I like this question because I know that the caller is motivated, their current source of funding is inadequate, and they already feel the pain and realize the costs of suffering from cash flow problems. I try to keep in mind that their lack of planning does not mean it is an emergency on my part and I hope that it is not too late to provide them the financial support they need.
The days of quick and easy money from a countless number of online FinTech lenders ended shortly after the pandemic began. It is uncertain when they will return and what that will look like. Their use of “algorithms” to make credit decisions worked for a while but it has not served them well in the longer term.
Borrowing money on the Internet is like meeting someone through a dating app and then marrying them the next day. Business finance professionals like us owe it to our clients and prospects to keep them from going down that road. Business owners need to be as interested in their lender as their lender is interested in them.
When asked “How fast?” my answer is, “We can move as quickly as you can provide the information we need, then answer the questions that result from that information.”. Any business looking for funding needs to be prepared to share basic information like financial statements, tax returns and aging reports. With complete information a good factor should be able to make an initial funding within 5 to 10 working days.
Once the first funding has been completed then it is a much different story. With a credit-worthy customer and good paperwork to support the transaction most factors can fund within hours of receiving an invoice. When someone asks if we can fund them by Friday I can honestly say, “If you were our client that wouldn’t be a problem.”.
In the real world of business finance, warning bells ring when someone requests funding in a hurry. Experienced lenders know that most of their problem deals were the ones that were done in a hurry. Sometimes, from a lender’s perspective, the best answer is to wait and see. Usually from a borrower’s perspective, a quick no is better than a long drawn out maybe.
Timing is always important when it comes to business, but when it comes to securing financing it is more important to make a good decision. Factoring is one of the quickest ways to obtain funds, but there are also lots of variables to consider. Good relationships can happen quickly but there must be good communication and a sharing of complete information from both parties before that can happen.