There are many parts to making a decision of whether to welcome a new company into our portfolio of factoring clients. Are we interested in the particular industry? Is the size of the deal right for us? And will the company be a good fit, easy to work with? But high on the list will always be; who are these people? There’s a good chance we might never meet face to face (although we do visit the majority of our clients because we like them).
So please, don’t take it personally when we start asking some pointed questions about the company, the owners, and anybody that might have control over the finances. When a prospect tells us that they don’t release their financial statements to anyone, it says one thing about them – they’ve never closed on a commercial loan before. Company financial statements are not considered “proprietary information†to someone who is considering giving you their money to use. Either is asking about your personal background. There are two parts to asking for this information. One of course is the information itself, but the other is equally important. We are entering into a relationship where a level of trust has to be established.
Last May a prospective client contacted us about getting funded. The size of the deal was considerable and we obviously were very interested. But the answers on the application and the independent information we were able to find didn’t quite match. Luckily our G.M. took the time to try and unravel the discrepancies. The prospect became indignant and huffed and puffed that we would question his authenticity. From our point of view the whole deal kind of crumbled and that was that.
Last week an investigator for the district attorney’s office in a large Midwestern city got in touch with us. It seems that somewhere in a pile of confiscated evidence was a copy of our application made out by the aforementioned prospect. The indignant fellow decided to try another factor that wasn’t quite as particular about false statements and took them for over Two Million Dollars. Absolutely true story you can call the investigator yourself.
Bottom line what does this mean to you and more importantly to our favored clients? If you enter into an agreement to get your invoices factored you want to be darn sure that the funds will be there when you need them. When you submit an invoice, you want a wire that day or the next. You don’t want to find out that your factor has been swindled out of its money. So yes we ask touchy questions to prospective clients. But it’s so both of us can sleep at night.