February 21, 2011 by Don D’Ambrosio
So you have this great factoring business and all of your efforts are starting to pay off. Your marketing campaign is generating new leads and your existing clients are growing. For most businesses this would be a dream come true. Right?
But what happens when your factoring company does not have enough cash to fund new invoices? It’s almost as if you are in the same predicament as your clients. You have new business but no capital to grow.
One solution called Participation is a great way for you to keep your current book of business and fund new deals. It’s actually quite simple and very effective for many factoring companies. A participant can enter into an arrangement where they fund all or a portion of the factor’s invoices in return for a percentage of the fee charged to the client. In some cases the participant will allow the factor to stay on as the lead, allowing them to keep their relationship with their client.
At Oxygen Funding, we have worked with several factors in participations with great results. KD, owner of a Midwest based factoring firm says, “I really enjoy working with Oxygen Funding to help provide additional funding resources to my clients. Participating with Oxygen has allowed me to continue to service my clients while reducing my risk and funds outstanding per client. I think it’s a win-win situation for both of us.”
Let’s face it, there’s nothing more frustrating to a factor than having to let go of a good client or give away new business due to lack of funding. Think about it, you earned the business; shouldn’t you get to keep it? Participation may be the answer for you.
Don D’Ambrosio is the president of Oxygen Funding, Inc. and a can be reached at (800) 790-3419 or you can visit his website at www.oxygenfunding.com.