How many times have you read about a new startup and kicked yourself because you had the same idea? I remember when I was in college there really weren’t any big name coffee shops on every corner but there sure were a lot of students hanging out at the cafeteria sipping on coffee while studying. Fast forward a few years later and the idea of Starbucks seems like such a no brainer. When we started our factoring company a few years ago the concept of financing accounts receivable was anything but new. There were many competitors with vast amounts of experience in the asset based lending arena. Prior to jumping into the ring we had diligently written our business plan, thoroughly studied our niche and built a marketing plan with the … [Read more...]
The Balancing Act of Factoring Invoices
In past articles I have addressed the need for understanding your client’s business as well as having a consistent set of policies and procedures to ensure you effectively manage the risk of factoring invoices. However, what happens when you run across those out of the box deals that do not fit nicely into your company’s comfort zone? Instead of immediately throwing these deals away you might want to consider some adjustments you can make to mitigate the risk. Although we all like to fund deals that are in our sweet spot in terms of size and industry, I have found that some of our best success stories were with clients in industries that we never would have imagined funding. Some past examples include speech therapists, a startup … [Read more...]
Peel Some Layers Back Before Funding Invoices
You’ve read the books, attended the training classes and finally have landed your first real prospect. They are eager to get started factoring their invoices and you can’t wait to get this deal closed. Whether you are working as a broker, business development officer or direct funder, this is the starting point where you will need to connect the dots to see if the deal will move forward or be declined. What Is The Business Trying To Achieve By Funding Invoices? Before the credit reports are generated, UCC-1(s) filed, or any other piece of due diligence is started, it is really important for you to understand what the prospect is trying to achieve by obtaining your services. Sure, we all know the easy answer is that the applicant is … [Read more...]
The Straight Truth About Invoice Factoring
Whenever you hear someone say they are going to give you the straight truth about a person or particular subject it usually isn’t good news. In a world where we are inundated with posts, tweets and instantaneous information it’s very easy to only get the information people want you to hear. When it comes to the factoring industry it’s very easy to get roped into thinking that it’s just about getting some capital, advance on receivables and make huge returns. What is the actual truth about the factoring industry? Anyone who works in this industry is entitled to their own opinion therefore, I will go on record and say that the views below are only mine based on my experiences as a broker, funder and due diligence coordinator. Truth #1 – … [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...]
Factoring Transactions: How To Know When To “Cut Bait”
Time is money as the expression goes and successful factoring consultants have to allocate time and resources judiciously. Identifying when a potential factoring transaction is viable for a funder to look at and discarding the ones that make no sense are decisions that need to be made regularly by consultants. Are all factoring transactions worth pursuing? The answer to that is a resounding no. So, when and how do we “cut bait” and go on to the next? … [Read more...]
Factoring News: Financing is Tight Reveals Forbes-CIT Retail Study
Nearly 50% of Retail Executives say their ability to secure financing has not improved or has worsened in the past year, according to a recent study released by CIT Group and Forbes Insights. As banks continue to restrict business lending the need for factoring invoices remains strong. Overall the study shows retailers generally pessimistic about the U.S. economy with 76% expecting the financial crisis to extend into 2012 or beyond. Here are some additional results from the news wire that may also impact your factoring business. Press Release: October 19, 2011 08:30 AM Eastern Daylight Time NEW YORK--(BUSINESS WIRE)--Middle market retail executives are bearish on a short-term U.S. economic recovery, even though many expect … [Read more...]
Pawning for Payroll? Try Factoring Invoices Instead!
Looking for further proof small businesses are in need of alternative financing options like factoring? The ongoing credit squeeze has companies turning to an unlikely lender…the pawnshop! Many pawnshops are reporting that over half their customers are now … [Read more...]
Is Groupon Marketing, Factoring, or Loan Sharking?
How Groupon makes Factoring Invoices look downright cheap for small business financing. … [Read more...]
Grow Your Factoring Business with Participation
So you have this great factoring business and all of your efforts are starting to pay off. Your marketing campaign is generating new leads and your existing clients are growing. For most businesses this would be a dream come true. Right? But what happens when your factoring company does not have enough cash to fund new invoices? It’s almost as if you are in the same predicament as your clients. You have new business but no capital to grow. One solution called Participation is a great way for you to keep your current book of business and fund new deals. It’s actually quite simple and very effective for many factoring companies. A participant can enter into an arrangement where they fund all or a portion of the factor’s invoices … [Read more...]