Commercial Factor Q&A: John Cummings Provides the Small Factor Perspective

This week’s Q&A features a focus on smaller factors, with John Cummings CEO and founder of ACS Factors providing his insights on this side of the industry. Cummings outlined why smaller factors have been nimble during the COVID-19 pandemic and also dove into factoring for the trucking industry during the last few months.

Do you think smaller factors have been better positioned to help companies through the COVID-19 pandemic than larger factors? Why or why not?

John Cummings: I feel that smaller factors have been better positioned to help companies through the COVID-19 pandemic in that, with smaller work forces, there was less disruption to our operations. Many small factors were already using remote employees, so the stay-at-home mandates were not a major upheaval for many of us. Also, many small factors are self-funded and therefore lender issues did not come in to play.

Have there been unique challenges that have cropped up for smaller factors during the last 12 months that may not been as much of an issue for larger firms?

Cummings: The one challenge that comes to mind is credit information. Small factors use free resources such as Google and other internet search companies to gather data for credit checking and due diligence; as free services, this data or information is more limited than pay-for services in doing a deeper dive into debtor creditworthiness or client onboarding due diligence. With such big changes in industries and the supply chains into those industries, the information needs to in real time and beyond the surface information one finds on the free resources.

If so, how has ACS Factors deal with and overcome some of these challenges?

Cummings: We added some additional resources for performing credit checks so that we could double and triple check one resource against another. 

What have the business development and origination processes been like for your firm the last 12 months? How have you adapted to a more virtual environment?

Cummings: We have really stepped up our origination processes. We have added automation to our application process. We adapted to a more virtual environment in that we have outsourced some prospecting and lead generation services.

ACS Factors prides itself on its work with the trucking industry. From your view, how is that industry developing this year and how can factors, large or small, help fleets in the current environment?

Cummings: Most trucking factors I have spoken with have recovered well from the initial downturn last April and May due to the pandemic. Since then, business has been generally very good. I feel that today more than ever trucking is a vital part of our economy in the supply of goods to market and to industry. Now, with the incredible efforts to distribute the COVID-19 vaccines, transportation and logistics are in critical demand. Besides factoring, we can look to how we can offer clients assistance in purchasing additional equipment and provide a fuel card that offers a nice discount on one of their highest levels of expense: fuel.

How has the first quarter of 2021 gone for ACS Factors?

Cummings: Our first quarter has been very good, all things considered. As mentioned, we pride ourselves as being mostly a freight bill factor, but we do serve as a general factor as well. In the trucking space, the first quarter is generally down 20% from the prior quarter. This year we are not seeing that downturn, as freight rates are robust right now, which just adds to how much we are factoring and then some.

What are your expectations for the rest of the year, both for your company and the industry overall?

Cummings: Very bright. I have been listening to many experts in the field and heard six months ago, “Go out and get as much cash and credit as you can, as the end of 2020 and all of 2021 are going to be great for the factoring industry.” I give credit to Bob Zadek of Buchalter for that last piece of advice.