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Above and Beyond: Knowing When to Say When

June 18, 2014, 07:00 AM

I just can’t believe that it’s June already. The weather here on long Island this past winter was just horrible. Actually I really shouldn’t complain too much since during the past six months I’ve been able to escape to more welcomed climates. I attended the IFA Senior Executive Meeting in St. Thomas in January, the CFA FactorWorld Conference in March in Miami Beach, the IFA Annual Convention in April at the St. Francis Hotel in San Francisco and the CFA's Independent Finance & Factoring Roundtable held at the “W” in Dallas in May. These were all great meetings and wonderful opportunities to learn new things. I was also able to hear some of the current concerns within the “factoring world.”

There’s a continuing concern about “ too much money chasing too few deals .” Since there’s a lot of competition out there and at very low rates to boot, it’s getting very difficult to get the spread that we were used to and pay the staff needed to provide the proper level of service required to keep the “ship” out of difficult waters. More and more, I hear about the need to hold on to what we got and to service our clients better. (After all, it’s cheaper than finding new clients.) Unfortunately, what I’m also hearing is that the same people are providing additional services to keep the clients happy. These folks are looking more to inventory and equipment in order to shore up relationships with these long term clients. And sometimes, just once in a while, it turns out that the additional inventory and equipment funding is still not enough to keep the client from having financial difficulties.

Of course these clients are great clients. We’ve known them for years. They’re wonderful people and we think a few more dollars here and there will straighten things out. Not always. Some of them are in real trouble and we’ve let things slide! When things go the wrong way, we actually find out that we didn’t “stick our knitting.” We didn’t do the proper notifications and we were doing fewer and fewer verifications. We got away from doing what we do best ... helping the client and protecting our money.

Unfortunately, a number of factors have a hard time taking responsibility for their inaction and begin to blame the client for committing fraud or something close to it. Sometimes it’s just stupidity on both sides. The importance of monitoring and constantly reviewing are important when figuring out “when to say when” with any client. Today’s economic conditions are turbulent at best and even the best thought-out plans may not come to pass. Since we all know that “desperate people do desperate things,” we need to be reminded that desperation can reveal itself in one quick movement that destroys any goodwill accumulated over the years. Simply put, we have to stick to our knitting.

Knowing “when to say when” is difficult, but there are signs that we are all aware of. We need to step back and not be blinded by the relationship. We need to take immediate and definitive action once we suspect that the relationship is going sideways. Therefore, a site visit may be necessary in order to speak to the client directly. A plan needs to be put into place and strict ongoing monitoring must be implemented.

I’m not saying anything new here and we’ve all heard this a million times. I’m just thinking that it’s time that we hear it again. The competition is even more aggressive than it was before the economic tsunami and we are all looking to new ways in order to compete. But doing things that we aren’t comfortable with or knowledgeable about aren’t the pathway to success. That’s just my two cents worth on the topic.

James L. DiCamillo
Executive Vice President | RMP Capital Corp.
James DiCamillo is the Executive Vice President of RMP Capital Corporation, headquartered in Islandia, NY with offices in several other state. Launched thirteen years ago, RMP Capital handles about $80 million annually in factoring deal flow.
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