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This Month's
Featured Industry #1
Janitorial and
Maintenance Industry
Betty’s
Building Maintenance Service provides exterior building maintenance
including pressure washing and window cleaning. As a minority
(woman-owned) business enterprise, she receives many unique
opportunities to compete and bid for lucrative local city and county
maintenance and janitorial contracts but has been forced to declined
these opportunities in the past due to the fact such contracts were
usually relatively large and both the county and city require 45 days to
make payment (terms of payment) for services performed. Since Betty's
company has few hard assets which could be used as collateral, she had
been unable to secure any form of commercial loan from any local banks.
One day Betty
received a mailer from Datamax Marketing Systems that introduced
her to the benefits of
factoring.
The mailer explained how
factoring
her invoices or placing them with a
factor
for immediate cash and then collection, would allow her to accept the
lucrative contracts offered by the city and county without experiencing
the worries of then making payroll and timely payments to vendors for
her cleaning supplies since with factoring, she would no longer have to
wait for45 day payment.
A Datamax
Marketing Systems representative introduced Betty to a factoring
company by setting up a conference call and Betty was quickly provided
with something called a
Terms and Conditions
letter that outlined a prospective factoring arrangement whereby Betty
would be charged a flat factoring rate of 4% for 45 days and 1% for each
fifteen days thereafter on all invoices sold to the factor. Betty's
profit margin of 25% easily absorbed the factor's fee and left her with
a 20% margin on work she was currently turning away. She also reasoned
the benefits from her minority business status would additionally allow
her to build a slightly higher profit margin into her bids for the city
and county's contracts which would actually pay for most of the monthly
fees associated with factoring.
Betty executed a
factoring
agreement and established her
client relationship. She immediately began to bid on the city and
county jobs that she had been turning down for years and was
almost immediately awarded a $25,000 monthly contract to provide
maintenance on five county buildings and also won the bid for
maintenance on the City Hall for over $100,000 per year. With her
factoring agreement now in place and with no more worries about meeting
payroll, Betty's Building Maintenance Service is now positioned
to grow at an exponential rate limited only by Betty's ability to market
effectively.
Case Study 2:
John's Guard Services
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The creation of a factoring relationship will allow you to focus
much more time on marketing and generating new and larger customers
and much less time on chasing dollars and accounting. It is
estimated that for small businesses, establishing attractive terms
of payment for existing and new customers (and some funding
mechanism such as factoring to finance those terms of payment ),
will result in a nearly three fold increase in the amount of
business produced.
One of the most
effective methods of determining whether factoring is right for your
company is to view Case Studies of similar enterprises.
Factoring can assist cash-restricted business owners in virtually
all business sectors. If you don't see a similar company to yours,
contact us with your company's unique
requirements.
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