What We Learned From Factoring Accounts Receivable for Clients

Posted by matthew begley on Mon, Oct 01, 2012

finance companyMatt Begley - CEO and co-founder of Fast A/R Funding

I have spent my entire career financing small- to medium-sized companies. The bulk of that time has been spent factoring accounts receivable from hundreds of companies with under $20,000,000 in sales. I have been lucky to work with people from every background in just about every industry on both sides of the Pacific Ocean. 

Since co-founding Fast A/R Funding, I have learned some new lessons, and I have  been reminded of some old lessons that are worth sharing.

1. Procrastination kills – It is human nature to do the things we like to do first, and put off what we don’t like to do. When combined with the fear of the unknown, procrastination can become fatal to any business. I see this most often when working with prospective clients for our cash flow financing product. It is not unusual for us to be contacted by a company looking for accounts receivables management and financing only to have them not contact us again for 60 or 90 days. Once they do re-engage with us it is only because they have come to realize they will not be able to make this week’s payroll unless they start factoring accounts receivable immediately. The pattern suggests that they have known for some time that they need outside financing, but have put off doing the work to establish their new facility until the need becomes acute.  

2. Be honest with the challenges facing your business – This is the first rule of good business, but seems to be the one that we struggle with the most. Honesty is a key component of any financing relationship. I see time and time again instances where if we had known all the facts we could have presented a solution to our client and prospective clients to make their cash flow financing more efficient. This is a delicate subject, but I would encourage all companies looking for accounts receivables management and financing to be completely honest with their lenders on the challenges their business is facing. Businesspeople should know that there really isn’t a challenge they are going through that a finance company hasn’t had experience with before. 

3. Your customers really don’t care – One of the most common objections I get during the sales process is that companies are afraid how their customers will view them if they learn they are factoring accounts receivable. The reality is that most companies are too busy running their own business, and dealing with their own challenges, to be concerned with what type of financing you are using. Factoring and asset based lending continue to be types of financing utilized by startups and Fortune 500 companies alike, so small businesses should not feel like they are unusual in needing outside financing to run their businesses. What the customers of our clients want is to have a vendor that delivers goods or services on time, and with the specifications they requested. It is that simple and that is how it should be presented. The only change our clients’ customers have to make in the way they do business is to change the payment address in their accounting system. 

If you keep these three things in mind when you start your search for a factoring company, you’ll be sure to have an easier time finding the right finance company and making sure your accounts receivables factoring facility is structured well for you.

Learn more about factoring and Fast A/R Funding’s services by downloading our informative “Factoring 101” guide, or call 888.833.2286 to speak with one of our small business finance consultants.


Tags: Invoice Factoring, Accounts Receivable Factoring