2011 State of the Factoring Industry

Happy New Year everyone! A number of months have passed since my last article. It is not because I have forgotten about you, quite the contrary. You will soon find out why it has taken me such a long time to share my thoughts and observations with you.

With the New Year, comes resolutions, renewed hope, a time to refocus, re-energize our efforts in hopes they come to fruition. With the New Year comes a season of change. This is not about pumping you up, I believe in intelligence vs. hype, facing reality and becoming aware of what could be in store for us in 2011.

Over the next fifteen days I am going to share a special message with you, send a special note of caution, and expose you to “TFI” – that I believe will revolutionize the Factoring Industry.

So what is this special message I wanted to share with all of you? That message begins with telling you that people converge on making money when the economy is strong and things are going well. When consumer confidence is high so is motivation in making money, it doesn’t matter on the type of business. When the economy starts to turn for the worst and consumer confidence begins to decline so does the urge to make money.

Given the credit crisis and the greatest economic meltdown since the great depression many businesses and people have begun to think these hard times will go on forever. Not to depress you but, all indicators point to a bleak 2011. When times get tough people become complacent and worried they become reactive instead of proactive, their focus changes to survival vs. making money.

The Financial services industry has undergone radical changes that have shaped the way we spend, save and invest. One thing that I have learned from other successful people is to be successful and remain successful you must try to anticipate the road ahead.

Let me explain by using an example of playing video games with my son. It is usually a sobering, humbling experience for me because it seems that my son always creams me. It is not because he is bigger, stronger, faster or smarter than me – it is because he has played the video games before…he knows what twists and turns are coming next which pitfalls, bad guys etc. to avoid. You see he has played the game before and he knows what is coming. He has learned to anticipate what to do next in the video game vs. me reacting to what is happening.

Truth be told this reaction causes me a little stress (lol) and ultimately losing the game. So why am I telling you this? It doesn’t matter to me what business you are involved with learning to become proactive vs. reactive and learning to anticipate what is going to happen in the future will help you become and remain successful. In my opinion if you learn to anticipate what is going to happen, you can learn to take advantage of the hard times and profit during these hard times. Take time to educate yourself, understand the trends, why these trends happen and your skepticism, your fear will turn into reality and confidence.

We have to learn to see the world as it is, not worse than it is, be smart and understand where our economy is going, why is it going that way and how do you fit in that world.  I don’t want to be the bearer of bad news but, I believe that the economy could still grow worse than it already is – However, if we can anticipate what is going to happen then we can look at ways that we can make money in any market place. That is what my message is all about.

Here is a question for you – “What drives the economy?”

Is it interest rates? In my opinion interest rates are at the lowest that can be offered. Mortgage rates are at their lowest but, no homes are being sold. So what is it that drives the economy?  It is spending!

When people are spending money they have a different mindset. The mode is different and people behave differently. The higher the demand the more businesses have customers, the more they expand, the more employees they hire. The economy moves in a positive direction. Statistics show that 70% of spending is consumer spending.

Understand the trends – Over the past 30 years this consumer spending has taken place by the baby boomers (largest middle class in history). Did you know that 10,000 baby boomers will turn 65 each day for the next fifteen years! Statistics show an individual’s highest earning capacity comes between the ages of 35 – 55. When these baby boomers aged to this bracket they spent more money why? They developed more disposable income, they were raising families, bought bigger houses, accessories etc. which all costs money (spending).

When the baby boomers aged to over 55 they began to focus more on saving money for their retirement vs. lavish spending. Fast forward to today the baby boomer generation a major percentage of population is saving vs. spending. They are aging, retiring which has already caused a strain on health care and it will become more expensive as time goes on.

Now, consider the unemployment rate is at the highest it has ever been and the average person that is unemployed has been out of work for at least nine months. You now have this staggering amount of people holding onto the money that they have versus spending. What about the real estate and stock market disaster wow! The demand for credit has shrunk amongst consumers in spite of the stimulus plan and bank bail outs.

Over the last year we have seen the single biggest drop in over 60 years for demand of credit. People are focusing on trying to pay back more than they borrow which means consumers are not spending using credit.

This is a great strategy for the individual versus improving the economy. Look at the banks, they are not lending money therefore, they are not earning interest. Small business lending continues to be slashed and individuals are not borrowing because they are focusing on repaying their debts. Businesses are not receiving loans because banks are skeptical when profitability is on the decline. Banks now focus on earning money through ancillary services and securitization.

So what are we left with?

Small business which is the back bone of the economy is not receiving bank financing. Small business which is the major employer in the economy is not expanding do to the lack of spending. Consumer confidence is on the decline and higher unemployment is on the rise.

So why am I telling you all this?

With all the uncertainty what remains strong and profitable is the Factoring Industry. When the economy is weak companies use factoring to help them survive. Over 82% of small businesses are reporting poor cash flow. Customers are taking longer to pay for their invoices. Over the past few years factoring has become the financing tool of choice. In many cases it is the only choice.

If you are reading this then you believe that something bigger is out there for you. Well, you are right – It is time to get smart and decide that you are going to take advantage of this situation. See yourself as part of a solution, with all the free technology available out there building a small portfolio of factoring clients now will translate to larger commissions when the economy improves.

Learn to leverage your skills, background and contacts whether you are employed / unemployed. The stock market will come back like it did in the 1930‘s and 1970‘s. Things will improve but, it will take time. Put yourself in a position that you are going to educate yourself. I don’t care how you do it…Learn to take advantage of all the tools and information available to you.

You need to know what you are doing in the factoring industry or in any other industry.

This is not an industry where you have to carry inventory or exhaust large amounts of money. If you don’t know what you are doing then it is better to do nothing. You will save yourself frustration. If you lack confidence have anxiety find yourself some role models that have done well in this market place. History tells us you can do well in very tough times if you are not fearful, become educated and you learn to anticipate, be proactive, do the right things right.

Wealth is not all about money; it is physiological, spiritual, emotional and physical. You can have all the money in the world but, if your health is gone you’re done. So my message concludes by saying this – “You may want refocus and consider helping small to medium sized business (through such difficult times) which is the back bone of this country get back on its feet. Understand the road ahead taking advantage of this time, this opportunity. Learning to add more value to your family, to your business and in other people’s lives can help you do well emotionally and financially.”

With all this said, I must share a special note of caution with all of you – watch for it over the next few days.

About the Author: Michael Ponomarew brings with him more than 24 years of experience in entrepreneurship, marketing, and business management. Mike can be reached at mikep@millenniumfunding.com or by calling 888.652.8298 ext. 45.


  1. OK, Mike, I’m listening.

    I’m an unemployed Executive Assistant – EXTREMELY frightened about my future right now. I continue to apply to jobs – and interview – but have yet to receive an offer.

    The idea of becoming a “Certified Cash Flow Consultant” appealed to me intellectually, and several years ago I took Fred Rewey’s course and became “certifiable”. Although my career has been devoted to the detail work involved with being an administrative professional AND a strong aversion the idea of trying to bring someone else around to my way of thinking (“selling” – UGG), I nevertheless decided I might want to build up a business in factoring for my “retirement”. I eventually approached several temp agencies that I had worked with in the past, but I found I was not received as a credible, trustworthy, experienced presence. Of course not – I don’t know how to approach people regarding what I can offer them and be taken seriously!

    So yes, I am listening. Because “retirement” is not in my vocabulary. And I really need to do something to produce an income. So as I continue to seek a job with a paycheck,

    I am listening … and will stay tuned for your words of caution …


  2. Michael Ponomarew says

    Hello Pamela

    I hope you received my email reply on Jan. 4th just in case you missed it – thought I would post a reply/comment.

    Thank you for your comments. I hear you loud and clear. You are right selling is a hard thing to do….learning to adapt a consultative mindset and developing communication skills (particular to this industry) will help you in converting prospects to clients. Having a company (funding source, individuals) that will support in helping with the conversion process is paramount in establishing credibility, integrity etc. I don’t want to get too far ahead of myself before the next article.

    I look forward to working with you – help is just around the corner!



    Michael Ponomarew
    Managing Director

    Millennium Funding Inc.
    A Canfield Capital LLC Company
    Tel. 888.652.8298 ext. 45
    Fax. 888.316.1118


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