for factoring clients along with sample scripts and handouts.

Click Here to Grab Your eBook Copy!

Without a doubt, Marketing Tools for Small Factors and Consultants, by Jeff Callender, is one of the best marketing books out there for factoring brokers.

But hey, don’t take my word for it. Here are just a few of the things people are saying about it:

“If you want to know which marketing methods are the most effective and which methods are a waste of time and money, read this book.” – Richard Koroki, Torrance CA

“I loved the pictures of the business materials and articles. The specific examples were very helpful to a visual person like me.” – Rebecca Álvarez, Tulsa OK

“Attention grabbing and attention holding. Chock full of tips! Without this book, one could spend hundreds or thousands fumbling around trying to figure it all out. All the reader has to do is take action with the information and run with it.” – David Martin, Spring Hill FL

“Insightful, though-provoking and packed with information. The easy-to-implement yet low cost marketing tips are invaluable.” – Derrick Collins, Lanham MD

If you already own a copy then please, take the time to read it all over again and implement at least one new idea for finding cash flow business.

Don’t already have this gem in your library?

Grab your copy here for only $13.95.

Ordering is fast and simple. You’ll receive instant download access to the eBook and it’s backed by our 100% satisfaction guarantee.

Of course these stats are no surprise to business owners.  Rebuffed by banks, they increasingly turn to factoring and purchase order financing for cash flow needs. The New York Times recently ran an article on the shift, highlighting individual companies that used purchase order funding last year when long-time bank loans had left them standing solo at the financing alter.

This alternative business financing market increased an astounding 80% in 2009 for one of the purchase order funding companies interviewed.

The article, entitled The Places They Go When Banks Say No, (by Andrew Martin, January 30, 2010) can be read at NYT online.

Purchase order (PO) funding provides a cash advance so the business can pay the source company manufacturing the goods. This allows the business to obtain the product, or materials needed to create the product, that will ultimately be delivered to the customer.

On the other hand, factoring provides cash through the purchase of invoices or accounts receivable at a discount for services rendered or products already delivered. Factoring involves funding after performance while purchase order financing requires funding prior to performance.

Both factoring and purchase order funding are in demand during the credit crunch providing opportunity for cash flow brokers and investors. To learn more be sure to read How I run My One Person Factoring Business, by Jeff Callender.

These training courses provide factoring brokers, funders, and investors opportunities for ongoing education and networking in the world of invoice factoring. Mark your calendars for these upcoming events:

2010 IFA Factoring Conference

April 14 – 17 – Fairmont Scottsdale – Scottsdale, AZ

Bankruptcy & DIP Financing

January 13 – Intercontinental Miami – Miami, FL

Presidents & Senior Executives Meeting (Sold Out)

January 14 – 15 – Intercontinental Miami – Miami, FL

Luncheon Meeting in Conjunction with New York Institute of Credit

March 2 – Arno Ristorante – New York, NY

Account Executive / Loan Officer Training Course

June 3 – 4 – Treasure Island – Las Vegas, NV

The Law and Business of Factoring

June 7 – 8 – Treasure Island – Las Vegas, NV

How To Offer PO, LC’s and Inventory Finance

July 15 – 16 – Treasure Island – Las Vegas, NV

Transportation Factoring Meeting

August 26 – 27 – Intercontinental Kansas City at the Plaza – Kansas City, MO

Small Factors Workshop

October 14 – 15 – Rio All Suites Hotel – Las Vegas, NV

Factoring Sales & Marketing

November 4 – 5 – Rio All Suites Hotel – Las Vegas, NV

For more information or to sign up for any of these factoring events, please visit IFA online or call 1-800-563-1895.

How will they be treated? What if they pay me directly? What do I tell them? Here are some common questions and helpful answers.

I don’t want to sell all my invoices. Is that possible?

Yes. Most factoring companies will allow you to pick and choose which invoices to factor. Of course they must be ‘credit worthy” but the factor will help you decide which ones are in your best interest to sell.

Where do the payments get sent?

Your customers will mail payments directly to the factoring company. Any ‘reserve” will then be forwarded on to you.

What if the customer mails me the money?

This is common, especially on the first payment. Factoring companies will require you to forward them the check. In other words, you are not to cash it and write another check to the funder. This helps the factor keep track of each customer’s credit worthiness (as well as avoid fraud). Your clients will then be notified that they need to mail payments directly to the factor.

How do I know the factor will treat my clients well?

The factor is in business with you. They want you to succeed and continue to grow. They are not a collection company. They want to maintain your customer satisfaction just as you would.

What should I tell my customer? Will it look bad if I am factoring?

Odds are your client may already be familiar with the process and not really think anything of it. If for some reason they are not, you simply need to tell them that you have chosen to use an outside company to manage your account receivables.

Still looking for more information? Check out 5 Things to Know Before Applying for Factoring.

Well, this article is for you!

What is factoring?

Factoring is the sale of accounts receivables or invoices at a slight discount.

How does it work?

You set up an account with a Factor. Once set up, you send the new invoice to the Factor who then cuts you a check for the agreed upon percentage, referred to as the advance. Read More…

How much does it cost?

The factoring fee depends on the strength and performance of the accounts. For the most part the fee will be between 2-5%. Read more…

How long does it take?

Setting up an account can take 5-10 days. Once the account is set up an advance is typically funded within 24 hours of invoice submission.

Do I have to factor all my accounts?

Not unless you are looking for a ‘one time” shot. Otherwise you pick and choose which invoices you would like to factor.

How long do I have to work with the Factor?

There is no set time. The average business may factor for 2-3 years but some companies continue on indefinitely.

What if I have poor credit?

For the most part the factor is looking at the strength of the payer (your customer), not you or your business.

What happens if my customers don’t pay?

That depends on how you set up the transaction with the Factor. If it is ‘non-recourse factoring” then you may not be responsible. If it is ‘recourse factoring” then you will need to repay or replace the bad invoice. Read More…

What if I have a bank or tax lien?

Oftentimes the factor can work with the bank or tax entity to have them subordinate their position. If there are enough receivables you may even be able to pay off the loan or tax obligation. Read More…

How can I get started?

There are numerous great factoring companies right here at FactoringInvestor.com. We recommend that you ‘interview” more than one to see which company may best fit your needs. Read More…

What if I want to learn more?

There is a lot of great information on this site. There are also many in-depth resources available from a variety of authors. Check out the ‘Resources” section of FactoringInvestor.com. Read More…

This leaves many owners losing sleep and making extra trips to the mailbox in hopes of finding the payment that will turn things around.

Unfortunately, when dealing with a slow or late payer there are not a lot of good options for the small business owner.

Banks are not likely to lend you money unless you have significant assets to back it up. Even when they reluctantly grant approval, as if adding insult to injury, banks may charge substantial fees and interest for the short-term loan. Plus, the debt will show as a liability on your books.

In need of improved cash flow, many business owners look to factoring account receivables as an alternative to bank business loans.

When considering factoring it is important to remember you do not need to factor ALL accounts receivable. You get to pick and choose which ones to factor and which will continue to pay you directly.

So, when should you NOT factor your invoices?

1. Your customer typically pays within 10-14 business days.

Although you could factor a quick payer (and the Funder would love you to), you may be better off just budgeting for that time frame. However, a Factor will often give you a really good discount rate for such strong payers. Decide if the factor’s fee is worth having the money to work with sooner. If not, just wait it out and pass on sending these invoices to the Factor.

2. You don’t need the money.

Ok, this one sounds obvious, but you would be surprised. Some companies get into the factoring routine, but then don’t get back out. It is easy to become used to the create an invoice and get paid within 24 hours routine. But if your business is not crunched for cash, or you do not have a better use for the money immediately (such as the ability to realize discounts on your own goods or services) then you may just pass on factoring altogether or at least scale back on the number of invoices you factor.   You can always bump the number back up if you need to in the future.

3. You have a line of credit with a grace period.

If you have a line of credit, or even a credit card, that allows a 30-day grace period it might be better to tap into these funds on a short-term basis. A “grace period” will allow use of funds at no cost. The down side is you better be certain in your ability to pay off that balance at the 30-day mark. If you cannot pay off the debt it is likely the charges on the line of credit or credit card will outweigh the cost of factoring.

Factoring is not for everybody, but almost every small business has situations where factoring, even in the short term, can offer the perfect solution. Although some businesses use factoring permanently, most utilize factoring services for approximately 18-24 months.

Knowing when to factor and when not to factor invoices can keep your business financially fit for years to come.

Jeff Callender: As an author and trainer of small factors, over the past year I have received many phone calls from people presently or formerly working in the mortgage industry who have been considering factoring as a new career.

I realized it would be both interesting and educational to have a conversation with someone once involved in the mortgage industry for many years, and who made the jump. In this interview you’ll find his perspective on both worlds, and discover what his life is like now as a smaller factor.

Don, tell us a bit about your personal and work history before you became a small factor and President of Oxygen Funding.

Don D’Ambrosio: I was born and raised in Philadelphia and received my Bachelor of Business Administration degree from Temple University in 1987. I became an accountant and moved to southern California in 1990 to take a position as Corporate Controller with a commercial insurance company.

In 1996 I took the course to become a Diversified Cash Flow Specialist but didn’t go into the cash flow business then; however the basic concepts of this industry have always interested me.

From 1996 through 2007 I worked as a Corporate Controller and later divisional Chief Financial Officer of a mortgage company of a large Wall Street firm with over 20,000 employees. In 2007 I left that world to start Oxygen Funding, Inc., my factoring company where I now work full-time.

What exactly were your responsibilities as a Corporate Controller and divisional CFO with the large national firm?

As Corporate Controller and Chief Financial Officer, I was responsible for all financial aspects of the company including, but not limited to, budgeting, forecasting, pro-forma planning, financial statement preparation, cash flow analysis, taxes and external audits with CPA firms and regulatory agencies. I was also responsible for monthly, quarterly and annual presentations to the Chief Executive Officer, Executive Committee, Managing Directors and Senior Management.

How many people did you supervise and what did your day-to-day work entail?

I had approximately thirty people reporting to me. As an executive each day differed. Typically, there were several key reports that I would review on a daily basis including the company’s cash position, interim profit and loss, month-to-date production and reports relative to the company’s head count, geographic footprint, expenses and pricing of production in the secondary market. I would meet with my managers to analyze what was needed to ensure the company was on target to meet the goals set in the budget.

Did your position there give you a sense of foreboding that something bad was going to happen in the financial world, before it happened? Or were you unable to see it coming?

I saw it coming, absolutely. As a CFO it was almost impossible not to see that things were going from bad to worse. The first real indicator was when newly originated loans started to show an increase in First Payment Defaults. Essentially this is when the borrower fails to make the first payment on his or her loan. As “FPDs” began to increase, the pricing of loans decreased, lowering revenues and profit margins. I could elaborate further but in my judgment this was the “tip of the iceberg”. The most difficult part during the early stages was trying to judge whether this was a short term problem that could be corrected or something much worse. Obviously we all now know the answer to that question.

From your perspective, what was behind the “Mortgage Meltdown” and what was your personal experience inside it?

It is fair to say that the recent mortgage crisis had many similar characteristics to the “Dotcom Boom” that occurred in the late 1990′s. When companies, investors and consumers all start to make quick money in large quantities, it’s a recipe for disaster. The mortgage crisis, however, had a global effect and nearly brought down the world’s financial system.

As to my personal experience, let’s just say the last few years were challenging to say the least. If you are the person that reports the numbers, which are going from bad to worse to catastrophic, it’s not a lot of fun. Losses were mounting, layoffs were numerous and there was no end in sight. Many of our competitors had already shut their doors, morale was at an all time low and the entire feeling was that of impending doom.

You escaped the mortgage crisis personally before it brought down the company you worked for. What led you to move from being a mortgage CFO to a factor?

I always liked the business model of factoring. Unlike the mortgage industry, the factoring industry deals with business to business type transactions. With our factoring clients, we deal directly with the owners of the company. They are very astute about their businesses and know their exact profit margins. After we give them our presentation and explain to them how increasing their cash flow can increase their bottom line, they usually come on board with us.

How is factoring an invoice different from closing a loan?

Getting someone into their first house or helping them refinance an existing mortgage is very gratifying, no question. Unfortunately, when you are an executive in the corporate office, you don’t often meet your borrowers in person or even over the phone. The personal contact is what I like. Also, unlike mortgages, factoring is a repetitive business so you really get to know and work with your clients.

So the personal contact with the people you’re helping makes a huge difference to you?

It really does. Every business that approaches us for assistance with their cash flow is unique. The underlying need may be the same but the situation varies from client to client. Understanding the client’s business, tailoring a program that works for them and witnessing firsthand how Oxygen Funding has helped improve their situation is very gratifying.

Do you find the typical business owner has a better handle on what he or she is getting into with factoring, than the typical consumer trying to obtain a home loan?

It depends. I can make the argument on both sides of that question. Although I was not in sales in my previous position, there were borrowers who knew exactly what they could afford, while others were less adverse to risk. On the factoring side, I have met with CEOs and owners who are very knowledgeable and others who really do not understand what our industry is and how it can help them.

How is the underwriting and decision-making process for accepting or declining a prospective home owner different than it is for a factoring prospect?

When qualifying a home owner you are making an underwriting decision based on the credit worthiness of that person. With a factoring prospect, the decision is weighted highly on the prospect’s customers. In many cases you can have a factoring prospect with little or no credit and still qualify them for a credit line since they have strong creditworthy customers.

What skills or insights did you bring from your previous work that have helped you with factoring?

It helps when you understand the numbers. When I meet with a prospect and understand their margins and can explain how Oxygen Funding can increase their bottom line, it is a huge benefit. Also, having the ability to read tax returns and financial statements is a definite plus in assisting our due diligence team.

What have you had to learn that you didn’t know as a mortgage professional?

There was definitely a learning curve when I first got into the factoring business. You can read books and go to classes but in the end nothing beats firsthand experience. For starters, to become a recourse factor in the state of California you have to complete a forty-three page application, obtain an insurance bond, get finger printed and have the application signed and notarized. The entire process with the state was definitely a learning experience.

How is your daily work the same and how is it different, as a smaller factor compared to what it was in your mortgage job?

In many ways it is the same since we are evaluating a risk and qualifying a client for financing. How it differs is that I now have an opportunity to interact directly with the client from the time they first submit their application up to the final decision whether it is an approval or denial. I have also learned that owning your own business means that you are always “on call” for the company.

Any advice for people from the mortgage industry thinking about entering factoring?

First, I’ll start by saying they are totally different beasts. Much of the factoring industry is relationship based. Start by networking with bankers, CPA’s, other factors, factoring brokers and so forth. Second, find industries that you may know that can use factoring. Finally, be patient. It takes time to build relationships and make sales. It’s just like planting a garden, some seeds grow quickly while others take some time.

Are there people in the mortgage industry who shouldn’t go into factoring? If so, how would you describe them?

I wouldn’t say there is a specific trait or characteristic of a person from the mortgage industry who should not go into factoring. I would prefer to say that factoring involves a different skill set. From a sales perspective, you are working with commercial transactions versus consumer loans. Therefore to be successful you will need to understand how to work with business owners and network with people and associations who work with businesses such as bankers, CPAs, the Small Business Administration and local Chambers of Commerce.

Tell us about your factoring company.

The name of my company is Oxygen Funding, Inc. We specialize in dealing with smaller companies, and our typical client has fewer than 10 employees and gross revenues fewer than $5 million per year. We specialize in assisting businesses having invoices $100,000 and below with a minimum of $5,000 total billings per month. We will consider clients that fall outside of these parameters on a case by case basis. We service the entire United States and work with all industries with the exception of medical receivables and certain construction deals.

Your company name Oxygen Funding is unusual; what’s the story behind it?

When I was attending Temple University as freshman I remember my Accounting 101 professor telling the class,  as important the profit and loss statement is to a company, positive cash flow is the oxygen all companies need to survive.

I never forgot that statement. As I started my factoring company and knew we would be in the business of providing steady cash flow for all our clients, the name Oxygen Funding seemed like a perfect fit. Now, as my professor would say, we provide the positive cash flow “the oxygen” our clients need to survive.

Why do you prefer smaller clients?

The first book I read about this industry was your book, Factoring Small Receivables. The more I read it, the more I agreed with the concept and benefits of being a factor of smaller receivables, rather than just larger ones. Besides the obvious risks involved in purchasing larger deals, we like the fact that we really get to know our clients.

Larger factors sometimes say factoring smaller clients involves more work for less income. Do you find factoring several small clients to be more labor-intensive than funding larger ones?

If you have good factoring software and conscientious employees, it makes the job a lot easier. I would highly recommend any factor use good factoring software. It can make or break your business. We use FactorFox software and are quite happy with it.

So how is business at Oxygen Funding?

Absolutely fantastic. We have exceeded our financial projections and continue to grow sales every month. Most importantly, we have fantastic clients that make our job a pleasure.

You put a lot of emphasis on your clients.

From day one with each client, our mission is to provide customer service that is second to none. We realize there is a lot of competition and pricing can only go so far. Compared to just a few years ago, the factoring industry has expanded greatly. We want to be considered to be the best at what we do.

Any parting thoughts?

This may sound overly simplistic, but in my humble opinion customer service is everything. Our mission statement is,  “Providing our clients with customer service that is second to none.” We take pride in that statement and work every day to ensure that we meet and exceed our clients expectations. In today’s world it is accepted that quality customer service is the exception rather than the norm. You would be amazed how far a little extra attention to detail and courtesy goes.

Don D’Ambrosio is President and CEO of Oxygen Funding, Inc. in Lake Forest, California. Don can be reached by phone at 800 790-3419 or by email at don.dambrosio@oxygenfunding.com.

Jeff Callender is President of Dash Point Financial Services, Inc. in Tacoma, Washington.  He can be reached by email at jeff@dashpointfinancial.com. Jeff has specialized in factoring very small businesses for many years and is the author of numerous books about factoring. His ebook How I Run My One Person Factoring Business is the number one online bestseller at the Factoring Investor bookstore.

Here is an alternative solution to consider when a company does not want to discount invoices or doesn’t qualify for factoring.

It is a common problem…

A business delivers the goods or services, invoices the customer, and waits for payment. A business could demand payment upon delivery but many customers might take their business elsewhere. Rather than waiting 30, 60, or even 90 days many companies decide to sell or factor their invoices for an immediate cash advance.

However some companies do not want the expense of factoring or don’t want their customers notified of the factoring transaction. Others might want to factor but their invoices don’t qualify.

Rather than factor invoices for a discount, enterprising companies turn to their customers. By offering the customer a discount for paying the invoice early a business can receive payment faster. Rather than punishing a customer for late payment they are rewarded for timely payment.

A common approach is to offer terms of 1%/10 days, net 30. This gives the customer a 1% discount from the invoice amount if it is paid within 10 days. After the 10th day and up to the 30th day the full invoice amount is due. After the 30th day a late fee might be incurred.

A tiered approach can also be effective. For instance, a 4% discount if paid within 10 days and 2% if paid within 20 days offers a more aggressive incentive for a longer period of time. As long as the discount is less than the factoring fee the business and the customer have an opportunity to benefit.

Of course offering early payment discounts can affect the bottom line and demand additional time in managing account receivables. Plus, not all customers will take advantage of paying early causing unpredictable fluctuations in cash flow. In addition to reliability, a factoring company can provide credit and risk analysis when deciding on whether to extend terms to a new customer.

Offering early payment discounts to customers is one accounts receivable management tool that can be an effective alternative or addition to factoring. An experienced accountant or consultant can assist in weighing the cost versus reward benefits.

What are the most effective marketing methods to find new factoring clients?

This is a vital question confronting all factors and factoring consultants, especially those new to the business. Yet surprisingly little is written to answer such a key issue.

This book shows which tools work (and which haven’t worked) for seven professionals in the industry. You Will Discover:

• The most effective methods which have the lowest cost – or no cost at all.
• Methods too often used by newcomers which are quite expensive and generate very little (if any) business.
• How to define your “choice client” then identify and zero in on that audience.
• Specific advice about what to do (and what not to do) as you get started.
• Unique methods not often considered when planning a marketing strategy.
• An analysis of all the marketing tools presented including:
• The business cards used by the author and each contributor.
• Charts reviewing marketing resources recommended by the writers.
• A chart summarizing all the marketing methods described in the book, including their relative effectiveness and cost.
• Sensible yet easily overlooked practices of highly effective networking.
• A sample public speaking presentation by one of the best in the business.
• Essential yet simple guidelines for making your web site a knockout instead of a yawner.

**Click Here to Download the Marketing ebook for only $13.95**

Or Combine as a Special Bundle

**Click Here to Download the entire Small Factor Series – 6 ebooks in all – for only $95.00**

About the Author: Jeff Callender has been factoring small receivables since 1994. With his books, articles, web sites, classes and workshops, he has taught thousands how to profit with this lucrative investment. This book reveals the essentials you must understand in order to safely make these remarkable returns.