What a difference a year makes!  In 2007 the US market had a 2% insolvency rate.  That meant that only 2% of your customer portfolio was at risk, but by 2008, the risk percentage grew by 52%!!

In just one year everything changed, causing forecasters to take a deep breath and reassess their models.  Fast forward to today and the domestic outlook appears to be on solid footing.  The insolvency rate is negative 10% (nice improvement from 2008, but far from the 19% of last year) and forecasted to go to minus 4% in 2016.

Soooo, what does that all tell us?  Nothing really because each business has its own set of unique customers and simply cannot apply generalized numbers to their portfolio to draw much of a conclusion.  What it can do, however, is give us all a sense of things to come and to prepare for the worst.

Speaking of preparing for the worst, I’d like to mention that we are all duped, from time to time, into a sense of complacency when things are trucking along nicely.  While 2008 made us all more diligent in our approach to business it did remind us all that things can take a turn for the worse rather quickly.  But while we sit here in Mid-August of 2015, I get the sense from businesses we deal with on a day to day basis that no one is really that concerned with a rapid deterioration and maybe they should be. 

There are steps to take to mitigate risk and not all of them have been considered.  For instance, in 2008 everyone rushed to insurance carriers to insure their credit portfolio only to find that carriers had tightened the reins so much that getting a policy was an all or nothing proposition.  By 2010 that had changed and carriers were willing to offer policies on certain segments of the portfolio, like a region or country or even the top 10%.  I would urge you to consider getting one in place prior to a catastrophe rather than after one.

Here are two graphs you might want to see….

 
 

Q & A with Jason Severson, President of Primary Funding Corp. 

We asked Jason to help our clients understand what value his factoring solutions can bring to organizational growth and here is what he had to say... 

Q: Can a company factor just one invoice one time or does there need to be more on the table? 


A: Doing one invoice is called spot factoring. Companies can do that, but it is not preferable and it can be more costly. We would consider it depending on the situation. 


Q: How long does it take to approve or deny an invoice?  

A: We get invoices and backup first thing in the morning and fund same day. That is typical, however, there can be instances that take a little more time depending on what is being delivered and if some kind of additional verification is needed. That doesn’t happen very often though. 

Q: Can a company get factoring approval prior to engaging with a customer?  

A: Yes, we can have a factoring agreement in place ahead of time. Also, we can pre-approve our client’s customer ahead of time so they know what the credit limit will be. 

Q: Typically, would you say that most companies are all in or nothing? 

A: In other words, do they typically factor their entire portfolio or not at all? It is really split. We have many clients in both categories. We have clients that choose just a couple of their customers to factor. Sometimes they have customers that they don’t want to know they are factoring so they leave them out. There is a lot of flexibility with our company.  

 

    David Gross

    After working for J&J, Abbott Labs and Eastman Kodak, David started Solberg & Kennedy, a commercial collection agency. It was there that David became an expert in the credit industry.

    After 12 years, David left Solberg & Kennedy to start Solken and Solken Insurance to address the many needs of a stressed credit department. 

    Solken provides Custom Software, Credit Reports, International Reports, Trade Credit Insurance Coverage, Credit Investigations & more. 

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