The famous French philosopher Voltaire once said,
“The ladder of success must be set upon something solid before you can start to climb”.
You can interpret this quote in a variety of ways and for me it really hits home when I look at our success in the factoring industry. We’ll get to that in a moment.
The first question that always comes to mind when talking about success is how do you measure it?
Talk to most folks and the answer is usually associated with the bottom line. Anyone that follows the financial markets knows what happens to a company’s stock price when they either beat or miss analysts’ expectations for a given period. Let’s face it, without profits companies cannot sustain their operations and continue to be a going concern for the future.
As a business student studying accounting at Temple University, I was taught by a few great professors to look beyond the profit and loss statement and to focus on the balance sheet and statement of cash flows to get the overall financial picture of a business. Some, on the other hand, focus on other key ratios such as profit margins, return on assets and so on. So often, when we are forecasting and projecting goals all we see are numbers on a computer screen which show us getting to a desired goal. We make specific assumptions for growth, averages and so on. No matter what tool you choose to measure your company’s financial success, make sure that it agrees with generally accepted accounting principles and is consistent in its application.
Sometimes I think it’s important to look beyond the bottom line.
Just like any other business it is pivotal for us to make money for our shareholders as well as to provide a way of living for our employees and outside vendors. However, let’s get back to Voltaire’s point about success. For us, it’s all about relationships. Whether we are talking about a client who has factored her invoices with us for several years, a newly signed broker or a close referral source, they all play a huge part in our success. For those of you new to the business you will find that great relationships are worth their weight in gold.
First let’s start with clients. Talk to any factor with experience and they will tell you that great clients are like a gift from above. Factoring relationships with clients are typically on a recurring basis which means the client is usually submitting invoices on a weekly, monthly or forty-five day basis. If your client is thorough, it will make verification, funding and collecting a breeze. Although in some cases you may be dealing with a not so pleasant account debtor which is a whole different story.
The same is true for factoring brokers and referral sources.
We’ve found that each broker is unique and usually has certain style when submitting an application to us. Some prefer to be fully involved in every aspect of the prospect’s file while others simply leave us an email with the contact information. Either way, mostly all of our brokers know our general parameters in terms of accepted industries, credit lines and unacceptable credit.
Whether it is helping a current client expand their operations through invoice factoring, paying a broker a well deserved commission or referring business to one of our fellow factoring partners, it’s all about establishing great relationships. Listen to Voltaire and set your ladder against something solid before you start your climb.
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
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