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The Contributors
All eight contributors to these case studies are honest-to-goodness, bona-fide small factors across the country. Their names
are real and their companies are very much in business. Many received training as factoring brokers and later started buying receivables as funding sources. Others began factoring without any training and learned
the business on their own.
The contributors have quite diverse backgrounds. All are Americans living in the USA and one is a naturalized citizen from Lebanon. Their formal educations range from high school
graduates to college graduates to an MBA to a PhD in electrical engineering. Their experiences prior to entering factoring include working as a handyman, an industrial engineer, a bookkeeper and office clerk, a
national phone company employee, an electrician, a banker, an owner of a textile recycling company, a university professor, a secretary and stay-at-home mom, and an operations manager for a local phone company.
Of the eight small factoring companies represented, three are family run in which both the husband and wife work the business. Of the five non-family operations, two have business partners, two are one-person
operations, and three factor full-time. Six are home-based businesses and two work from an outside office. Their homes stretch from coast to coast and include Oregon, California, Nevada, Arizona, Illinois, Michigan,
Maryland, and South Carolina.
One writer was a business owner who factored his receivables. That person began as a factor in the early 1980’s, while the others started in the 1990’s. Three currently
focus more on brokering deals than funding. The others spend most of their time funding transactions, and broker occasional deals as they deem appropriate.
The Case Studies
There are twenty-one case studies written by the eight small factors. Ten of these studies could be considered good
experiences, while eleven are negative (…and a few of those downright awful). I want to point out this percentage of bad experiences does not reflect the proportion of good/bad clients in the portfolios of most
factors. If it did, there would be very few factors in business! Most factors have a negative experience from time to time, but the vast majority of their clients and transactions hum along at a relatively smooth
and steady pace. Make no mistake, however: the unpleasant ones are hard to forget! As you read, notice how many negative case studies occur when the factor is new to the business.
The disproportionately high
number of “lemons” is included here for instructional purposes. While you learn a great deal from good client experiences, you also learn plenty from the bad. That’s why the negative case studies are in this
book in such abundance. Their number is not intended to scare you away from factoring, but is included to give you several first-hand accounts of the troubling situations that can arise – and give you some handles
as to how to steer clear.
Marketing is always a key issue for people starting business. To help with this matter, I’ve summarized below the client industries that are included in these case studies, as
well as the marketing methods or referral sources the factors used to obtain these clients.
Client Industries
Advertising Agency
Carpet Cleaner
Commercial Cleaners
Construction Supplier
Floor Surface Preparer
Food Processor
Garment Distributor
Importer
Internet Service Provider (2)
Landscaper
Manufacturer
Map Maker
Printer
Screen Printer
Security Guard Service
Temporary Agencies for:
Office Workers
Home Health Care Nurses
Nurses in Retirement Homes
Traveling Nurses
Tool and Die Shop
Marketing Methods/Referral Sources
Attorney
Banker
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Benefit of Factoring – A benefit factoring provides the client is conveyed. Use these in your marketing!
Desirable Client Feature – A desirable aspect of a client is
expressed. The more of these you find in a prospect, the better.
Due Diligence – A standard due diligence activity is described.
Common Factoring Practice – A normal factoring procedure is being followed.
Risk Minimizer – This is a precaution or action which lessens the factor’s risk. Learn to weave these into your own practices.
Good Advice – So pay attention!
Common Sense – One of the most vital assets of any factor.
Mark of Success – Experiences which make factoring so gratifying for everyone involved.
Risk – The factor is taking a chance or the client is acting
in a way which increases the factor’s risk.
Mistake
– A mistake is being made by the factor or client. 
Over-concentration – The factor has too much money
concentrated in this particular client, customer, or invoice. This can pose a grave danger to the survival of the factor’s business.
Fraud – The client has committed a fraudulent act. Very, very bad.
Red Flag – When these come up…watch out!