I remember attending a Chamber of Commerce event in Westchester, New York last December. I was making my rounds, shaking hands and introducing myself to the room full of professionals in attendance. I came upon a group of three people and politely joined the open conversation.
One of the men in the group turned to me and asked “What do you do?” (Who? ME?!?) I thought to myself, ‘Two months into the business and I’m still learning what exactly it is that I do!’
An Awkward Moment
Then I took a deep breath and answered, “I work for a company called CapitalPlus. We purchase Accounts Receivables from companies in the construction industry and we serve companies all over the country and in Puerto Rico. We have offices in Tennessee, Texas and here in New York.”
The man paused for a moment and then said “Oh, you do factoring.” I didn’t know if I should be happy because, after many events, I finally found someone who was familiar with what I do, or worried about how the man described my occupation so very simply.
The man turned out to be a banker with over 30 years in the industry, and his wife coincidentally worked over 20 years for a factoring company specializing in textiles.
He took over the group conversation and started telling everyone in the group exactly what factoring is. He then related a story to the group about how one of his best and most profitable clients came to him for a bank loan and he could not help him.
He was torn by this dilemma, so torn in fact that he took his work home and told his wife about it. As it turned out, his wife who was an invoice factoring agent was able to help. He was very happy to get to work the next morning and eager to call his client with the good news.
The Outcome and Point of the Story
Well, the outcome and point of the story is that factoring enabled everyone to get what they wanted out of the situation. The client was able to get the cash flow he was looking for, the wife was able to form a new relationship and the banker was able to keep one of his best clients happy.
I meet a lot of bankers (I’m an ex-banker myself), and they all have the same question: “What’s in it for me?”
My answer leads back to my story from December in Westchester, NY. There was nothing for the banker to gain financially, but he was able to gain something even more important, the benefits of trust and loyalty from his client.
The client now looks at the banker as a one-stop-shop. He would think twice, maybe three times before leaving that bank to join a different financial institution.
When they find a banker who truly has their company’s best interests at heart, they tend to stay with that bank and just as importantly, will not hesitate to recommend them to friends, family and business associates.
How Clients, Banks and CPAs Benefit from Factoring
Factoring can be customized and managed so it provides working capital when your client needs it. It’s not like a traditional loan, so the client doesn’t incur any debt. Factoring also reduces your costs, such as overhead expenses.
Here’s another great example of how factoring benefits everyone involved in the transaction. I’m currently working with a CPA, who was doing an examination on one of his client’s files.
The client was in desperate need for some cash flow but could not get a bank loan due to having some open accounts with a Merchant Cash Advance Company. The CPA educated his client on the benefits of factoring and contacted me to see what CapitalPlus could do.
We are currently in the process of not only providing the capital the client needs, but also paying off that loan for him. In this case, the CPA went out if his way to assist his client and did not receive any monetary compensation from us but got something better in return, he got to keep his client happy.
I thank the gentleman for that first awkward moment in Westchester, because it did something great for me. It made me realize that many businesses focus only on the monetary gain. They don’t recognize the value of gaining long lasting relationships with clients, which in turn will give them infinitely more profit in the long run.