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- Fraud Corner - "More than Meets the Eye"
- CarrierGuard - A Must Have if you
Finance the Transportation Industry
- Latest News in the Factoring Industry
- IT Corner - Internet Advertising
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Sometimes you can touch it, feel it, and kick the tires, but if it is too good to be true, it very well may not be true. A temporary staffing firm, we'll call them Physical Therapist Staffing, Inc. (PTS), approached a Factor- and indicated that their Bank had asked them to find new financing. The Bank was going to retain a $250M side-note, but would release the A/R to the Factor. John D. Owner said they had expanded too quickly in six SE states, had some losses, and the Bank couldn't fund them with a deficit net worth. The PTS balance sheet, (from their Quick Books software) reflected the Bank debt, and six notes to private individuals, some of whom had the last name of "Owner" too.
The Factor searched with the Secretary of State in the home State, confirmed the corporate charter of PTS, Inc., and noted an assumed name certificate for "Rehab Source Staffing". The Factor then searched the other five States, and found that PTS, Inc. had registered as a foreign corporation in each State. Searches in the other States also picked up "Rehab Source Staffing of (name of State), LLC, but the Managing Member or Members were individuals not related to PTS or the Owners. PTS gave the Factor six detailed Agings, each titled "Rehab Source Staffing - (Name of State)." The factor performed extensive phone verifications with almost 100% success. The amount made available to PTS was substantially in excess of what it took to pay off the Bank, which of course, PTS drew from the Factor.
Within a few weeks the Factor was receiving calls from the irate CEO's of franchises in the other States, due to their customers receiving notification letters. The alleged branches were separate franchises that continued to utilize PTS, Inc., the Franchisor, to do certain bookkeeping and billing functions for a fee. The A/R were the legitimate assets of the franchisees, most of which were pledged with liens to lenders in the other States. The Factor didn't search UCC filings or make filings in the other States, as it had only filed in the home State per revised UCC-9. John D. Owner claimed that the A/R clerk had made a mistake in giving the agings and backup for the other locations to the Factor. The money was gone; all the private individual notes were retired.
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 They were all actual notes from John D. Owner to PTS, and they were labeled with John's family member names for bookkeeping convenience only, because John had personally borrowed from these relatives. This eliminated the option for the Factor to bankrupt PTS and have the preferences pursued. Additionally, the Bank had the priority position on all other assets, including John's, to support its remaining $250M side note. The Factor was $700M in the hole, with no hope of recovery except to continue to factor the modest A/R of PTS, Inc. in its home State and to try to claw a little back to reserves.
Lesson One: If the Bank was willing to take a haircut and hold a side note, why would there be excess availability on the initial funding? Too good to be true! Lesson Two: You can't ever ignore or take at face value alternate names or corporate structures that show up in searches. When owners create names or entities they typically have plans that will be adverse to the Factor's interests. Lesson Three: When anything out of the ordinary or unexpected pops up in due diligence, take the little time to perform or engage a pre-funding field exam. Our field audit afterward noted that the payroll taxes paid under the PTS E.I.N. were not sufficient to cover the number of employees that would be needed to generate the invoices the Factor bought. Each of the franchise LLC firms had its own tax filings. The bank statements also confirmed that only customers from the home State were going to PTS. A field exam can tie all the elements together to see if, despite being real, it is still an illusion.
Credit Support International, the umbrella organization of FactorHelp, has a Collateral Auditing Division with over 20 years of experience in professional collateral auditing and pre-funding exams.
For any questions, please email Jon Eckhouse at jon@creditsupport.com or call (972) 231-6572.
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CarrierGuard is a Web-Based Compliance Monitoring System which tracks the changes to your registered carrier's Insurance, Authority & Safety Ratings 3 times per week and notifies up to 5 people at your company of any changes via email or fax. This is done automatically so you will never again have to worry about where your carriers stand, whether they are borrowers or debtors.
Because we capture all of the 400,000+ DOT data on our system, CarrierGuard also provides information that you simply can't get anywhere else. This is what we call our Fraud Protection Feature. As you validate carriers initially, by using our system instead of going to the DOT's website, you can not only see the current status, but by using our Fraud Protection Feature, you can also see:
• If there are any similarly named carriers in the system. One of the fraud tricks is to have two companies with almost exactly the same name and then let one run up debt while the other siphons all the cash.
• If there are any other registered carriers at the same address. Again, if you've had trouble with a carrier, it's a safe bet that the people behind it will give you trouble again, but use a different name. You'll know upfront if there are multiple entities.
• If there are any other registered carriers at the same phone number. Sometimes the new or different name will use a PO Box, but the phone number will stay the same.
• If your carrier has multiple DOT #s, meaning that loads you think were hauled directly by your carrier, could have been hauled under broker authority instead. Brokered loads have a different legal status that direct hauls.
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You can use this feature on any carrier, whether they are a presently monitored carrier or not, and you can do so as many times as you want. So if you begin sniffing out a problem, you can have one additional tool to turn to!
CarrierGuard also can be used as a Marketing Tool, with our Company Locator feature. Again, because we get the entire database sent to our system, you can find all carriers registered with the DOT in any geographic location you choose at the click of a button. You can also search for Pending Authority in any particular state. So you can see who is entering the Transportation business.
Finally, for those companies that are interested in the Safety Ratings of their carriers, CarrierGuard also tracks and monitors those changes as well.
CarrierGuard is a yearly subscription based service, and the service costs as little as $2,000 per year for those firms monitoring fewer than 250 carriers. For those firms monitoring thousands of carriers, the cost is just a little over $1 per carrier per year. AND by signing up NOW, you can try the service for one month, and if it doesn't meet with your expectations, cancel it and only pay for the one month.
You can go directly to CarrierGuard.com to sign up or email jon@creditsupport.com to schedule a time to do a 10-15 minute demo. The system is very easy to use & we can show you how it works- live.
CarrierGuard provides the most protection available to those firms with exposure in the Transportation Industry! Period.
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King Trade Capital has provided financing to aid in the Hurricane Katrina relief and recovery efforts. King Trade Capital, a nationwide provider of purchase order, trade and contract finance, was referred a New York based power supply company in need of fast financing. The power supply company had a contract for the delivery of six powerful electric generators to the U.S. Army Corp. of Engineers to aid hurricane recovery efforts but did not have the capital to move quickly as required.
King Trade Capital stepped in and after receiving the funding request on Wednesday, completed due diligence and the $2.2 million funding in time to ship the units on Friday. King Trade Capital understood the urgency and quickly reviewed and structured the financing to help those that needed the help. Because of the quick response and King Trade Capital's financing capacity the client is able to deliver this order and others they have received related to hurricane Katrina relief and rebuilding efforts.
Bibby Financial Services announces the hiring of Randy Haney, a sales veteran with over 17 years of success in Factoring, for its Western US operation in Westlake Village, CA. Randy spent the past 6 years with Wells Fargo Business Credit. Prior to that, Randy helped build the portfolio for several small-business Factoring companies in Southern California.
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Bibby Financial Services is wholly owned by the Bibby Line Group, a dynamic business to business services group. Bibby Financial Services specializes in providing cash flow solutions for business. From start ups to more established businesses, if you trade with other firms on credit; if your business deals in the UK or overseas; or if your cash is tied up in vital equipment and you just want your cash to work harder for you, we can help.
Webster Business Credit's Retail Finance Group has provided Car Toys, Inc. with a $22 million, three-year revolving line of credit and a $3 million term loan. Car Toys, based out of Seattle, WA, is a leading specialty retailer of wireless products, mobile electronics, satellite and satellite radio products and services in the United States. Car Toys currently operates 52 locations in Washington, Colorado, Oregon, and Texas.
Factorhelp offers a complete suite of Investment Banking Services for companies in the Factoring Industry. Call, email, or visit our website today for all of you M&A and/or portfolio brokerage needs!
Thomas G. Siska, Managing Director (847) 498-9136 or tsiska@factorhelp.com
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The days of the bloated advertising agency, with their innately-slow processes and exorbitant fees, are over. The Internet has changed the way that consumers and businesses interact with one another.
The traditional media models are being smashed and replaced with strategies that integrate multiple digital sources (web, pay-per-click, search engines, rich-media, email, wireless, news syndication, flash, interactive video) with established outlets (newspapers, magazines, radio, television, billboards, direct mail) and offer state-of-the-art metrics to gauge the effectiveness of each component.
What Happened to the Dinosaurs? A large meteor struck the earth and caused years of darkness that wiped out the dinosaurs. I think that many "Old-Guard" advertising agencies are going to look back and say that internet did the same thing - destroy their precious business model of overcharging and underperforming.
This is not to say that all agencies are inept. A large agency typically brings a strategic approach, compelling creative work, and a full complement of in-house promotion services. These can be an asset to your business, but without a pure digital advertising strategy, the campaign effectiveness will be exponentially lower.
Changing Demographics - The Census Bureau has recently reported that single-adult households have displaced two-parent families with children as the most common kind of U.S. household. Nuclear-family households, which are two married parents and a child, were the most common as recently as 1990, when there were 25 million such households. But by 2000, nuclear-family households fell to second place, both because there were almost a half-million fewer of these types of homes and because the number of single-adult households surged past 27 million. Married households without children remained the third most common, with 20 million in 1990 and 22 million in 2000.
So how does this affect advertisers and content creators in the digital age? Target markets are shifting as consumers demand things on their own terms at their own pace. Marketers must embrace emerging media to spread its message.
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 A great example is RSS, really simple syndication, in which people subscribe to news and content feeds that "push" digital content to be read at the convenience of the reader. It is like a digital paper boy that delivers what you want when you want it.
The Cost-Effectiveness of Digital Media - As opposed to traditional media outlets, digital and internet advertising can provide "the most bang for your buck". Television, radio and print are VERY expensive. You can achieve greater market saturation through a targeted online strategy that utilizes search engine marketing, website and rich-media advertising. PPC programs, such as Overture and AdWords, allow you to reach an enormous market through extremely targeted messages, while strictly adhering to any budgetary constraints through highest bidder systems.
State-Of-The-Art Metrics - A New Level of Analysis - To truly be effective, a marketing campaign must be measured and judged on its effectiveness. When you are working across multiple media formats, this process can become very complicated. Custom software solutions that include customer tracking, advanced data analysis and reporting can help you to make sense of the sea of information.
By better understanding how and why your customer's make their buying decisions, your company can make better informed marketing assessments that have a direct impact on your bottom-line revenue. Knowledge is power!
Edgar Pitts is Managing Director of Design & Technology Consulting Services.
DTCS offers a complete suite of internet advertising services including pay-per-click management, search engine optimization, content management, keyword creation, keyword position tracking, rich-media ads, email newsletters, news syndication, flash content creation and interactive video.
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This seminar is also an excellent training tool for new or recent hires in any capacity (sales or credit operations) at any level, Investors or Lenders to Factors and people contemplating getting into the Factoring business.
 From the basics of Factoring to more complex issues involving aspects of underwriting and portfolio monitoring, this is one seminar that your employees should not miss.
• What is Factoring?
• Benefits of Factoring
• Typical & Ideal Factoring Clients
• Factoring Clients to Avoid
• Selling Tactics
• 6 C's of Credit
• Considerations when Factoring
• Information Requirements from Client
• Factoring vs. Other types of Financing
• Legal Issues Related to Factoring
• Purchase Orders & Contracts
• Elements of an Invoice
• Support Documentation
• Fraud Signals
• Paper to Avoid
• Financial Statement Analysis
• Notification & Verifications
• Debtor Approvals
• Rules of Successful Selling
• Prospecting
• Overcoming Objections
• Closing the Sale
• The Future of Factoring
Instructors are:
Thomas Siska - Managing Director - FactorHelp, Inc. - Tom began his career in 1984 building the Chicago Operations Center for Riviera Finance from the ground up. In 1990, he was promoted to National Sales Manager and moved to the home office in California. At that time, Riviera Finance had over 25 Sales Centers scattered throughout the United States and Canada. Tom left Riviera in 1994 to turnaround a struggling asset-based lending firm, Concord Growth Corporation (CGC) in San Jose, CA. Tom also was President of CGC's start-up Factoring Division (now Bay View Funding). After successfully selling the Company to Bay View Bank, Tom later joined GE Capital as Senior Vice President/Western Region Manager for GE's small Asset Based Lending & Factoring Division. More recently, Tom was National Sales Manager for AmeriSource Funding prior to joining FactorHelp in April of 2004. Tom holds degrees in both Finance and Marketing from DePaul University in Chicago (1983) and earned his MBA from the University of Chicago (1990).
Tyler Grady - Chief Marketing Officer - LSQ Funding Group, L.C. - Tyler V. Grady is a Principal and the Chief Marketing Officer of LSQ Funding Group, L.C. LSQ Funding Group, L.C. provides account receivable working capital financing solutions to small and mid size entrepreneurial companies. Tyler started with LSQ in 2000 and is responsible for its Business Development Team and Strategic Alliances. Prior to joining LSQ, Tyler spent 19 years with Bank of America, most recently as a SVP and Credit Risk Management Executive for the Pacific Northwest Private Banking Team.
United Airlines - United Airlines is the official airline of the IFA. If you or your travel agent calls United's toll-free number (1-800-521-4041) to book your reservations, you will receive a 5% discount off the lowest applicable discount fare, including First Class or a 10% discount off full fare unrestricted coach fares, purchased 7 days in advance. An additional 5% discount will apply when tickets are purchased at least 30 days in advance of your travel date. Discounts also apply on Shuttle by United and United Express. Make sure you refer to Meeting ID Number 538GO.
The fee for this course is $895 ($945 for Non-IFA Members)
A special rate at the Monte Carlo of $109 has been negotiated for this event. You can make reservations by calling the Monte Carlo at 800-311-8999 and ask for the XFACTO1 rate.
Register at: Online Registration or info@factoring.org or call 1-800-563-1895.
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 • Import vs. Export Factoring
• Differences between Domestic and International Factoring
• Trade terms used in international trade (Incoterms)
• Factoring Clients to Avoid
• Payment terms used in international trade
• Active international factoring markets
• Risks & financing needs in international trade transactions
• How does the United Nations Conventions affect Factoring
• Methods of structuring International Factoring
• The Two-Factor System (using an Export and Import Factor)
• Rules governing the agreement between the client debtor
• Structuring a letter of credit/payment to an overseas vendor
• Credit quality of overseas end customer
• Standby vs. documentary letter of credit
• Underwriting Guidelines
• Utilizing a Freight Forwarder
• Foreign accounts receivable financing credit insurance
• How Export Import Bank can reduce the factor's risk
• Fraud schemes and protective measures
• Investigating the quality of the factoring client and product to be sold
United Airlines - United Airlines is the official airline of the IFA. If you or your travel agent calls United's toll-free number (1-800-521-4041) to book your reservations, you will receive a 5% discount off the lowest applicable discount fare, including First Class or a 10% discount off full fare unrestricted coach fares, purchased 7 days in advance. An additional 5% discount will apply when tickets are purchased at least 30 days in advance of your travel date. Discounts also apply on Shuttle by United and United Express. Make sure you refer to Meeting ID Number 538GO.
The fee for this course is $995 ($1045 for Non-IFA Members)
A special rate at the Monte Carlo of $99 has been negotiated for this event. You can make reservations by calling the Monte Carlo at 800-311-8999 and ask for the XFACTO3 rate.
Register at: Online Registration or info@factoring.org or call 1-800-563-1895.
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