2013 was certainly an active year for the factoring industry. Given the economic roller coaster, it is no wonder that more and more companies were inquiring about invoice factoring services and seeking help from factoring consultants. Each week Factoring Investor publishes free content – all designed to help you in the area of factoring accounts receivables. As 2013 comes to an end we wish everyone a Happy New Year! To help get your 2014 off to a productive start, we share with you this list of the... Top 7 Most Read Factoring Business Articles on FactoringInvestor.com Six Tips For A Beginning Factoring Consultant or Broker Wondering why some factoring consultants fail and others succeed? Here are 6 tips for starting as a … [Read more...]
Archives for 2013
Is This The Golden Age of Invoice Factoring?
It’s usually during this time of year where you will find a bunch of business articles that reflect upon the events of the past year or take a stab at making predictions for the next earnings period whether it be quarterly or annually. Instead of following suit and subjecting you to the same old topic I would rather take a look at... The present state of the factoring industry. When you hear the term “Golden Age” of something it typically represents a period of great peace, prosperity and happiness. Usually we think of periods of history in Greek and Roman mythology when civilizations thrived in the arts, literature and science. Obviously it sounds like a stretch to associate invoice factoring with the historic cultural periods of the … [Read more...]
The Affordable Care Act May Boost Demand for Staffing Factoring
The Affordable Care Act will give an unprecedented number of previously uninsured consumers access to affordable health coverage and care. This has a number of implications for the temporary staffing industry, and will create opportunities for the savvy factoring professional to expand their business. Companies looking to minimize their healthcare costs, or avoid the employer mandate entirely, will need to manage their employees’ hours to stay below the 30-hours-per-week benchmark or reduce their full-time staff below 50. Temporary staffing allows companies in this situation to fill talent gaps without compromising their position, which is both boon and burden to the staffing agency. Factoring for temporary staffing provides solutions … [Read more...]
How To Finance Your New Factoring Company
In my previous article, we discussed whether brokers should start their own factoring companies. In this article, we discuss how to finance a factoring company, should you decide to start one. While owning a factoring company can be very rewarding, it’s also very risky. And most owners make their riskiest decision before funding their first deal – the decision on how to finance their own company. The wrong decision could wipe you out financially and have long-lasting repercussions. Make this decision very carefully. There Are Many Ways To Fund A Factoring Company. Each way has varying degrees of risk. How you proceed depends on your risk tolerance. For example, when I first financed my factoring company, I made two upfront decisions. … [Read more...]
The Blurred Lines of Factoring
Factoring is one of the oldest known business practices that date as far back as the Ancient Roman Empire when merchants would enlist the help of collectors to settle trade debts. The Definition of Invoice Factoring Factoring is generally defined as an arrangement whereby a factor purchases an account(s) receivable from a business at a discount to the face value of that receivable. The factor earns a fee based on the number of days that receivable remains unpaid. Effectively the business is no longer dependent on the conversion of the accounts receivable to cash from the actual payment from their customers which takes place on typical 30 to 90 day terms. Today, factoring is used more than all other types of business financing combined. … [Read more...]
How Factoring Benefits Temporary Staffing Agencies
Temporary staffing has been a linchpin for recession recovery, representing approximately 14 percent of the nation’s job growth each month throughout 2013. As a result, temporary staffing agencies may feel the cash crunch of expanding recruitment and marketing efforts and meeting greater demands from their customers. For these agencies, invoice factoring is the ideal funding solution to keep them on solid financial footing. There are several benefits to factoring for temporary staffing agencies: Factoring is the most flexible financing option available to staffing agencies. Financial flexibility means they do not have to worry about submitting a minimum amount of invoices or hitting a monthly maximum. An agency can choose to factor as … [Read more...]
Should Brokers Start Their Own Factoring Companies?
Most brokers who join the factoring industry expect to eventually own a factoring company. They plan to start as brokers due to the lower cost. This approach allows them to get some revenues and experience, with the hope of eventually becoming a full-fledged factoring company. This strategy is fine, as long as you realize that running a factoring company is completely different from running a brokerage. The costs, needed skill set, risks, rewards, and challenges are very different. Do you have the capital? The first question to ask yourself is if you have sufficient capital to start factoring accounts. This attainment is not as easy as it sounds. Obviously, you need enough capital to service your clients. This simple table gives you … [Read more...]
PayPal Offering Working Capital To Business Account Holders
Well-known for its online payment processing, PayPal™ is now venturing into the world of working capital funding for businesses. The new financing program is geared towards small business owners and publicized as an alternative to traditional bank loans. We have been using PayPal™ here at Factoring Investor to accept payments online in the Bookstore since we first started publishing our newsletter online in 2008. We are familiar with its ease of use and secure processing. The part that came as a surprise was their recent marketing email touting similar benefits to factoring invoices. Here is a quick excerpt: If you’ve been thinking about growing your business with PayPal™ Working Capital, we’re here to help. It’s easier funding for … [Read more...]
The Sales vs. Underwriting Factoring Dilemma
I’ve written a bunch of articles about what to look for when funding a new client. Whether it’s proper notification or having an ironclad factoring agreement, you should always have a consistent set of due diligence procedures that adequately protects your company in every factoring transaction. With any new deal there will regularly be nuances that are unique and test the funder. In many cases getting past these roadblocks can make or break a deal. With any factoring company, one the biggest challenges is to scale the company for growth while keeping the proper safeguards in place. The friction caused by this dilemma is usually felt by the sales and underwriting divisions within a company. Salespeople complain that the underwriters … [Read more...]
Ongoing Due Diligence Ensures Healthy Factoring Relationships
Every business that extends credit to its clients understands the importance of due diligence. Just as most people would not blindly hand over a stack of cash to a stranger on the street, factoring companies do not begin purchasing invoices from clients whose businesses they do not understand. Once the client relationship is established, it is easy to become comfortable with the routine of purchases and collections and ignore due diligence entirely. This complacence can prove disastrous for the client relationship. Tax issues, debtor concerns, and client malfeasance can all fly under the radar until the situation requires a more serious (often legal) response. Fortunately for factors, a variety of services exist to make the process … [Read more...]