The Factor Guru

Tips on accounts receivable financing and business practices.

Archive for April, 2009

Trade Show Tips

Apr 12

Posted by Gen Merritt in General Information | Comments off

It’s that time of year when many factors, ABLs, companies and other businesses are exhibiting for trade shows and conferences. Therefore, I thought I would focus on ‘business tips’ instead of solely factoring. This blog will be basic trade show tips 101 for most; however, since the questions still come up, I thought I would just add it to the list of weblogs…

First, Keep It Simple. The job of an exhibit is to gain exposure, build credibility and find new prospects. Use your exhibit to provide a quick glimpse of what your company offers. A trade show display or exhibit is a serious representation of your company’s brands and business philosophy. Here are some things to think about to maximize the value of your investment:

  • Give promotional items… they are meant to be given and not taken.
  • Create an atmosphere that generates leads. Limited space does not mean limited selling potential.
  • Record your leads. Create a system to remember what type of lead you have, who you talked to, etc.
  • Realize when people stop, they want to talk to you.
  • Remember you are always selling… before, during and after exhibit hours.

Next, remember to staff your booth… don’t wait for prospects to stop at your booth. Be proactive. This also means: don’t stand behind the table–in fact, don’t put a table in front of your booth. Stand out in the aisle and greet people with questions and eye contact. Even though most shows do provide seating for exhibitors, always remain standing. This way you appear more approachable. Think about it this way… do you want to approach someone who is sitting down with their arms folded?

Now, here are the things you DO NOT want to do: It’s not the words you say, but the non-verbal communication that you do that leaves the largest impact and impression upon visitors. What are the ten pitfalls to avoid?

1. Don’t sit, read, smoke, eat, drink or chew gum in the booth.

2. Don’t use the cell phone in the booth.

3. Don’t gossip or badmouth competitors.

4. Don’t leave the booth unattended or leave without informing colleagues.

5. Don’t be late for booth duty.

6. Don’t use negative body language. Instead, smile and look at person when speaking. Use affirmative comments. Don’t close off conversation by crossing your arms. Remember, open hands promote honesty.

7. Don’t let the booth get cluttered, untidy and unorganized.

8. Don’t wear your badge on the left hand side. Instead, wear your badge on the right hand side so it can be seen by your visitor when shaking hands.

9. Don’t be unprofessional.

10. Don’t try to sell. Make appointments to call back or visit, and follow up immediately after the show.

So, what is the best way to maximize the leads you get?

  • Use pre-show promotions and invitations to your exhibit one to two weeks prior to the show. Studies show promotions can boost your lead counts by 33%.
  • Train booth staff to reiterate the benefits expressed in the pre-show promotion.
  • Engage in a 30-second dialogue of open-ended questions.
  • Determine what to present to this prospect within two minutes.
  • Present product(s) that benefit the prospect in a ten-minute timeframe.
  • In a minute’s time, complete your lead card or agree on the next step and move on.

Most importantly, make your leads matter! Have your booth staff fill out any lead generation card rather than the prospect or customer. This way you are sure to get all of the pertinent information as well as make a personal connection with that lead. It also gives the staff member a better opportunity to find out the exact needs of the prospect. 90% of all sales literature distributed at an event is discarded at the trade show, either by sales people or attendees themselves.

The success of a trade show is often measured by the number of leads created (especially qualified leads). However, trade show staff often forgets to get the visitor’s contact info or to indicate what products or services those visitors truly may or may not have an interest in. As a result you end up with either very few leads or unqualified leads that the sales team discards later.

Start Following Up On Leads BEFORE The Show Starts! So, before you leave the show, write (and, if not personalized, even print) the follow-up letter and prepare the follow-up packets. Be sure to have a stockpile of any brochures you may need, and if you’re going to promise to send anything after the show, be sure to have it already back in the office. Time is not on your side. Be prompt.

Good luck at your show! Wishing you success. The Factor Guru.

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Notification: Climate Critical

Apr 1

Posted by Gen Merritt in Operations | Comments off

Talking among some factoring companies the other day, I realized that many had differing views of the current credit market. I found it interesting that many of their perspectives stemmed from the condition of the factoring company itself: some factors were experiencing increased deal activity albeit with minimal increases in actual new business closed, others were targeting newly presented opportunities such as available acquisitions and others were focused on accessing capital to finance their clients (to be addressed in another weblog).

But then, there were those focused on problematic accounts. Actually, many factors were experiencing what I refer to as ‘challenge’ account situation, meaning both workouts and turnarounds.

In the current economic climate, however, many of these ‘challenged’ situations are now long term commitments for both parties: the client and the factor. Oddly, a lot of these more problematic accounts arose initially because the basic factoring fundamentals were not upheld… specifically notification. Because this is a building block within factoring, I have to say I was astounded at how many stories I had overheard pertaining to this specific issue.

Pursuant to Article Nine of the UCC (Uniform Commercial Code) factoring companies should incorporate a notice to the customers (debtors) of their Clients notifying them of the sale and assignment of the Client’s invoices to the factoring company. In reality, how else would those customers know where to pay or why they should pay you, the factor? This notice generally includes providing new remittance address information for where those debtors should pay invoices.

Side Note: Look at the checks that come through the lockbox. Are they mailed to the proper address or has the Client received them and then forwarded them to the lockbox address? This could be an indication that the debtor is not adhering to the notice.

I tend to recommend that any notices sent to a debtor should include ‘sold and assigned’ language in the notification letter; using a stamp or other legend on an invoice is also advisable; although some may consider this duplicative in meaning, it saves ambiguity (or confusion) for those customers.

Taking a stance of being more conservative? Protect yourself as a factor.

Operating under the K.I.S.S. principle? Send letters with proper notice, meaning stamp, label or include in the invoice template that language… why make it complicated? And of course, remember any advice pertaining to notification should be reviewed by legal counsel.

Now, many factors that purchase invoices send notice letters via overnight, certified or even fax delivery. There is a reason: Evidence. Not that it is necessary, but it helps. Think of when you, as a factor, need to prove that you did in fact send the notification letter, such as when a debtor states they never received the notice, didn’t know about the relationship with the factor, or states the Client instructed them otherwise of the factoring relationship, or maybe the debtor indicated the relationship had been terminated, or at least they were told such by the Client.

But, what happens when you send a letter to the customer and they still pay the Client at the Client’s address?

If you call the IFA or your legal counsel, they may direct you to use an ‘alternative’ letter to help protect your rights as a factor, or they may instruct you not to purchase future invoices for that customer. Remember, though, this decision may also be predicated on other general credit rules, including debtor concentration for that Client.

For example, if the customer is the sole customer for a Client, it is critical to ensure that customer pays the factor directly. However, if the customer represents five or ten percent or less, the factor may choose to send this type of ‘alternative’ letter to protect their (the factor’s) rights while still relying in some way on the Client’s reserves, all depending on the specific circumstances.

In any case, it is essential in a factoring operation to incorporate a notification process before, during and through a workout situation. Do you have these in place? Do you know?

These processes can sometimes become keys in managing the overall collectability of a Client relationship along with the exposure where situations arise that present an adverse condition between the factor and the Client. I can only implore you to evaluate these processes and the steps you take as a factor during each phase of a Client relationship. The current credit markets demand vigilance, as I always hear… and I couldn’t agree more.

Wishing you success. The Factor Guru.

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