Money for Jam

In the “old days” (whenever those days were), Factoring one’s Receivables was, in many cases, considered “a bad thing”, the last resort of the damned, the last gasp of a failing business. Today, Factoring is not only an accepted and acceptable way to raise Working Capital, especially for those business who cannot satisfy the tedious requirements of a Bank Institution, but in many cases should be the product of choice for growing companies.

However, we do have a whole new industry, one whose anxiety to ram cash down one’s throat is matched only by the ineptitude of its representatives (usually on the phone), its complete lack of transparency and its overt efforts to take advantage of business people who do not have the financial acumen to ask the right questions or, even worse, who do not know what the right questions are! An industry begotten by wealthy investors who are unhappy with the miserly returns offered by regular investments who are happy to risk their capital for the huge, huge rewards they will garner from some of the suckers who end up borrowing from them. These exorbitant profits, they figure, will make up for the huge losses they are sure to make, based on the low Underwriting requirements they have.

So, here’s how it works: The phone rings and as you answer, a pre-recorded message says that you have been “selected” as one of the fortunate few upon whom the caller would like to bestow its largesse. Press “1” to learn more (repeated at least twice and finally, at the very end of the recording an afterthought that says “and press 9 if you wish us to take you off our list”).

Well, the word “selected” succeeds in making you feel important, so you press “1.” After all, what is there to lose, right? Suddenly, you are talking to a real live person, but the only difference between listening to the recording and listening to the “artist” who is now hoping you will borrow some of his company’s money, is that the live person breathes and can read from a script.

The requirements are few – in fact, there is only one requirement: that you can provide bank statements of your business showing some kind of regular cash flow. Good or bad credit? Well, maybe that’s not too important. Now you’re thinking, “This is getting better and better. The fact that I was late or missed my mortgage payment the last couple of months doesn’t even matter? Wow, if these guys can lend me money, I can pay my mortgage this month!” Longevity in business? Not important. Show that you have been in business for 3 months (or so they say) and you are a candidate (or should I rather use the correct word, “prey”) for these predators.

Anyone with a modicum of knowledge of lending and borrowing should then ask two important questions (at least to start with): “What is the rate of interest I will be charged for this loan”? and “What are my repayment responsibilities”? I can assure you that you will NEVER get an answer as to the interest rate, either because the person on the end of line really doesn’t have a clue, or more likely if they tell you, you’ll run like the wind. What they will say is that it “depends on your credit score”, but I’ll bet you will never get a straight answer at all.

So you move on from the interest rate and timidly ask how the loan is to be repaid. You know the answer: You give this lender the authority to dip into your company bank account weekly, if not daily to remove some fixed amount the calculation for which only they know. I don’t like giving anyone the right to debit my bank account for anything – and I usually don’t. With legitimate payments, well it’s OK I suppose, you don’t have to remember to do anything. But you do have to have money in your account on the day of the debit. Come on, how many of you out there have been caught short – and how many times? The debit comes through on Tuesday and your deposit hits on Wednesday. Oh dear, as they say “A day late and a Dollar short.” Now you want to give these guys the right to remove funds from your account every day? What happens if you are short? Well, that’s no problem – they’ll just offer to lend you more to cover the shortfall. The temptations are endless, the solutions to your problems just too good to be true – and you surely know what the riposte is to that cliché, don’t you?

So, if your business needs Working Capital, (Cash, Moolah, Money, Dollars), and you are selling to other businesses on credit AND you want to grow, we will give you what you need, we will grow with you, you will know exactly what you are paying and there are no tricks. And to crown it all? We continually check the credit-worthiness of your customers so you don’t end up selling to dead-beats, we monitor your outstanding invoices and make (professional) collection calls for you or ask you to help out if you prefer and while we might cost more than the bank charges, we provide an array of support services to you – and it’s better than giving up stock in your company for an infusion of cash – or just going short. Ask some of our clients who have appreciated the services we offer and have been with us for 10 years and more.

One final thing: You will always work directly with me, benefiting from my experience in Financial Management and Public Accounting over a career spanning decades.

Money for Jam? I prefer to think of our services as Money to Preserve, Protect and Profit by.

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