Factoring and Client Advocacy: Building a Referral-Worthy Service

Written By: Danielle LaPaglia, Sales Supervisor, Jack Henry

Factoring is a financial service that businesses count on for access to immediate cash flow. Some examples include situations of high growth, lack of capital, or bad credit. It’s a viable solution for all types of businesses. Since it’s a transitional product, it’s imperative for factoring companies to differentiate themselves in the market. Often, this differentiation comes down to competitive pricing and exceptional customer service. Personally, I believe that long after the price negotiations have been forgotten, a client will always remember how they were treated. After all, business is about people. 

Speaking of customer service and people, I had a recent encounter with a stranger on a plane that reinforced my belief in using customer service to set yourself apart in the factoring industry. I’ve always loved meeting new people and find it incredibly rewarding to make a connection whether it’s over shared interests, similar backgrounds, or related professional experience. Recently on a flight back home from a conference, I met a gentleman, and we shared a small world moment.

He asked what I do for a living and told him that I sell technology that helps businesses manage their factoring and ABL portfolios. Expecting a blank stare, I was surprised when he responded “Oh, we used to factor our invoices”. It turns out that he used to own a small trucking fleet. He went on to share that he had used the services of three different factoring companies. There was one that stood out to him as exceptional due to their customer service. It had been years since he had factored his invoices, but he never forgot his experience and how he was treated. 

Stellar customer service is a factoring company’s strongest ally. Why? The tenure of a client is 18 months. I know this varies, especially on the industry, but I believe this to be the average. This short period doesn’t give a company very long to make a lasting impression on their clients. A happy client becomes a company’s great advocate, potentially referring services to others in their network. Organic growth through client referrals is a testament to the values and credibility of a company, driven by superior customer service.

Building a Referral-Worthy Client Base

Exceptional customer service not only contributes to client satisfaction but also plays a pivotal role in driving organic business growth. Satisfied clients are more likely to refer their peers and colleagues to a factoring company that consistently exceeds expectations. Positive client experiences also contribute to longer client tenures, enhancing the stability and profitability of a factoring business. So, how do you build a referral-worthy client base?

Building a referral-worthy client base involves excelling in communication, being proactive and leveraging technology. Your clients want to feel heard and valued. This will foster trust and loyalty. Being proactive in anticipating their needs demonstrates that you’re not only listening but that you’re dedicated to their financial success. Utilizing technology can allow your team to get away from manual processing and place a greater focus on serving your clients. By combining these attributes, you create a client experience that exceeds expectations, making clients eager to share it with others.  

Communication

Your clients want to know that they can get someone on the phone when they have an issue. They don’t want to just be another account number; they want to work with someone who understands their needs and will listen when they’re having an issue. Timely communication with clients throughout the factoring process builds trust and confidence. It also means sometimes having hard conversations with your clients. The key is how you deliver this news. Lead with empathy and act with integrity.

Effective communication is also about being available and responsive. Clients should never feel like they are being left in the dark about their accounts. Regular updates, prompt responses to inquiries, and proactive outreach to address potential issues are crucial. By maintaining open lines of communication, you can build strong, trust-based relationships with your clients.

Be Proactive

If you want to show your client that you’re paying attention and dedicated to their success, be proactive. This means not only responding to their needs and concerns promptly but also anticipating potential issues before they arise. By staying a step ahead, you demonstrate that you’re invested in their success and actively working on their behalf. This level of attentiveness can build trust, further strengthening your client relationships.

Being proactive involves understanding your clients' businesses and their unique challenges. For example, if you notice a negative trend in their debtors’ payment pattern, reach out to discuss it before it becomes a bigger problem. This proactive approach not only solves problems before they escalate but also shows your clients that you are committed to their long-term success.

Technology

Technology can play a significant role in enabling you to provide excellent customer service. By adding automation, such as AI tools, and ensuring operational efficiency, you can significantly reduce the administrative burden on both your operations team and your clients. Providing an online portal where clients can access their account information in real-time can also enhance transparency and trust.

This efficiency can be crucial for clients who rely on quick access to cash. Additionally, using technology can help your team spend less time on mundane tasks and allow them to place their focus on providing support to your clients, reinforcing your role as a trusted partner. Leverage technology to enhance customer service.

Conclusion

Invoice factoring is a valuable financial tool for businesses in need of immediate cash flow. However, the success of a factoring company depends not just on the financial products it offers, but also on the quality of customer service it provides. Exceptional customer service can differentiate a factoring company from its competitors, drive client satisfaction, and foster organic growth through referrals.

Business is ultimately about people. By treating your clients with respect and empathy, you create a positive experience that they will remember and share with others. This word-of-mouth marketing is invaluable and can significantly contribute to the long-term success and reputation of your factoring business.

In conclusion, if you’re in the factoring industry, make customer service your top priority. Develop a strategy to continually improve the service you provide, and watch as your clients become your best advocates, driving your business forward with their referrals and loyalty.

The views expressed in the Commercial Factor website are those of the authors and do not necessarily represent the views of, and should not be attributed to, the International Factoring Association.