Business owners often have many questions when it comes to factoring, since it is a form of financing that is unfamiliar to many. They want to understand the practice and how it will affect their business now and in the future. Being prepared to answer their important questions will help you make them comfortable with factoring and more likely to want to do business with you. Will factoring work for my industry or specific business? Factoring is a viable financing option in many industries, including manufacturing, medical, construction, oil and gas, temporary staffing, trucking and freight, technology, and clothing and textiles. While each industry has its own challenges, they tend to share commonalities which make factoring … [Read more...]
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...]
Funding Invoices With Fundbox
Invoice funding is not always factoring. We were reminded of this in February when we highlighted a case study on social media marketing in the article Is Invoice Factoring Becoming Mainstream? We were intrigued by the company with an innovative marketing approach and decided to dig deeper in this interview with Tomer Michaeli, VP of Business Development at Fundbox. A NY-based technology company, Fundbox is helping small businesses, freelancers and home offices grow by overcoming short term cash flow gaps. They also accept referrals from factoring brokers and are a new addition to the 2014 Directory. Is Fundbox a factoring company? Tomer Michaeli: No, Fundbox is a technology company that offers business owners and freelancers a … [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...]
How To Finance Your New Factoring Company
In my previous article, we discussed whether brokers should start their own factoring companies. In this article, we discuss how to finance a factoring company, should you decide to start one. While owning a factoring company can be very rewarding, it’s also very risky. And most owners make their riskiest decision before funding their first deal – the decision on how to finance their own company. The wrong decision could wipe you out financially and have long-lasting repercussions. Make this decision very carefully. There Are Many Ways To Fund A Factoring Company. Each way has varying degrees of risk. How you proceed depends on your risk tolerance. For example, when I first financed my factoring company, I made two upfront decisions. … [Read more...]
The Factoring Company Waiting Game
Whether you’re in line at your local grocery store, sitting in a doctor’s office or just looking to grab a bite at your favorite restaurant, we all have to wait. In our modern world of instant text messaging, mega fast downloads and next day deliveries we’ve become a society that expects everything when we want it and the faster the better. The same is true in the factoring industry. How many websites (including yours truly) boast phrases like “Same Day Funding” or “Approvals in 24 Hours or Less”? Let’s face it, with almost any service provider, speed is king. The first question we usually get from new prospects is how long will it take for them to get funded. In most cases they expect to be funded in a few days or less. Brokers … [Read more...]
Medical Staffing Invoice Funding – Tips For Managing Customer Fears
Many medical staffing business owners worry that their customers (hospitals, nursing homes, medical clinics, etc.) will misinterpret their decision to factor as a signal of financial instability. In reality, deciding to get medical staffing invoice funding help is an encouraging indication that your medical staffing business is stable, rapidly growing, and in high demand. To help alleviate your concerns and to educate your customers about medical staffing invoice funding, consider the following: … [Read more...]
Credit Squeeze Keeps Factoring Companies Busy
A small business owner who is trying to grow his/her business during a booming economy will hit some speed bumps when applying for traditional financing if he/she cannot show an extensive profitable operating history. Throw in the current economic climate, and the chance of an entrepreneur obtaining a conventional bank loan is slim to none. When loans are no longer an option, business owners have to find … [Read more...]
What is Accounts Receivable Factoring?
Cash flow problems often occur at the early stages of business development or during periods of rapid growth. Cash flow especially becomes a problem in industries where it's typical for completed work to go unpaid for 30, 60, or even 90 days after issuing the invoice. Thus, when growing companies start experiencing growth pains, they first try to … [Read more...]