Business, business finance, Entrepreneurship, Factoring, factoring, finance, invoice financing, Start up

CASE STUDY: I Couldn’t Even Buy Food

WHO:  MJ Security Patrol Inc.  A Start-Up

Marcus had worked for a security company for a several years, and decided to go out on his own. He was in his late twenties, and had gotten experience as an armed and unarmed security guard. He had gone through his check list, had set up his company as an S Corp. gotten his business license, liability insurance, workman’s comp, uniforms, and all the other requirements. He had saved some money, to buy fuel, food and pay rent.  He had a couple of other guards who wanted to work for him.

He landed a contract with a very creditworthy customer.  Marcus submitted all the required documents, and got ready for his first job as a business owner. Excited, he put on his uniform and arrived promptly every day at the job site, signing in and out as the rules required.   Everything worked perfectly.

While Marcus had anticipated he would have to wait to get paid, and had saved money for that situation, he was waiting more than 30 days to get paid.  The company paid  30 days after he had submitted his invoice and  time sheet.  The check was cut on the 30th day, unless it was on a weekend, and then the check was cut the following Monday.  Then the check went to the controller to sign, and then went for a second signature, the owner.  Lastly, the check was mailed. So, payment was actually mailed 35-45 days out.

Thirty days without a regular pay check can be a long time, even if you’ve planned for it, but 40 + days puts even more pressure on your finances. Every business owner and individual knows how hard it is, when you don’t have regular Cash Flow. Two rent payments, two insurance payments, plus 2 months of food and fuel, with no money coming in, is very stressful.

Marcus had to borrow money from his friends, just for food, and his rent became overdue.  Through no fault of his own, things began to get way behind, and he borrowed more money from his buddies.  Finally, the check came, and he had some money, but not very much left out of the check after he repaid his friends.

That’s when Marcus started looking for a better way.  He had heard of factoring from the other companies he’d worked for.  He didn’t know anything about it, but he couldn’t go on borrowing, and living hand to mouth.  And, he knew that other companies didn’t operate this way. He started calling factoring companies.

When Marcus called me, he had been turned down by several factoring companies.  He was too small.  He had a good customer, but he was the only one working.  With his cash flow problem, he had not been able to hire his friends, because he couldn’t make payroll.  They went on to other jobs, but Marcus really wanted his own business and knew, somehow, there had to be a way.  Most factoring companies that you see on the first page of an internet search usually require that you factor $10,000 or more every month and can require you sign a long term contract.  This is hard on a start-up and a small company.  Their first few months don’t even come  close to $10,000 a month in many cases.

Marcus happened to come across my website, and called me.  Our approach is that if you have a creditworthy customer, and need cash flow, we’ll find you a factoring company.

We don’t care if you’re doing $500/month or $5,000,000/month.  You deserve all the opportunities available to grow your business.

We had a phone call with Marcus to talk about his business, his volume, and his needs. Since we had a good idea of Marcus’s business after the phone call we found a factoring company who was willing to work with him very quickly.  He started factoring his invoices, and improved his cash flow.  His customer still needed a couple more guards, so Marcus called some of the guards he used to work with in his previous employment.  They were happy to come work with Marcus, and they also knew  more people who wanted to work, even part time as guards.

We have a data base of many factoring companies and what their requirements are, so we don’t waste time talking to factors who are not a fit for your situation.

And so MJ Security Inc. began to grow.  That was three years ago.  Marcus has always stayed in touch to tell me how things are going.  He no longer has to worry about money for food.  He recently sent me a video that is airing in various nearby towns where he offices, advertising his company.  Yes, he has grown to the point where he can pay for advertising.  He now has over 12 sites where he supplies guards every week, on a part time and full time basis, depending on the customer’s needs.  He sends in the time sheets every week, and the factoring company enters his invoices in their software, verifies and sends out the invoices to his customers.  They are his back office, making his company look larger, and certainly more professional, as well as being more efficient. His customers know he uses a factor, and know that his workers will be paid on time.  With that in mind, when a new opportunity comes up, Marcus gets the first call to do the job.

When Marcus has a new customer who wants to work with him, he calls the factoring company to get a credit check, before he starts any kind of negotiation or signs anything.  This is a service of most factoring companies, which saves him having to pay for his own credit service, and he doesn’t have to do anything but text, call or email to the factoring company to get this information within an hour.

In our last phone call, he did say he was really tired. But he wasn’t tired from lack of food.  He was tired from being so busy.  He is working on hiring a person to send out his payroll, while he develops more new customer relationships.

Factoring your invoices not only gives you needed Cash Flow, but a back office and a credit monitoring service to support your company at no cost to you.

Spend more time on your business and less time chasing your customers for payments.

factoringFor my Free e-book “The One Thing Business Owners Need” Click the Book Image





To Your Success,

Anne Gordon
Guilin Funding (The Money Lady)

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