FCS -Chapter 1

In the first two books of The Small Factor Series, I included examples from my own factoring business to illustrate several points. Readers of those books may remember my very first client , the carpet cleaner whose receivables were literally piled in shoe boxes when we started. Organization was not his middle name, and unknown to both of us he factored several invoices that had already been paid when we began. Thus began my education as a small factor.

Chapter 1

The complete first chapter
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(© Dash Point Publishing, Inc.)

As that thought germinated I came to see that an album of stories from this colleague and several others would have great educational value. A group of stories – factoring case studies – would not only illustrate in human terms the principles, instructions, warnings, and suggestions made in the first two books; it would be both fascinating and entertaining. Thus this book took its embryonic form.

I put together some thoughts as to what these case studies might include, and assembled a list of small factors I knew with various levels of factoring experience. I contacted these people and asked if they would be willing to share their experiences with one to four clients for a new book. The response was strong and their replies make up the pages that follow.

Each contributor was given the same instructions for creating the case studies. In short, I asked for “the good , the bad, and the ugly” of their factoring experiences. As you will see, each writes with his or her own style and outlook. Below are the guidelines each contributor was given as he or she sat down to write.

“For each case study, describe:

Introduction

What This Book Is About

You may also recall another client, the published psychologist (PhD) who lived in my neighborhood, whose child my daughter baby-sat. That client received her first advance factoring one invoice, then skipped town after “copping” the payment check. I still shake my head over that one.

The purpose of these and other stories was to give real -life, human examples in what was heavily information -laden material. While small factors definitely need the information to earn the remarkably high returns within their reach, they also need to realize how very human the experience of factoring is.

This is a very people-centric enterprise. If individuals don’t fascinate you, you probably will not find factoring very interesting. Exasperating at times - yes; quite lucrative at times - no question; but interesting…no. The purpose of this book is not only to illustrate and educate , but to share the fascination I find in factoring.

If you don’t understand what people are really like deep down, the heavy dose of human nature you’ll receive from factoring will be quite an eye-opener. I have found when you deal with people’s money, you are handling something that over time reveals their inner nature. You will sometimes be surprised with what you find, as their outer facade is peeled away and the inner nature revealed.

Sometimes those surprises are pleasant and you find a true heart of gold; such moments and such souls are an honor to behold. Other times you expose a heart that is twisted and wretched, and you regret having been part of its unmasking. You also regret the loss of money, time , and the stress you experienced because of this person.

Peeling back that outer skin and revealing the inner nature is what this book is about. It’s far more than just a book on alternative financing, though it is that as well.

How This Book Came to Be

One day I was speaking with a colleague (one of this book’s contributors, actually) who was having a seemingly never-ending saga with a very trying client. As the story unfolded into yet another unbelievable episode, I found myself thinking, “What an experience! The stories from this client alone could teach loads about the business of factoring small receivables. What would result if I could put together a collection of several true stories like this?!”

Not one of these case studies is made up. Every story is true and each client is real. For the sake of anonymity, company names and personal names have obviously been changed. The names given them are monikers or acronyms which describe the essence of each business or experience in a few words. Hopefully they will bring you a smile or two, if not a good laugh.

With these preliminaries in place, let’s look at an overview to help you understand the book’s layout, the icons in the margins and their meaning, and the analyses that follow.

•	How you and the client found each other.
•	The industry the client is in, the client’s product or service, and to whom the client sells.
•	Why he/she wanted to factor, and why he/she wanted to factor with you.
•	The approximate factoring volume.
•	How you structured your rates, advances and rebates.
•	Why this particular client stands out from others.

For the ‘good’ clients describe:

•	What specifically made this a valuable client to you.
•	How long he/she factored with you.
•	What appealed to you when you accepted this client.
•	What did/do you like about the client as he/she continue/d to factor.
•	What features in him/her you look for in new prospects.
•	If you were just starting to factor again, what you would do the same, and what you would do differently.

For the clients that were ‘bad’ experiences, describe:

•	The chronology of when and how things went south.
•	Whether the problems were of the client’s making and/or a result of your mistakes.
•	What specific mistakes you made that you would do differently next time.
•	Whether the client tried to defraud you, either intentionally or unintentionally, and if so how.
•	Whether the root of the problem was client mismanagement, incompetence, and/or personal problems/circumstances such as illness or divorce, etc.
•	How your experience with this client has affected your procedures, general practices, or industries/clients/ debtors you no longer accept.