When customers of a factoring client were contacted by the factor, the unexpected happened… sales went up! Is this a throw back to the concern most people have about factors contacting their customers or what?
A new factoring client, supplying frozen and too perishable fresh goods, was scared to death that when the factor made contact with their customers to confirm their orders, that their customers would panic and think ill of them. HOWEVER, the opposite happened: Sales went up! Why?
During the process of factoring, a factor purchases invoices from their client – in this case the seafood supplier – but prior to advancing money on the invoice at the factor’s option, the factor may contact the client’s customer(s) to confirm that the product (or service, as it may be) received was of good quality and that the customer is planning on paying the invoice per the terms allotted.
The product? Fresh fish. This is unfrozen and top quality seafood, but when the factor called the customer they found that the fish being sold was “not exactly’ what the customer was ordering. The problem wasn’t the quality or condition, but was the actual size and cuts/shapes of the filets of some of the orders. It wasn’t enough to warrant refusing the shipments but it was affecting the ability to resell it. The result? The factor went back to the client, reported this and the client was able to correct customer concerns so they could get paid on the invoice.
Better yet: The supplier’s customers were thrilled that this minor problem was being solved!
When you first read this, it probably sounded like the client selling the invoice wasn’t doing a good job, right? Actually, they were. Prior to this, thirty or forty-five days would go by before the invoice was due and the, for the most part, the customers didn’t see it worth their while to argue given the problem’s size. Now, the issue was being corrected when the order was received and the existing customers actually increased their orders because of the improved quality.
This often happens. Why? Many small businesses get so busy that they don’t always get the chance to make the extra phone call to their customer just to say, “Hi, this is _________, and I’m just calling to make sure that you received our shipment and that everything is the way that we promised … or better!” Will that hit home with your customer or what?
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