Accounts receivables factoring is a financial service offered by United Capital Funding



Winning Business and Loyal Clients in Accounts Receivable Factoring
#III - The Strategic Planning Process
Advice Desk
In the third in a series of articles aimed at assisting you in winning business and loyal clients, Mark Mandula, Principal, Vice President, United Capital Funding, offers his guidance from the viewpoint of an experienced business finance and factoring professional based in the US.


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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, accounts receivable factor, a broker looking for a funding source, or a professional who may be considering this as a career.

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.

The Strategic Planning Process for Accounts Receivables Factoring
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:



Core group of funding professionals


Experienced finance staff with limited turnover


Above industry / per group client retention levels in factoring as a strategy to enhance business cash flow


Expertise in vertical areas of finance, such as collections, credit and management


Owner operated invoice factoring company



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.

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:



Revenue and client concentration


Lack of other related products on our financing service menu


Industry dynamics relative to receivables management that indicate a lack of professionalism overall


Limited financial resources when compared to larger regional or national firms.


In the Marketing area, the results of the self assessment were sobering. They included:


A dependency on outside sources for leads in gaining incremental factoring accounts


Reactive, not proactive approach in marketing receivables management


Lack of focus


Inconsistency in the areas I reviewed included:


Lack of written plans, strategies, etc. for growth in our accounts receivables client base


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:


The need to have ongoing market research


Focus on client segmentation in funding working capital needs


Innovative pricing and product development for our commercial funding clients


Incentive compensation for our finance staff


Sales and knowledge training


A proactive, opportunistic approach


Written plans, goals, benchmarks for performance


Self reliance in the marketing area of factoring for working capital and cash flow


A focused, niche player relative to accounts receivables funding for businesses


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


View and Print this Article (pdf version):
Winning Business and Loyal Clients in Invoice Finance (part III)

Thank you for visiting and Enjoy!
In this series of articles to assist you in winning business and loyal clients, Mark Mandula 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)

Other Invoice Factoring Articles of Interest
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
?

For a comprehensive FAQ (as well as additional information on factoring accounts receivables services provided by United Capital Funding Corporation) please view and print the following:
Factoring Company Corporate Overview

Apply for Factoring Online

 
 





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