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I will try to make my observations from around
thirty years of hands-on experience in the
financial services industry. Much of this
experience has been from the “school of hard
knocks!”. My comments are geared to any
professional in the financial services industry,
and this could be an asset based lender, factor,
a broker looking for a funding source, or a
professional who may be considering this as a
career. |
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As a quick recap, I discussed in the first
Article a series of ideas, attempting to answer
the following question, “Is your firm a Service
Focused Firm?” Questions were introduced at the
end of the first article, to stimulate thinking
and analysis of the organization.
In the second Article, I discussed the need for
all funding organizations to have a well
defined, focused purpose for their existence. In
addition, all marketing strategies require a
written plan in order to be successful. I closed
the second Article in this series with this
question: What is our purpose? In order for any
business, organization, family or for that
matter, individual to be successful, they must
first know what their purpose is. |
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AThe Strategic Planning Process for
Accounts Receivables Factoring |
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Step 1: SWOT
I make an assumption in this Article that you
are familiar with the Business Strategic
Planning process. There are an unlimited number
of excellent publications available and
information on the Internet about the steps to
take to complete a written, strategic plan for
your accounts receivables factoring company.
All businesses, regardless of industry, size,
location, ownership or age need a written plan.
No exceptions. In today’s global competitive
environment, to operate a funding business
without a plan is a recipe for failure.
For this discussion, I am going to focus only on
the marketing related aspects of the self
assessment, Strategic Planning process.
This is the first step in the usual Planning
sequence, commonly referred to or called SWOT:
Analyze Strengths, Weaknesses, Opportunities and
Threats relative to the invoice factoring . In
my experience, you need to undertake all of
these parts of the equation in order to have an
outcome that is credible. Let’s walk through an
exercise for each of the areas, and present some
ideas on variables to examine on your
organization.
Strengths; Critically assess
what you believe are your organizations current
strategic advantages or strengths, relative to
serving your commercial receivables factoring
accounts. These are the areas that you should
“run” your organization to.
For example, several years ago we completed this
exercise on our accounts receivable factoring
firm, looking at all facets of organization. The
list included the standard areas of analysis
such as our strategic focus, leadership, rewards
and punishment, marketing and sales, standards
and values, communication and systems, policies
and procedures. We now, as part of our ongoing
Strategic Planning process, revisit and update
this analysis on an annual basis.
The identification of current strategic
strengths or advantages is also important,
because it serves as the cornerstone for the
product or service menu to be offered by your
business. When we finished this strength self
assessment, here is what we came up with for our
firm in the most recent assessment: |
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Core group of funding professionals |
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Experienced finance staff with limited turnover |
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Above industry / per group client retention
levels in factoring as a strategy to enhance
business cash flow |
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Expertise in vertical areas of finance, such as
collections, credit and management |
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Owner operated invoice factoring company |
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It is important to note that our list of
strengths the first year we did this was not
this long. In fact, it was quite short. The
identification of our weaknesses [see the next
section] actually served as the “To do” list for
us. The areas of perceived/actual weakness
became the areas where we needed to improve
quickly, and transform a “negative” into a
“positive”.
Please recognize that every business funding
firm will have a different set of these
competitive strengths or assets. Your firm is
unique and also recognize that it is very
important to be honest/objective when stating
that a given area or discipline within your firm
is truly a competitive advantage. |
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The second step in the SWOT is the generation of
your factoring firm’s weaknesses; both internal
and external/marketplace. This self assessment
process is not easy to do, and unfortunately, is
the most commonly skipped or neglected part of
the Strategic Planning process. It is, however,
from my experience, the most important step in
the process for the business finance industry.
Without an objective, perhaps humbling self
assessment step, the planning process is
incomplete.
As human beings, none of us [myself included!]
like to admit that we have flaws, or have
weaknesses. This step in the process is much
like procrastinating in daily life; for example,
not scheduling an annual physical or checkup for
fear of the results one might find. I can relate
to this in my own life; how many times have we
rescheduled the Doctor’s office visit, only to
be “relieved” when we find out nothing is the
matter?
We also completed an assessment of our
internal/external weaknesses, as part of our
planning efforts. This process was actually a 2
step process, analyzing our overall firm
weaknesses, and then I completed an assessment
of our historical marketing efforts. Because of
their importance, let’s review the results of
both.
The overall weaknesses for our factoring company
that we developed were: |
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Revenue and client concentration |
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Lack of other related products on our financing
service menu |
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Industry dynamics relative to receivables
management that indicate a lack of
professionalism overall |
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Limited financial resources when compared to
larger regional or national firms. |
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In the Marketing
area, the results of the self assessment were
sobering. They included: |
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A dependency on outside sources for leads in
gaining incremental factoring accounts |
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Reactive, not proactive approach in marketing
receivables management |
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Lack of focus |
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Inconsistency in the areas I reviewed included:
Lack of written plans, strategies, etc. for
growth in our accounts receivables client base |
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Recall the list
of positives outlined in the first step of this
process. All of the negatives identified above
assisted us in the development of strategies to
correct each weakness. Equally important, where
we were weak motivated us as a funding
organization to put together a list of goals,
where we wanted to end up. These included:
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The need to have ongoing market research |
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Focus on client segmentation in funding working
capital needs |
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Innovative pricing and product development for
our commercial funding clients |
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Incentive compensation for our finance staff |
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Sales and knowledge training |
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A proactive, opportunistic approach |
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Written plans, goals, benchmarks for performance |
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Self reliance in the marketing area of factoring
for working capital and cash flow |
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A focused, niche player relative to accounts
receivables funding for businesses |
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In the next several series of these Articles, I
will outline the step by step process we used to
help us achieve each of the above mentioned
goals. I am excited to let you know that we are
almost there, even though each day requires us
to more incrementally move closer to our desired
goals.
Feel free to contact me with questions,
observations, comments or if you need any
additional information on the discussed topics.
I can be reached via email at
mark@ucfunding.com |
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View and Print this Article (pdf
version):
Winning Business and Loyal Clients in Invoice
Finance (part III) |
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In this
series of articles to assist you in winning business and loyal
clients, Mark andula, Vice President, Principal, United
Capital Funding Corp., offers his guidance from the viewpoint
of an experienced business finance professional based in the
US.
Winning Business and
Loyal Clients in Invoice Finance
(part I)
Winning Business and
Loyal Clients in Invoice Finance
(part II)
Winning Business and
Loyal Clients in Invoice Finance
(part III)
Winning Business and
Loyal Clients in Invoice Finance
(part IV)
Winning Business and
Loyal Clients in Invoice Finance
(part V)
Winning Business and
Loyal Clients in Invoice Finance
(part VI)
Winning Business and
Loyal Clients in Invoice Finance
(part VII)
Winning Business and
Loyal Clients in Invoice Finance
(part VIII) |
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Other Invoice Factoring Articles of Interest
Commercial Finance
Perspective:
How to survive the current economic malaise
(part I)
Commercial Finance
Perspective: How to survive the current economic malaise
(part II)
Trust Based Financial Services
in Factoring of Accounts
Receivables:
How to build a sustainable
trust based financial services firm
Winning Business
and Loyal Clients in Accounts Receivable Factoring
"How to Sell More to Your Existing Clients"
Winning Business
and Loyal Clients in Accounts Receivable Factoring
"Work
Smarter, Not Harder"
Factoring: Fact vs.
Myth: What types of companies use factoring?
Factoring: Fact vs.
Myth: Will factoring negatively affect your
customers perception of your company? |
