Winning Business and Loyal Clients in Accounts Receivables Factoring
"Work Smarter, Not Harder"
 Advice Desk

Our firm, United Capital Funding Corp. provides working capital and professional Accounts Receivable management services to entrepreneurial firms on a national basis.

Tampa Bay Office:
United Capital Funding Corporation
146 Second Street N.
Suite #200
 St. Petersburg, FL 33701
727-894-8232

Since the formation of our financial services firm in April, 1997, we have served factoring clients in over 40 states, and in nearly every industry segment, including staffing, manufacturing, distribution, construction, telecommunications and others.
 
One of the most interesting aspects of accounts receivables factoring is that we serve clients across the entire corporate lifecycle; from startups [incubation or inception clients] to harvested or “mature” firms. I have often wondered if there is a single attribute or common denominator of the firms that over a long period of time survive and grow profitably. Is this possible?

In observing our invoice factoring clients, that we provide financial services to, I have concluded that there is one common thread that is present with the most successful clients that we serve. I believe that without this tool in the bag of the entrepreneurs that we have as clients, their businesses could not have become the success that they are. If this is true, then the question is simple; what is the common denominator? How can I apply this approach to my business?

The 80/20 Rule

The answer to the first of the 2 questions posed is simple: the most successful apply in every aspect of their business the 80/20 rule. I am sure we have all heard about the 80/20 Principle at some point in our careers. But really is the 80/20 rule? Does it really work?

According to Wikipedia , the 80/20 rule, or the law of the vital few is actually called the Pareto Principle. The law states, that, “for many phenomena, 80% of the consequences stem from 20% of the causes.” Business management thinker Joseph M. Juran suggested the principle, and named it after the Italian economist Vilfredo Parteto. He evidentially observed that 80% of the income in Italy went to 20% of the population.

This rule has been around a long time. After all, it was a study that Pareto concluded in 1897, or over 100 years ago that led to his discovery. Since then, numerous additional modern applications have been suggested, using the Pareto Principle. For example, some ideas are:

20% of the criminals account for 80% of the crime

20% of the carpet gets 80% of the wear

20% of the streets account for 80% of the traffic

20% of your clients account for 80% of your profit

I can tell you from first hand experience as applied to our accounts receivables factoring services, that once you have answered these questions, and begin to focus your effort on the 20%, amazing things occurs. Your time is better spent; you enjoy your work a lot more, and significantly higher profitability occurs.

Conclusion

The key to long term financial success for any business is the ability for you to attract and retain satisfied, loyal clients. One way discussed in this article to accomplish this goal is to utilize the 80/20 Principle [also known as the Pareto Principle] to ensure you focus your efforts on the clients that grow and are profitable over the long term. We have successfully used this concept within our own commercial Accounts Receivable factoring and management firm, and I hope you find it rewarding.