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Mid-year 2006 already and in the midst of the summer doldrums. I sure wish that business was heating as fast as the weather but that does not seem to be the case for most of the factors and small ticket ABL lenders across the US. Even with the challenges of the businesses and industry we have chosen, I would like to say it is a noble calling.
I just wonder how many companies would not have survived without having the adequate cash flow to meet the needs of their businesses. I wonder how many companies would have been required to sell an equity position to get the required capital to expand. I wonder how many companies would have been unable to take on that new contract or reach above their cash flow capabilities without the help of a finance partner that was willing to take the risk right along side of them to assist them in meeting their goals.
Yes, this is a great industry which is the foundation of the small to medium size entrepreneurial businesses across this great United States of ours. We are the reason that many survive and go on to bigger and greater things. Do some fail? Of course they do. Failure is sometimes part of reaching for success. But without the entrepreneurial spirit in the factoring companies coupled with the entrepreneurial spirit in American businesses, our country would not be as great as it is today. So when you are battling for more business, when you are providing the vehicle for somebody to reach their dreams, take pride in the fact of what the industry has provided through the many years of service to businesses.
As the top recruiting agency in the US serving our industry with 102 placements last year alone, I also wanted to add that our company is proud to be of service to you in helping your companies grow and expand.
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If you are selling rate, you are in a poor position to close the sale. Rates have plummeted in the industry over the past 2-3 years primarily to market forces of lower interest rates and higher competition. That being said, if your only claim to fame is that you have a lower rate, then please be rest assured there is plenty of stupid money out there and all of it is not even in the banks. Selling rate will not close the deal. You must have some value added because everyone's money is green and at the end of the day, that is what you are selling, or is it?
So, you are probably asking "What does some recruiter in Texas know about selling factoring?" Valid question and my response is I have interviewed more BDO's; found out what made them a success and failure than anyone in the US. There are several common threads and one of them is that rate is not what they sold. They did however sell:
1. What the client company could do with the additional cash flow each month.
2. The ability to save the company money in losses by qualifying the debtors to ensure they meet certain standards.
3. The need for less people in credit and collections which translates into less payroll, benefits, etc… which saves thousands in human capital costs.
4. The possibility to expand without selling off an equity position in their company.
5. Having a financial partner that cared about their success versus a bank whose rate might be better but might leave them in a bad position, if the climate in the economy or bank changed.
6. A financial partner that helps you monitor your business on a daily, weekly and monthly basis and lets the entrepreneur or small business person do what they do best, concentrate on building the business.
If you are smart enough to listen to what is the real problem the business is having instead of rushing to a solution and competing on rate, then your percentage of closing will definitely go up. Know you customer, listen more than talk, then collaborate on a solution. The approach will make rate less important. Good Luck.
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by John Hail, Managing Director, Factorhelp, Inc.
 Ever had that long term client who month after month consistently posts zero or even negative reserve? From all appearances - decent sized outstanding, consistent invoice flow, solid back-up, good verification, steady posting of payments, and acceptable concentration spread - the Client, while not overly sophisticated, seems to have a decent business but they never achieve sufficient progress to be permanently removed from your watch list. The advance rate can't be reduced adequately to produce a quick fix without endangering the business' ability to operate. Your reports indicate higher dilution than you like but this is offset somewhat by a reasonable flow of non-factored funds. The cause could result from a number of things but you can't put your finger on it. Out of frustration, you send your auditor in to evaluate the overall business and investigate the source of the problem only to have them report, "…their bookkeeping leaves a lot to be desired but it seems to be a solid business".
Standard dilution reports are designed to provide an overall view of the client account encompassing their entire debtor base. In a larger account, with a good concentration spread, an individual debtor's dilution can get lost in the numbers and if that debtor happens to be a large company with a respectable D&B rating, most factors will accept a reasonable number of charge backs in the course of purchasing new invoices. Many clients place total reliance on the factor to collect their invoices and an unsophisticated client may not realize the need to step up their own collection efforts on invoices once they have been charged back to them. Over time the charge backs can add up leaving the reserve consistently negative. Collecting the charge backs will solve the problem.
Many times we focus on the big picture in attempting to solve problems. Stepping back to take an unconventional view of a situation can many times lead to the solution.
John Hail can be reached at 469-226-5634 for any of your operational or sales consulting needs.
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Linda Walker has joined Presidential Healthcare Credit as senior vice president of sales and marketing.
Wells Fargo & Company is proud to announce the promotion of Eric Meyer as the newest business development officer for Wells Fargo Business Credit.
Healthcare Finance Group recently appointed Tim Bruckner as regional vice president of the Midwest.
J. Brad Leach has been promoted to vice president, business development at Lighthouse Financial Corporation.
Presidential Financial Corporation hired Ryan De Witte to oversee the credit functions in the Midwest region.
Bridge Finance Group announced two new additions to its team. Andy Hall joined as director, portfolio management and is based in the Chicago office. Jeffrey Appleton is director of the company's new Atlanta office.
FGI Finance recently named Maria Chiang as vice president of business development.
Brad LeFevre joined Wells Fargo & Company as vice president of business development for Wells Fargo's Factoring division.
Wells Fargo & Co. announced the appointment of Kevin Pearce as vice president of business development.
Jason LeuVoy was promoted to senior vice president overseeing business development at Presidential Financial Corporation.
Textron Financial Corporation announced four new hires: David Warren, Tom Shockley, Greg Dyson, and Bruce Pavesich. Mr. Warren is now Textron's central region business development officer for their Healthcare Finance Division and Mr. Shockley is vice president - business development in the Southern California region. Mr. Dyson was hired as vice president, business development overseeing the Northern California, Northwest, and Nevada markets. Mr. Pavesich is also vice president of business development and is over the mid-Atlantic.
Crestmark Bank is proud to announce the appointment of Donna Mullane as vice president, business development.
Wells Fargo & Company is pleased to announce Perry Larson a division manager for Wells Fargo Business Credit.
Gordon Trask joined Bibby Financial of the Midwest as Vice President of Sales and Marketing.
William Kirth was named vice president and national sales manager for Stearns Bank Financial Services.
FleetOne announced three new additions to its team. Patty Smith and Jo Baggett are the newest Account Executive's to join and Steve Pritchard is the company's Senior Underwriter.
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NATIONAL FUNDING ASSOCIATION - www.nationalfunding.org
Charlotte Chapter: Luncheon meeting at The Palm Restaurant is Tuesday, July 25, 2006 at 12:00 noon. Our speaker is Nuby Fowler, the Regional Administrator for Region IV of the U.S. SBA.
Chicago Chapter: The Summer Soiree will be held at The East Bank Club on the roof for an evening of food, drink, and networking. This event will take place on Wednesday, July 26, 2006 from 6:00 to 8:30 PM.
Atlanta Chapter: An evening meeting at 5 Seasons Brewing will be held on Thursday, July 27, 2006 from 5:30-7:30 PM.
See NFA Calendar page for more details www.nationalfunding.org/calendar.html
INTERNATIONAL FACTORING ASSOCIATION - www.factoring.org
Thursday & Friday, August 10th & 11th, 2006 - Presidents / Senior Executives Meeting
Hilton Los Cabos Beach and Golf Resort - Los Cabos, Mexico
 Presidents and Senior Executives of factoring organizations have unique needs. One of the best ways to help with your strategic planning is to spend time discussing those issues with other Presidents and Senior Executives in the factoring industry. This meeting is designed to facilitate that discussion.
We will be discussing specific topics that are of concern to Senior Executives. Some of the topics that we will concentrate on are:
• Marketing • Credit and Underwriting • Account Liquidation • Fraud Presentation • Technology • Debtor Risk • Looking for Hidden Red Flags • Threats to Your Security Interests • Making Yourself Unique
The second component of our meeting will concentrate on networking. We will begin on Wednesday evening with a Welcome Reception. Breakfast and lunches will be held together to give you a chance to network with the other attendees. Dinner on Thursday evening will also be included.
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