Commercial Factor Q&A: Gail Reints-Pratl Speaks on Factoring’s Endurance
In a preview of a panel at the upcoming International Factoring Association’s Annual Conference, Gail Reints-Pratl, president of Sky Business Credit, explains why factoring consistently endures as an industry, including during the COVID-19 pandemic, while also sharing some insights into how the year is shaping up for her business.
What are some unique characteristics of factoring that make it a resilient financing source?
Gail Reints-Pratl: Factoring is unique because any business can utilize it as a source of funding to expand their business. It doesn’t matter if they are a startup, have had financial issues, or are just experiencing a huge surge of growth in sales. Because factoring focuses on the creditworthiness of the customers a business sells to, any company with good sales to paying customers can use factoring as a cash-flow tool to fuel the growth. That allows them to bring in cash immediately upon fulfilling a sale rather than having to wait the normal sales cycle of 30, 60 or up to 90 days to receive payments from customers. It’s a very underutilized cash-flow tool in commercial business that is easy to access, and when compared to the profit that can be made if a business uses it to increase sales, the cost is relatively low.
How has the factoring industry adapted to survive and thrive during the COVID-19 pandemic?
Reints-Pratl: Across the industry, experiences were mixed this year for factoring companies. For some, the availability of [Paycheck Protection Program] loans reduced the demand for financing. Other funders who service the oil and gas or retail industries may have experienced a slowdown, as many of those businesses suffered from the pandemic. Going through a year like this is a good reminder to all of us to make sure our portfolios are diversified to reduce the impact when specific sectors are affected so heavily.
For Sky, we were proud to support more medical staffing companies this year. Because funding from factoring can be sent quickly and scale easily as demand grows, it was the ideal solution to companies like these that had to grow very rapidly and unexpectedly due to the pandemic.
How well do you think the industry is positioned as we begin to come out of the pandemic in the second half of 2021?
Reints-Pratl: At Sky Business Credit, we’re ready. I think the industry is ready, too. In talking to my colleagues in factoring, especially those who work with industries that saw a big downward trend in sales, everyone is ready for the economy to come back. After all the PPP money runs out and businesses find their footing, factoring companies will be here to support them with working capital and will continue to be a great resource to help businesses fuel growth.
How have the first few months of 2021 gone for Sky Business Credit?
Reints-Pratl: The first few months of 2021 have been really busy for us. We are seeing our existing clients grow their sales more than ever and we are seeing a lot of new business. We brought on a new senior business development officer, Donna Hinrichs, who has more than 20 years of experience and has been instrumental in bringing in a lot of new business for us. I think we are seeing clients have a need for funding that they didn’t have in 2020. Government financial support may be dwindling now and business that slowed down is picking back up.
What is your outlook for the business the rest of the year and how will you remain competitive?
Reints-Pratl: Our outlook for 2021 is very positive. We will remain competitive in the same way we always have. Sky Business Credit is a small, high-touch factoring company. That means we take the time to really get to know our clients’ pain points and help them identify ways to improve their business. For companies that we cater to, fintechs and quick cash apps don’t meet their needs. We have had many clients tell us that we are much more than a funding company to them — we are also a small business advisor that helps them become better business owners.