T is for Transparency

I have been seriously remiss in my writing for the last couple of months.

I figured out why.

I am on “T”.

My spreadsheets of words for this writing experiment are supposed to be about dogs and business.  The only “T” word I have wanted to write about is neither. And, while my politics and life philosophies seep into everything I write, that particular “T” would not be about dogs or business, and frankly, would not be possible without offensive language.

Let’s talk about transparency instead.

When I receive a client referral, the initial conversation is always a version of Factoring 101.  I tend to go over what factoring is; how it works and how it can help the company level out its cash flow challenges.  While this conversation might vary some, based on the industry and particular issues the company is having, the basic information is the same.

The only time there is a significant change in this initial conversation is if the company has used factoring before or has been shopping for the right fit.

In those conversations, I focus more on what makes LDI different.  I never try to convince a prospective client that LDI is the right fit for them and will steer people to other firms if I believe that is the best solution for them.

We recently signed a client who had been referred to a much larger firm by their banker.  They had gone through the underwriting process and were ready to sign documents when a colleague (a current client) said “Hey, you should talk to Melissa at LDI…”

I went into that initial conversation expecting to bypass Factoring 101 – after all, they had already gone through underwriting with a well known, large, national firm.  Of course they already knew how factoring could help them.  I thought my task was going to be overcoming the perceived limitations of being a small, boutique firm without the presence of a large, national company.

Color me shocked when, as we were chatting away about life and business, she asked me if I could explain how factoring actually works and how it could help her company.  Once I stopped stuttering and regained my composure, I back tracked to Factoring 101 and walked her through the good, the bad and the ugly.  I answered question after question on the basics.

I realized when the call ended that I was pacing.  I pace when I am angry.  Between the banker who made the referral and the factor that took this company through the sales cycle and underwriting, how was it possible that she did not know how factoring could help her?  How was it possible that no one had the Factoring 101 conversation?  How could someone, anyone, allow a business owner to enter into a contract without ensuring that they were fully aware of…everything?

Transparency in factoring is, historically, an industry-wide issue.  When I first got into the industry 15 years ago, people just didn’t talk to their clients about overall company issues.  The focus was, instead, on providing a solution to the immediate pain point – compromised cash flow – without much regard for how the factoring relationship might impact the client in other ways.   The result of this lack of transparency is that the factoring industry faced, and continues to face, an uphill battle of reputation management.  If you do not tell people what to expect; if you don’t go over contracts with them, answer questions honestly and enter every transaction with a level playing field, misunderstandings will undoubtedly cause the deal to unravel.

When a factoring deal unravels, it is bad for everyone except the attorneys.

I tell every prospective client that I would rather answer 100 questions in the underwriting process than ever have there come a day when they tell me they didn’t know something about how we do things or didn’t understand a contract provision.

The lesson:

Insisting on a level playing field is the right thing to do – always,


If the only way to “win” is to hide one hand behind your back, you have already lost.

And finally:

If you want silver linings, you have to talk about the dark clouds.