Factoring 202

Direct Value Statements and Probing

Direct Value Statements and Probing

Prospecting is your method of qualifying the leads you receive from your referral networks and various types of direct / response marketing.  These conversations are often “cold calls” so you will need to become adept at it.  Your primary goal is to…

  1.  Probe the needs of this company
  2. Begin build a relationship with the owner
  3. Get the contact email if you do not already have it.

Direct Value Statements and Probing

Whether you are prospecting with the telephone, at a trade show, networking, or during an appointment, you need to develop an attention-getting Direct Value Statement (DVS).  Direct Value Statements should be included in any initial prospecting presentation you make and should clearly define what your business finance consulting company does and how it does it.  In prospecting, this statement it is an early hint at a goal or solution to a perceived or possible problem the business owner may have.  Examples of Direct Value Statements include:

“May I speak to Joe Smith?”
“This is Joe Smith.”            
“Joe, my name is Howard Adams with Adams and Associates in Miami, Florida.  We are a private consulting firm that assists small business owners in acquiring working capital to expand and grow their businesses.  We specialize in the areas of commercial factoring and asset-based revolving lines of credit.”

 “The reason for my call is…..”

Powerful, well thought out Direct Value Statements are an extremely important component of your cold call and can be used to quickly gain appointments on the telephone and to meet sources of referral business when networking.  They are attention-getting “door openers” and should be carefully constructed as such. 

Probing and Identifying the Prospect’s Needs

In all sales, you will find that different people buy the same things for different reasons.  The reasons are unique and theirs and theirs alone.  One of your goals as a financial broker / consultant is to determine the business owner’s needs or motives.  Its no big secret then, that one of the keys to effective prospecting is probing or asking those certain questions that will uncover the prospect’s motives or needs.

In the world of asset-based lending, factoring and alternative commercial finance, you will often utilize problem resolution questions.  To do so, you will need to understand a little about the problems faced by small business owners and how various types of finance can resolve or eliminate those problems.  You will find that by simply making cold calls to small business owners, you will garner great insight into many problem areas these owners face as you converse. 

Below are some very common problem areas of small business that alternative commercial finance can help to resolve.

Payroll…probably the most common reason for a small business to need factoring.  Granting terms of payment to customers is an accommodation that usually leads to more business.  Unfortunately, a small business owner cannot match payment terms with payroll needs. Employees must be paid at a minimum every other week whether invoices are paid by customers on a timely basis  or not.

Taxes…usually payroll taxes.  It is easy for a small business owner to get behind in payroll taxes.  Factoring and asset-based finance advances upon invoices can help speed up cash flow and provide immediate cash to help catch up on delinquent taxes and arrearages.

New Business…one of most powerful roles played by asset-based finance is to provide a business owner with the capital to seek new customers..  Many small business owners do not solicit business or actually decline business from potential new customers which pay in 30 days or longer due to cash flow constraints.  With alternative commercial finance products in place, owners can become much more aggressive in their marketing efforts to win new, larger customers.

Taking Supplier Discounts…and early payment discounts.  With alternative commercial finance solutions  in place, a small business can approach its suppliers to        grant price reductions for early payment or volume purchases.  In many cases, the price reductions can be          greater than the fees for factoring.

Inventory Purchases…and expansion.  Asset-based lending and inventory finance address this area directly.   It is clear that freeing up the working capital “trapped” in the accounts receivable of a small business can also be a ready solution when volume purchases of new inventory are required.

Providing Working Capital in Bankruptcy…and times of distress.  Factoring and asset-based DIP financing play a vital role when businesses are faced with such a crises.  Savvy industry brokers will often prospect this usually overlooked area.

Bridge Financing…and temporary financial accommodations.  Factoring can provide a temporary solution when a company must replace an existing asset-based lending facility with a new one.  In some cases, factoring may become a more permanent part of the new financial structure of the business.

Owner Buyouts…and partnership breakups.  When two business partners agree to disagree and a business must be divided, the liquidity provided through factoring can be used by the surviving partner to buy out an equity position.  (This is a great reason to network with local business brokers.)

Natural Disasters…which come in all shapes and forms.  The SBA, asset-based lenders, and factors can act quickly and bring capital to bear on problems.

Factoring facilities can quickly be put in place to deal with problems created by everything from a business owner’s “sticky” divorce to damage suffered from tornados, hurricanes and floods.