By reading the headline of this article one would assume that I will be expressing pearls of wisdom about how to become an instant success in the factoring industry. It’s really easy, right? All you need to do is to acquire some capital either through a bank or investor, fund some invoices and walk your way to fame and fortune. Whether it’s a new factoring company or any startup, one of the easiest things to do is to create an excel spreadsheet with some basic assumptions and just double and triple income for the next few years. We recently had a recent startup visit our office looking for capital. Although they had been in business for less than a year I requested a set of projected financial statements including a profit and … [Read more...]
Archives for September 2014
Red Flags of Factoring: When to Walk (or Run) Away From a Deal
“Time is money” is a cliché, but also a reality of the factoring industry. Unfortunately, all too often we waste time – and money – chasing prospects and shopping deals to any number of funders without identifying the fundamental issues that will doom a deal before you make the first pitch. Before you invest in any deal you must ask: will any rational funder make this work? Without delving into funder preferences and gray areas, there are five red flags you should look for in any factoring lead you come across: Medical deals with very low dollar amounts Medical factoring in particular is very time and effort intensive. While some medical factoring companies will at least take a look at very small deals, the majority will determine that … [Read more...]