Most of us have seen the late night adverts for secured loans. Significantly, these adverts don't sell the mundane features of the loan such as interest rates or monthly payments. Instead they help potential customers visualise the benefits of taking a second charge on their home.
They are full of imagery: holidays to sunny beaches, flat screen televisions and dazzling kitchen extensions. They encourage home owners to create a luxurious new lifestyle free of credit card bills. One lender has gone so far as to brand themselves "Picture the Loan".
Why as an industry do we not do more to help entrepreneurs visualise the many benefits of factoring? The secured loan industry does not sell on price. Neither should we.
The receivables finance industry has far more benefits from which to create effective marketing campaigns that can help drive home the many benefits of factoring. Here are some ideas for a series of factoring ads that target aspiring business owners:
• Andy Wiseman, a recruitment consultant, decides to follow the example of his friend Tony Broke and leaves Temp Staff PLC to set up on his own. He lacks the security for a conventional bank loan or overdraft. He secures a factoring facility with a working capital line at start-up that automatically grows in proportion to his company's turnover.
• Our newly minted entrepreneur wants to compete for a big contract with Giant PLC that pays its suppliers in 40 days. Andy competes and wins the contract, knowing he will be able to pay his staff weekly, while trading on the extended credit terms demanded by this important new customer.
• Our hero is having lunch with his former colleague. Tony is complaining about the cost of hiring a new controller and bookkeeper to keep up with the billing and payment collection for his growing business. Andy explains how he avoided such costs via sales ledger management features of his factoring line. After lunch our hero is seen making a new business pitch while Tony argues with his new hires about how to collect mounting receivables.
• A large client delays paying a big invoice, threatening the viability of our hero’s business. But Andy’s factor’s credit controllers spot the issue quickly and liaise with specialist solicitors who initiate legal action, get the invoice paid, and save the company from bankruptcy.
• Giant PLC, who takes staff from both Andy and Tony’s agencies, goes out of business. Hundreds of companies are left with unpaid debts. Tony goes out of business. Because Andy opted to insure his ledger, our hero’s business continues to grow. Andy is seen collecting an award from his local business community as the ad fades.
Factoring should be the automatic choice for an entrepreneurial business that does business with other businesses. Helping potential customers picture the many benefits of our product is a way to help both their enterprises and our sector grow. By creating a vision of aspiration, we can expand the market for invoice finance.