The Factor Guru

Tips on accounts receivable financing and business practices.

Posts Tagged marketing

FAQs about the National Factoring Group

Apr 10

Posted by admin in Sales and Marketing | Comments off

Recently, I have had a few people ask me about a new group and their website: the National Factoring Group (“NFG”). In response, I thought it would be better to have someone from NFG discuss their business and answer some frequently asked questions. Brandi Bauer, one of the Founding Members, has agreed to answer some of these questions for us:

What is NFG?

For the past six months, we have been working on expanding our brokerage business, the Business Group of Brokers. We established The National Factoring Group as a separate entity and factoring brokerage website, designed to combine servicing the financial needs of the small and medium sized business owner with the exposure that the internet brings.

We wanted to present our collective prospective clients options that would make it easier to find you, the factoring company. We looked at factoring companies across the country and thought, “How can we present this information to the prospective client in the most organized and concise way, while still maintaining equality amongst these factoring companies?”

The website groups factors by the state (or states) in which direct representation exists, either by an operations’ center or business development office. To maintain an equal playing field, each factor then describes their range of services, niche features, and what makes them different. We believe that this strategy helps equalize local and national factoring companies amidst a competitive marketplace.

Through the website, business owners can educate themselves on factoring and determine which factoring company best meets their needs. The prospective client enters specific financing needs, industry information, and other data to help target an appropriate funder. Based on the preselected parameters by both the business owner and the factoring company, a set of matches are created.

What input does NFG have into choosing which factoring companies are sent information?

The National Factoring Group has no input into which factoring companies are chosen and does not see any client information until they are sent to the factor.  These emails occur simultaneously to the factor and to NFG.

Each factoring company is represented by certain aspects of their company such as their industries serviced, size range, and the way they describe their company.  Descriptions provided range from very simply saying, “Here is what I do…” to more in depth descriptions with a brief history of their company and why their clients stay their clients.

What makes NFG different than other brokerage businesses or websites?

The National Factoring Group strategy allows the prospective companies to decide. By inputting information about their business, their search results produce only factoring companies where a match would exist (i.e., size, demographics, other niche financing, etc). This process saves the company time in their search for financing.

More importantly, however, is that a portion of all commissions earned through NFG will go back into the factoring industry through advertising, articles, or other announcements that promote factoring for small and mid-size businesses.

Does the NFG select where to spend those funds?

Actually, no. We have set up an advisory board including factoring companies and other factoring professionals. These advisors will help to provide guidance on where these monies should be spent.

I often have people ask me if this is a website that is used to rate factoring companies in any way.

No, we do not rate the factoring companies. Every factor stands and is represented purely on what services they provide and how they choose to describe themselves. We do, however, have a code of conduct that requires all factoring companies to be honest in how they represent themselves to prospective clients.

Do factoring companies need to provide any information to NFG?

Yes.  Each factoring company provides an application or information package. This basic information focuses on their company, preferred industries, targeted size ranges, and other items. No reporting or confidential information is requested.

This application process is to ensure that the factoring company is represented appropriately to the businesses seeking factoring services. For an application, you can email me at brandi@nationalfactoringgroup.com.

What does a prospective company seeking factoring need to do?

The process for prospective clients is very simple. They provide general information about their company and their needs and select a local or national resource option. From there, they are presented with a matched list of factors that fit their company’s needs. The company can then read through some general information and select up to three factors that they would like to hear from directly. To complete their request, the company then completes more detailed information and the lead is then sent to the factoring company contacts listed.

In summary, it is also important to note that the funding transactions and relationships are directly between the factors and the clients. The role of the NFG is as a brokerage arrangement. For additional information on NFG, please contact Brandi Bauer at brandi@nationalfactoringgroup.com.

Wishing you continued success. The Factor Guru.

 

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Why We Do What We Do ~ a guest blog by Brandon Bauer

Sep 8

Posted by admin in Sales and Marketing | Comments off

Finally, after a year, I have a story to share with all of you.  I have worked in the factoring industry for over a decade and have loved almost every minute of it.  I could have done with fewer workouts or without the heartbreak that comes with those companies that did not survive.  Fortunately, there are many more good memories than bad.  For my money, nothing makes me feel better than knowing you helped a business make payroll, keep their doors open, and retain their valuable employees.  Like many of you, this is why I don’t mind getting up a little earlier in the morning, or working later into the evening.

In April, after being a factor all of these years, I set out to start a brokerage company.  This experience has given me a different perspective, as now I am helping businesses in various areas of financing while also working more closely with companies that were once my competitors.  This new perspective also has reaffirmed what I already knew: factors are definitely doing business and helping our economy.

The economy has, however, changed. Sadly, not all small and mid-sized companies have changed quickly enough to save their businesses.  These small to medium sized businesses and start ups are what will help rebuild our economy.  For many of them, factoring is the best way, or the only way, for them to maintain their cash flow.  Since there are a variety of factoring companies within different markets, industries, niches, size ranges, etc., I can now introduce my clients to the factor that best suits their needs and their situation, thereby being able to say ‘Yes’ a lot more. Being able to say ‘Yes’ allows me to make a greater impact in the small and mid-sized market.

After all, factoring is the lifeblood of many of these small and medium sized businesses; it enables these companies to grow and saves many businesses that have been hit hard by the economy.  With factoring, business owners and their businesses are also able to purchase more inventories, accept more orders and jobs, pay vendors on time, and hire new employees.  This trickles down allowing their vendors to do the same.  By helping one company, we are helping many. We are all helping to rebuild the economy.

During these past months, I have rediscovered the joy of factoring.  Recently, I was able to help a company that was struggling to find a way to make payroll at the end of the week.  With the funding provided through a factoring facility, twelve families did not have to worry about how they were going to put food on the table.  Our client was so happy, he cried. To me, that is worth all the early mornings and late nights.

While I don’t know if this is the nature of what my article was supposed to be, I felt it was important to share these thoughts and to say to all the factors and their dedicated teams, “Keep up the good work.”  You have a direct impact on the people and companies with which you interact. You are doing more good than some may realize. Thank you.

The Business Group of Brokers, LLC was created to provide a multitude of alternative financing options, utilizing the strengths of different finance companies to make sure clients find the best financial match for their specific needs. Businesses benefit from expertise and years of experience in helping them find the working capital needed to grow and expand their company.  Since every finance company and their clients are unique, The Business Group of Brokers strives for complete satisfaction on both sides of the transaction and plays an intricate role in creating a good match for the financier as well as for the company. To find out more, visit www.mybgb.com.

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Keeping Your Old Friends

Aug 31

Posted by Gen Merritt in Sales and Marketing | 2 Comments

We all have a tendency to focus on new business. Did you see that commercial from Ally Bank? A friend of mine sent me this commercial. It got me thinking… Sometimes, it is more about the customers you already have… the ones who have stayed with you, appreciated the benefits your products provide them and their business, the ones who have chosen you over others: your old friends.

Maintaining strong client customer service speaks volumes! It says your clients can rely on you for their funding needs. It says your clients know they would rather be with you than another competing financing source. It says your clients stay with you because you are their right choice, the one they count on to operate their business. You provide the right service while solving their working capital needs. Again, they chose you and have stayed with you.

So, how do you ensure strong client retention?

You are candid. You ensure the reporting you provide is accurate and transparent. Clients can see everything online or you will provide the information. There are no hidden fees, untimely reports, or slow responses.

You are honest. Clients know where they stand and they understand the rules for funding.

You are reliable. Clients do not have to worry about their funding needs. They know they can rely on the stability of your company to meet their working capital challenges and daily operating cash flow needs.

You are available. Clients can call or email you and know they will see results promptly.

These are just a few of the concerns your clients may encounter when working with a financing company. Overall, communication is a key factor in retaining customers. Most of the time, fees are not the reason a client chooses a competing factor. It is not always about the price, even when they tell you it is.

But, it is critical to them to feel and know they can count on you, their funding source, to provide information and service so they can run their company efficiently. Remember, your clients have a company to run… they do not need to worry about their financing source on top of that.

Why is that important? In the long run, most factoring companies obtain new deals because of their existing clients, by providing referrals and recommendations. These relationships with already existing long standing clients can indicate the service, reliability, and even stability of a factor. And, your clients are a reflection of you as their factor.

What is that saying we always hear? You are who you associate with… Your old friends reflect who you are… they prove your history… they are the evidence of why you exist with the reputation you have. Ultimately, they have been with you and they want and choose to stay with you, no one else.

Focusing on your customer service is and continues to be an important element of what we do as factors. Client retention is essential, especially in the competitive markets in which we exist. Understanding your old friends and them understanding you and your business can be the key.

Wishing you continued success. The Factor Guru.

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FAQs: Transportation Qualification

Jul 7

Posted by Gen Merritt in Sales and Marketing | No Comments

I noticed when I returned from vacation there were several questions on transportation factoring. One of them stuck with me: What are some questions I should ask a small trucking company to help qualify them for factoring? Below are some questions you may want to consider:

* Tell me about your business. How long has the business been around? What did you do before starting this business? Hints: This conversation may also help establish the type of monitoring that would be involved with the account.

* How many trucks are you running? Depending on the type of loads being hauled, trucks may typically carry from $8,000 to $12,000 a month in loads; loads hauled generally do not exceed $15,000 a month per truck unless the company operates in a unique niche of the marketplace, provides heavy hauling, etc.

* Are you hauling full loads or LTL (less than a truckload)? Hints: LTL means smaller invoices and more paperwork; risk is spread among many invoices and customers which helps diversify the risk profile while also creating additional work in the account management.

* Where do you get your loads? Do you have steady customers or do you get loads from load boards? Hint: if all loads come off the web, the client may struggle maintaining business profitably as these loads tend to be lower paying.

* Who are your major customers (i.e., shippers, brokers, names of companies, etc.)? How many customers do you have? How many of them are repeat customers? How do your customers typically pay? Hints: if the customers pay very slowly, then your fees will be higher; the client may not be able to afford factoring. Trucking industry receivables tend to pay in less than 45 days. These questions will also give you an idea of how much time an account will take for notification, verification and collection purposes.

* What is your typical invoice size? Hints: there is no “typical” but get a range from low to high. However, unless a trucking company is doing heavy hauling loads, they should not have large dollar invoices (i.e., $5,000).

* What is your current billing process? How does it work? Can you walk me through what you typically do to get your customers their invoices and how long that process takes?

* Do you have any special arrangements with any customers on advances for fuel, quick payment terms, or anything else?

* Do you have a line of credit at the bank now? Hint: if yes, then a bank take out may be in order or subordination on the receivables.

* Do you have employees? Hint: if yes, the client should be current with payroll taxes and other obligations. The client may use owner operators as well. If so, how many; are they always the same drivers or different ones each time, etc.? This may also reveal whether the company is brokering loads to other carriers.

* Is the company profitable now? Hint: if they have a reasonable profit margin, the client should easily be able to afford factoring.

* What about 2290 (heavy vehicle highway use) taxes? Do you have these? Are they paid currently? Hint: remember that these taxes are due annually and have the same priority on factors and lenders as payroll taxes.

The list of questions can go on and will expand based upon the company’s answers. Understanding their business, the collectibility of the invoices, and your risk-reward profile will help you better structure a transaction. Feel free to add more by commenting to this post.

Wishing You Continued Success. The Factor Guru.

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What’s in Your Box?

Oct 5

Posted by Gen Merritt in Books to Read, Sales and Marketing | No Comments

Imagine a box. Any type will do. It could be a cardboard box, a pink or red gift box, one wrapped in newspaper or even shiny paper. It may even have a big red bow on top. The box is yours, so picture it clearly. Only you know what is in it. The question, however, is do others know what could be in there? Could they even guess? How can you make what you do ‘stick’ with them?

Well, if they know you then they probably can guess… if they cannot, then nothing specific exist sufficiently in their mind to think of you when they have something for you… such as…

a Deal…

In work, we all have niches we provide. We have certain transactions we specialize in and others in which we choose to steer clear. You, in your job, may look at several types of industries in the clients you work with such as medical, government receivables, construction, trucking carriers and/or brokers, staffing or manufacturing. You may only prefer deals that are under or over a certain dollar size or in a set geographic area.

Do people know what you do? Do they have a good understanding? Have you explained to them enough so they could guess what’s in your box? And, almost more importantly, will they remember? Does what you do ‘stick’ with them? Or, is what they know so generic that your box could hold just about anything? What makes you any different than what everyone else does?

If not, they will probably never be able to ‘guess’ what specifically could fall into your niche, or what you may include in that very vast space where any factoring company may fall. In this, they may never know what type of transaction to send your way. Unfortunately, you would just be the same as everyone else with that same generic box. Nothing special… Nothing that stands out… Nothing memorable. The only exciting benefit you may offer may be your packaging: the big red bow, the curly ribbons, and the shiny paper… the pretty marketing-driven features.

So, how do you know? How will you know?

Are you seeing transactions that are completely out of your range, target market or pricing? Getting others to understand what you do may help.

Some marketing people give the basics of their target industry, size, pricing, and other details. They key is: will you remember? Tom Siska, with Working Capital Solutions, continues to write for The Commercial Factor, The Secured Lender, and the ABF Journal. In most of his articles, he continues to address knowing who you are and sometimes, more importantly, who you are not. I tend to agree with this.  

Successful marketing people seem to develop more effective communication tactics (not sales pitches) in helping others remember what they do (in understanding their target market). I know some talented marketers that should a deal come my way and sound even close to what they would do, then I will definitely call them. Why? Because I know what goes in their box… therefore, I know what may go around their box.  Ultimately, I know if they may be able to do the deal!

One of my favorite methods of remembering: stories. Opportunities to hear examples of deals (why they worked and why they didn’t; how they were done) are lasting. They stick. People can relate to them. Stories can help seal the deal. People remember.

After reading Made to Stick, I further believe and encourage such stories. (I also highly recommend reading this book. By the way, it is a shorter read than the 8 ½ hour book on tape — or CD as the case may be. And, yes, I have both because I have ‘issues’… as some have said). The communication styles referenced in this book may help others remember more about you and what you do.

These messages leave a lasting ‘stickiness’ factor. And, at the end of the day, if communicated correctly, I know I always remember what goes in everyone’s ‘box’ for the types of transactions they are looking to fund.

So, again, what’s in your box? How do people know? How will they remember? How will what you do ‘stick’ with them?

Wishing you success… the Factor Guru.

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Measuring Results

Sep 23

Posted by Gen Merritt in Collections, General Information, IRS Information, Sales and Marketing | No Comments

Yes, we had several questions this week on payroll tax monitoring, 8821 forms with the IRS and past due taxes, along with IRS tax liens. In all cases, we are happy to provide our experience; however, you should also consult your legal counsel or a CPA to insure you are protected. We’ll save this for another time. If you have questions in the interim, you can email us directly. (A link has been added for this form so you can use this now, if you are not already). Note this was updated in August 2008.

What I wanted to talk about in this entry was planning and measuring performance. Do you have the ability to measure productivity… performance… results? How do you know that the processes you thought you established are truly being followed? What tools and management do you have in place? (This works in any business – not just factoring).

Have you ever wondered why marketing/salespeople bring in a lot of leads but minimal results? Have you ever wondered why a collections staff can call on aging invoices all day but with limited success? Some would say it’s a numbers game in both cases. I respectfully would disagree.

Sales can be a numbers game, but wouldn’t it be better to identify who your salespeople are calling on, what they are saying, what they know about the product they are selling? Is it just the features? Or, do they know what the true benefits (and challenges) are for a prospective client? Can they outline those benefits to a prospective client to add value to any new customer? Can they breakdown a good lead from a ‘not a good fit’ lead?

Likewise, in collections, do your collectors just call to identify the status of a payment without understanding what they are calling on exactly? Do they follow up promptly? Is the reason they are calling because of an internal issue in either your company or your client’s company?

In both cases, you will notice, ‘understanding’ is required and needed to produce efficiency in efforts and to maximize the value of your organization.

Although I have lots of ideas about both — I more or less want to pose the question to readers for them to think about their operation, their company, and ultimately their success.

Wishing you success… the Factor Guru.

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