The Financial Professional’s Vocabulary

It’s time for factoring professionals to consider, “What’s in your vocabulary?”

Factoring Consultant VocabularyAll of us get caught up in linguistic shorthand that apparently works well between financial professionals in the factoring business but very often becomes a usual and customary part of our parlance.

When we talk we have choices of words, phrases and nuances that are available at that time. It is a common mistake (in my view) to use the same choices for all listeners. It is with this in mind that we look at how we use words.

Factoring Financial Transactions (Not Deals)

My first complaint is with the term “deal.” If one looks through my articles, underwriting notes and comments you can see that I noticeably avoid that word.

Between financial professionals we all talk about deals that we saw, closed, and are in various stages of underwriting. Perhaps it is a mental block on my part but I can only associate a “deal” with some kind of behind the scenes activity; some kind of closed negotiations between less than savory characters; some kind of “don’t tell anyone” atmosphere.

My solution has always been the word “transaction” instead.

I do not like the fact that banks and realtors close “financial transactions” and we, non-conventional funders, do “deals.” For me this type of description lessens our value and suggests a reckless investigative approach to underwriting. So vocabulary word #1 should be transaction. Seriously, one looks and sounds more professional using that term.

Tips For Factoring Consultants and Brokers

Being a specialist in healthcare factoring, my brokers very often call me with a description of a proposed transaction (not deal) that they have. Typically it may sound somewhat like…

”Fred, I have a medical practice that needs A/R financing. There are three Docs in the group and they bill about $200K net, monthly.”

My immediate response is one that I learned from a friend who was the CEO of a large hospital who once told me “DOCS (docks) are places where Doctors park their boats.”

I seriously remind my brokers that doctors spend a heck-of-a-lot of time in colleges getting that medical degree and deserve the full title. Too often brokers will refer to the doctor as DOC on the phone during a conference call, from my perspective…not good!

We get only one chance to make a first impression. So when you find a new financial facility for factoring transactions, avoid the question:

“So what are your rates?”

I am not aware of any finical institution doing loans or factoring that has a standard rate. When I get a call like that, my appraisal of that broker’s professionalism is not too high.

However a when a new broker calls and asks:

“So what are some examples of how you have structured some typical transactions?”

Wow that brokers stock price goes way up!

Factors price and structure transactions differently from one another and differently for each of their clients. Also remember that rates are but a part of the overall transaction. There are up-front fees, audit fees, origination fees, advance rates, collateral evaluation and still more components that all blend into the proposal being made by the lender or factor. Be professional in your approach to your funders, and show them immediately that you understand what you are doing.

What About Funding Sources?

We all use the phrase “funding source.” I may have used it in this article and it is not a “bad term.”

I’ve found however that when talking to potential clients there is a much friendlier, understandable and professional way to make them aware that you have many sources to which you and bring their transactions. One can certainly say:

“Your transaction is somewhat complicated Mr. Prospect, but I have many different funding sources to whom I can show this.”

I’ve always liked however:

“Your transaction is somewhat complicated Mr. Prospect, but I have many different underwriters that would be interested.”

For some reason, to me, this seems much stronger. I accept any disagreement with no defense, it’s just my perception.

The Professional Summary

To summarize we all want to be professional in our factoring businesses. Going on a first appointment to a potential client’s office we certainly would wear our “banker’s conservative” clothing as an initial confirmation of our professionalism. \

For me our words are the clothing for our thoughts. Use those terms that reflect what one would anticipate your listener would want to hear. Always remember, ultimately, you are talking about their money!

Fred Leder Factoring With Xynergy CapitalAbout Fred Leder: Xynergy Healthcare Capital LLC is an industry specific finance company located in south Florida, with nationwide clients and referral sources.

For more information contact Fred Leder at (954) 519 2376 or by email at fleder@xynergycapital.com. You can also visit the company website at xynergycapital.com.

So what’s in your vocabulary? Do you have any phrases you like (or don’t like) to use when factoring transactions? We invite you to take a minute and share in the comments below!

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