Tools to Increase Productivity and Profits for Factor Consultants and ISOs

18:15 14 June in Blog, Broker Resources

Do you feel like you’re working as hard as ever but not accomplishing what needs to be done to be successful as a factor consultant or independent sales organization (“ISO”)? 

Take a minute to do a quick assessment of how your business is doing.

  • Is your client list growing?
  • Is your volume increasing?
  • Are you contacting enough potential clients to keep your pipeline full?
  • Is your percentage of conversion of prospects into clients improving?

If the results of your assessment are not in the affirmative, then you need to take steps to increase productivity, business volume, and profits.

There are three actions you can take to improve your results.

  • Avoid distractions
  • Focus on value-added activities
  • Use technology tools to eliminate manual activities and improve productivity

Avoid Distractions

Email, text messaging, smartphones, and social media can be powerful tools for communication, but they can also become a source of distraction and reduce your productivity. It’s very easy to let yourself become a slave to answering emails and text messages, and fall into the habit of reading and responding to social media postings and surfing the internet. 

A simple internet search will provide a plethora of tips on how to use these communication tools without becoming addicted to habits that can sap your productivity. These tools should work for you, not vice versa.

Focus on Value-Added Activities

Value-added activities such as prospecting for clients, making presentations to prospects, onboarding new clients, and building volume with existing clients help to increase your business volume and profits. When you are distracted or your day is filled with busy work, you will not have enough time to devote to value-added activities. Planning is the best tool to use to focus on activities that will grow your business volume and increase profits.

An annual plan can help guide you to the areas you need to focus on to achieve your objectives. A weekly/monthly plan laying out what you need to do to keep on track can help to synthesize your annual plan objectives into the value-added activities you need to focus on in the near term. And of course, a daily To-Do list is always a helpful tool to use to maximize your focus on the value-added activities you need to work on.

When you develop plans, short-term or long-term, be realistic. Don’t try to do everything. Planning too many activities will reduce your productivity and you won’t do the activities as well as you should. Focus on value-added activities and work toward your plan goals.

Use Technology Tools to Eliminate Manual Activities and Improve Productivity

Time is a limited resource. You need to conserve time for value-added activities. Manual activities waste the limited time you have available. Technology tools can help you to minimize the amount of time you spend on manual activities.

Here are some technology tools that can help you be more productive.

Automate Business Processes

If you still have manual business processes, it is essential to automate them ASAP for two reasons. 

  • Your clients and business partners, e.g. factors, probably have fully automated business processes. It will be difficult for you to continue to do business with them if you don’t automate. And, they may not want to continue to do business with you if you don’t automate.
  • Manual business processes can consume a huge amount of your time that could otherwise be spent on value-added activities. List your manual business processes and estimate the amount of time you spend on them weekly/monthly. You’ll probably be very surprised at how much time you could save by automating your business processes.

Time Management

When you own a small business of any kind, including a consulting firm or ISO, the boundaries between your personal time and business time can be opaque, which makes time management critical to your success.

  • If you aren’t using a calendar software application such as Google Calendar or Apple Calendar which are free, or Microsoft Calendar for Microsoft users, you will probably do a better job managing your time by planning your week/month and benefit from the automated reminders they provide.
  • Use online retailers, consumer apps such as grocery shopping and delivery, and restaurant meal delivery to free up time to spend on your business. 

Marketing and Communications

The value-added activities you want to focus on revolve around identifying, attracting, contacting, and communicating with prospects and clients. Following are some tools that can help you be more productive in these areas.

  • Customer Relationship Management (CRM) software can increase your productivity by streamlining customer interaction. CRM organizes client profiles, history, and conversations in one location. It gives you a concise overview of your client interactions with dashboards that provide the information you need at a glance and also allows you to schedule and automate communication.  It is not uncommon for consultants to have several thousand client prospects and networking contacts so therefore you cannot effectively build relationships without this tool.
  • Email Management Software (EMS) applications can help you to manage large volumes of inbound emails. EMS helps you to track and respond to priority messages and quickly archive and retrieve emails.
  • Social Media Management (SMM) tools can help you engage with prospects and clients. SMM enables automated and real-time posting to multiple channels. It gives you the ability to monitor social media and learn about client preferences. SMM allows you to post to multiple platforms at once and can be used to consolidate a number of networks with just a few clicks.
  • File sharing tools can help with document management and the deal submission process.  It enables you to securely distribute, collect, and organize documents more conveniently with clients and other third parties.  This tool can be particularly useful in efficiently working with large clients or with complex transactions.  It also will expedite the underwriting process once the deal is submitted to the factor company. 

Technology tools, focusing on value-added activities, and avoiding distractions can improve your productivity and profits.  This will help you work efficiently and effectively with clients and will greatly improve the probability of approval by the factor company during the underwriting process.  Your business volume will grow and so will your profits.

Capstone works with factor consultants and ISOs to help them be successful. Capstone has the resources and experience to help you increase your business volume and profits. For additional information on resources to assist you, please read: consultant Resources – Capstone Capital Group (

Minority-Owned Supplier Master Factoring Facility, Purchase Order Financing & Letter of Credit Case Study

14:41 08 June in Blog, Case Studies

This Client is a globally diversified supply-chain solutions company with offices in New York and Shanghai, China.  They provide all supply chain services from procurement, warehousing, distribution, fulfillment and transportation and has a broad portfolio of service offerings.


  • The management team has experience with servicing the world’s leading consumer product manufacturers. 
  • The Client is able to assist small businesses to large corporations with their supply chain needs.  
  • As a certified minority contractor, they have dedicated contracts from New York City agencies for materials required to conduct the City’s business and maintain and improve its assets.

Company Challenges

  • The Client received contracts totaling $2MM from the New York City Housing Authority (NYCHA) to supply generators.   
  • Two of the generators are manufactured in China.  The terms of the sale were 30% down payment of the COGS and 70% of the COGS upon shipment of the goods to the USA.

Capstone’s Solution

  • Provided a $2MM Master Factoring Facility. 
  • Opened a $1MM PO Financing Facility and issued two Letters of Credit to Chinese manufacturers for each generator.

Progress and Future Outlook

  • Based on the Client’s ability to issue letters of credit and arrange for the delivery of the generators, NYCHA has given additional orders.
  • The new orders are for materials required for construction and maintenance of the apartment buildings and related infrastructure owned by the City of New York.


Purchase Order Financing vs Invoice Factoring

02:36 06 June in Blog

Purchase order (PO) Financing and invoice factoring are two financial strategies that businesses can use to purchase inventory or materials and accelerate the conversion of accounts receivable into cash.  With so many financial products out there, it is easy for people to be confused about these financing tools, how they work, and their advantages. 

The two strategies are closely related but they are distinct.  Helping business owners understand the difference will allow them to be paired with the right financial strategy and will also make them more comfortable using these financial tools.

What PO Financing and Invoice Factoring Are Used For

PO financing (aka purchase order funding) and invoice factoring are both used to address cash flow issues and provide working capital, but they are utilized at different stages in a transaction cycle.

PO financing is used to purchase inventory, materials, or other resources related to specific purchase orders or contracts.  It provides funding to a business’s vendors or suppliers so they may fulfill an order or get started/ complete a project.

Frequently, small and medium-sized businesses are unable to obtain credit from suppliers or a loan from a bank to purchase inventory or materials due to varying circumstances.  It is important to note that in certain instances where the supplier is located outside the U.S., a letter of credit is usually required.  PO financing provides businesses with the ability to fulfill orders as well as perform work BEFORE they’ve invoiced and received payment for the invoices.  In essence, it’s an advance against the funds a business expects to receive once their customer’s invoice is paid and is meant to cover the cost of goods sold.

Invoice factoring, on the other hand, is a financial tool that businesses use to accelerate cash flow by selling their unpaid invoices for a completed order or project to a factor company at a discount. Businesses receive cash immediately for their unpaid invoices instead of waiting for their customers to pay.  This funding can then be used for things such as payroll, operating expenses, growing the business, moving on to the next contract or project, etc.

How PO Financing Works

Invoice factoring can be used by itself to accelerate cash flow without also using PO financing. However, when PO financing is used, invoice factoring is also used to complete the financing transaction.

The steps in a PO financing transaction include: 

  • Client receives an order or enters into a contract with their customer.
  • Client forwards the purchase order to their supplier and the supplier provides an estimate of the cost to fill the purchase order.  In cases when the client enters into a contract for a service or project, the client obtains estimates for materials or other resources from the respective vendors.
  • Based upon the need for funding, the client enters into an agreement with a factor company to fund the purchase of inventory, materials, or other resources for the specific purchase order or contract.
  • The factor pays the supplier/ vendor through cash proceeds (or with a letter of credit if the supplier/ vendor is located outside of the U.S.), and the client takes delivery of the inventory or materials.  The proceeds may cover up to 100% of the cost however the client may have to pay out of pocket to make up any difference.
  • Client completes and ships the customer order, or performs the work contracted for and invoices the customer.
  • Client assigns the invoice for the completed order or services to the factor. The factor purchases the invoice once the validity of the receivable is verified and makes a partial advance on it first deducting the supplier/vendor payment and fees.
  • Once the related balance under the PO financing facility is retired, the client is then eligible to receive the remainder of the factor advance amount depending on the terms of the factoring agreement.
  • Client’s customer will remit payment for the invoice directly to the factor.
  • The factor receives payment on the invoice from the client’s customer and deducts the factoring advance as well as factoring fees, and remits the balance to the client.

How Invoice Factoring Works

The steps in an invoice factoring transaction include:

  • Client enters into an agreement with a factor company.
  • Client completes and ships the customer order, or performs the work contracted for and invoices the customer.
  • Client assigns the invoice for the completed order or service to the factor. The factor purchases the invoice once the validity of the receivable is verified and makes an advance to the client depending on the terms of the factoring agreement.
  • Client’s customer will remit payment for the invoice directly to the factor.
  • The factor receives payment on the invoice from the client’s customer, deducts the factoring advance amount and factoring fees, and remits the balance to the client.

Advantages of PO Financing

PO financing allows business owners to increase the necessary working capital required to boost sales, increase product or service offerings, and allows the business to gain the edge over the competition.  

PO financing is more accessible to obtain than a bank loan and may be easier to qualify. The credit underwriting decision is based on the financial strength of the client’s customer, unlike a bank that uses the business’s credit profile regardless of the income and cash flow that will result from fulfilling a firm purchase order or contract.

This is particularly important in light of the Federal Reserve’s change to a tight monetary policy, and the possibility that it might induce a recession. In this environment, bank credit requirements are tightened. Banks favor large customers and have a tendency to reduce credit exposure to small and medium-size customers.

PO financing may sometimes cover up to 100% of the supplies, inventory, or resources needed to get started/ complete a project or an order.  All the while without using credit available under existing lines of credit. It also enables clients to pursue business opportunities, which they might not otherwise be able to do because of insufficient working capital financing, and it can also be a stepping stone to developing a relationship with a supplier that leads to open-account terms.

Advantages of Invoice Factoring

Invoice factoring helps to accelerate cash flow by converting accounts receivable to immediate cash. Clients will not have to wait 60+ days for their customers to pay an invoice. Having access to those funds increases cash flow and reduces the need to draw down on availability under existing lines of credit.

An invoice factoring facility is also easier to obtain than a bank loan, and the credit decision is based on the financial strength of the client’s customer, not the client.  Invoice factoring facilities are more flexible to use than bank loans. In addition, they can be custom-tailored to fit within a business model.


While PO financing and invoice factoring are both designed to provide solutions to a business’s working capital needs, the key points to consider are the timing of when the funds are needed in the transaction cycle and the use of funds.  Understanding the differences will help pair the right financial strategy with the right type of business. 

Tips on Bidding New Projects in an Inflationary Environment

11:10 23 May in Blog

The surge in inflation driven by record fiscal stimulus, pandemic lockdowns and restrictions, supply-chain disruptions, and the war in Ukraine has created a major challenge for business owners in the construction industry in bidding on new projects and maintaining sufficient cash flow.

Many of the commodities used in construction are subject to changes based on third-party events outside of your span of control such as changes in world market prices and geopolitical events. Despite the Fed’s tighter monetary policy, inflation appears to have become embedded in the economy and may continue to persist at elevated levels for some time.

Construction Cost Increases

The following table lists some examples of changes in the Producer Price Index (PPI) reported by the Bureau of Labor Statistics for key materials and other inputs used in construction.

Year-Over-Year Change in December PPI
Construction Inputs 2020 2021
Steel mill products 5.2% 127.2%
Plastic construction products 5.4% 34.0%
Aluminum mill shapes -1.7% 29.8%
Copper and brass mill shapes 24.0% 23.4%
Gypsum products 3.6% 20.7%
Lumber and plywood 37.0% 17.6%
Diesel fuel -2.8% 55.0%
Truck transport of freight 2.2% 18.0%
Construction machinery and equipment 1.1% 10.0%

Along with these costs, labor and wage costs have increased in response to inflation and worker shortages. Average hourly earnings in construction rose 5.8% from February 2021 to January 2022 for hourly tradesmen. The average for similar workers in the overall private sector jumped 6.9%. Unfortunately, these wage increases have not kept pace with inflation and further wage increases may be required to keep your skilled staff employed with your company. 

Overhead costs have also experienced inflationary increases. Personnel costs, rents, and other administrative costs have surged. Unlike construction materials costs, which rise and fall with demand and supply, overhead cost increases tend to become ingrained in a company’s cost structure.

Impact of Inflation on Profit Margins and Cash Flow

Inflation in construction costs has squeezed contractor profit margins significantly. The PPI for input costs rose 1.8% for the 12 months to September 2020, matching the 1.8% increase in PPI for bid prices. But the 19.6% increase in PPI for input costs for the 12 months ended December 2021 far outpaced the 12.5% increase in the PPI for bid prices. 

Contractors must take steps to factor inflation into bid prices, improve the accuracy of their bids, and ensure the project retains profitability.  Inflation erodes a project’s profit margin and if left unchecked can create serious cash flow issues. 

The risk of inflation increases with the size, length, and complexity of a project. Size increases the potential magnitude of impacts from inflation. The length provides the opportunity for inflation to occur and reduces the reliability of estimates. Complexity increases the number of variables subject to potential change. 

Whether you’re a general contractor, subcontractor, or in another segment of the construction industry, the following tips will help you develop your project bids in an inflationary environment. 

Tips to Improve Bid Development Process

Review the way your company develops bids to improve accuracy. 

  • Checklists – Use checklists to ensure all important items are included in the bid.
  • Carefully review plans – Check takeoffs and measurements to improve accuracy.
  • Attend pre-bid meetings and site visits – Review project requirements and get clarification when needed.
  • Technology – Use software to improve estimates and accuracy of bids.
  • Subcontractors – Review past performance, bid details, and pricing. The lowest bid isn’t always the best if the job is late or performed unsatisfactorily.
  • Labor costs and practices – Review local labor costs and practices. If union labor is used, review work rules and how they will impact productivity and costs.
  • Financing costs – Work the cost of financing, or factoring services, into the price to your client.
  • Bid the right projects – Bid on the projects that fit your company’s strengths.
  • Expiration date – The bid should have an expiration date so you have the opportunity to rebid if the bid validity date passes to account for the higher cost of goods.


Implement Project Management Tactics

If your bid is accepted there are many project management tactics that can be used to mitigate the effects of inflation.

  • Time material purchases – Careful timing of purchases can help to contain material costs, especially when seasonality is a factor.
  • Monitor costs – Perform regular variance analysis to determine which costs are trending upward.
  • Hedge commodity prices – Use futures contracts to lock in prices of key commodities.
  • Inventory – Stock up on inventory to protect your business from future price increases if you have the cash to do so.
  • Discounts for early payment – Manage your cash flow to regularly take advantage of early-pay discounts offered by your suppliers and vendors.  These discounts can really add up.  
  • Critical suppliers and vendors – Identify critical suppliers and vendors then negotiate.  Some may be willing to offer better pricing to maintain a valuable customer. 
  • Best practices – Use best practices such as Target Value Delivery to empower your team to manage the project to bid targets.
  • Technology – Incorporate technology to facilitate project management.
  • Performance and quality control – Complete the project on time and maintain a high level of quality control. Your customer may be more open to accepting future bids with more robust profit margins if they know they can count on you and will receive quality results.  


Include Inflation Terms in Contract Language

Construction cost inflation has not exceeded 5% for over three decades so many contractors do not have experience in an inflationary environment. Adding a few percentage points to bids for inflation won’t protect you sufficiently in this type of environment either.

There are many different approaches to mitigate inflation risk in bids.

  • Time and material – Charging for actual time and materials cost shifts the risk of inflation to the customer. Customers may not accept this approach because it doesn’t place limits on costs.
  • Price adjustment mechanism – Language that permits an increase in price under specific circumstances, such as – if the cost of concrete exceeds X then the price of the contract may be increased by Y.
  • Collar – A price adjustment mechanism that works for both price increases and decreases. This can be a good alternative for commodity materials which can be subject to large swings in price.


Take Control of Inflation’s Impact on Your Working Capital with Factoring

Inflation increases the amount of working capital needed to fund a project and also negatively impacts your cash flow if left unchecked. Invoice factoring through funding sources such as Capstone is an excellent cash flow management strategy for construction contractors looking to combat inflation’s negative effects.  Business owners obtain the additional working capital needed to finance projects as well as the cash flow for operations. Factoring can be provided for a single invoice/ payment application, or as a program for all of your accounts receivable.  Credit approval is based on the financial strength of your customer, not the creditworthiness of your business.   

Keep in mind that in an inflationary environment, the value of your accounts receivable lessens the longer they remain outstanding.  Instead of waiting 60+ days for customers to pay, business owners can convert their outstanding invoices to immediate cash.  Having access to those funds provides you with staying power until cash flow catches up with expenses. 


How Capstone Can Help

Capstone Capital Group, LLC is a leading commercial finance company that is focused on providing businesses with sufficient access to working capital. Capstone has the experience and resources to provide customized invoice factoring and PO financing programs that fit your needs in an inflationary environment. 

Funding Strategies For Businesses To Weather a Recession

16:15 05 May in Blog, Broker Resources, Business Funding

A growing number of business leaders and economists have warned that the U.S. is headed for an economic slowdown or possibly even worse, a recession.  Are your clients prepared?

Surging inflation is driven by a tsunami of fiscal stimulus from Federal and state governments, and supply-chain constraints resulting from pandemic restrictions have made it necessary for the Federal Reserve to begin tightening the money supply and increasing interest rates.

The Russian invasion of Ukraine made matters worse by precipitating a leap in prices for energy, agricultural commodities, and metals. The Fed will probably need to tighten faster and harder than initially anticipated. Economic pundits have begun to reduce forecasts for economic growth and start discussing the possibility of the “R” word. 

The time to prepare is now.  Financial brokers can use the following strategies to help small and mid-sized companies plan ahead to weather a recession.

Accelerate Cash Flow

The key to surviving a recession is cash flow management.  In a recession, cash flow is often reduced due to a number of things including customers stretching their accounts payable to conserve cash. As a result, business owners may experience a deceleration in their own cash flow and may have to use available credit facilities.  Having high accounts receivable balances outstanding for an inordinate amount of time can be detrimental to the sustainability of a business.  A double hit to cash flow and available credit can seriously impair a business owner’s ability to meet its financial obligations. Accelerating cash flow with invoice factoring through a factor company, such as Capstone, can help to reduce this dual impact.

Invoice factoring accelerates cash flow by speeding up the transaction cycle. Instead of waiting 60+ days for customers to pay, business owners can convert their outstanding invoices to immediate cash. They will have more cash available to fund operations and reduce the need to draw down available credit facilities.

Avoid Slashing Key Programs and Personnel

When an economic slowdown occurs, it is common practice for businesses to cut operating costs in order to conserve cash.  A mistake many businesses make, however, is cutting key sales, marketing, and product programs.  These programs are the link to customers as well as the marketplace, and the source of future growth.  Cutting key programs may cost business owners much more in the long run than they will save in the short run.

The pandemic spawned a change in the labor market making hiring and retaining personnel a major challenge for many businesses. Cutting headcount to reduce operating costs and conserve cash should be carefully evaluated to avoid recruiting costs and problems hiring people that may delay ramping up when the economy recovers. 

By resisting the urge to implement drastic cuts in these areas, business owners will be able to position themselves to capitalize on the recession and potentially scoop up market share that competition left behind through their cost-cutting.  

Increase Working Capital Facilities

Adequate working capital and the right type of facilities are also critical to weathering a recession. 

If a business owner needs additional working capital, they should apply now. The Federal Reserve’s monetary tightening and interest rate increases, combined with the possibility of a recession will make it more difficult if the business owner delays. In a tight monetary environment, banks and other traditional financial institutions tighten their credit requirements and favor larger customers while reducing their credit exposure to small and mid-sized companies. 

Work with a Factoring Company

During a recessionary period, smaller community banks and other traditional financial institutions may not be able to provide adequate working capital because of lending limits. Also, many businesses may find they will fall outside the acceptable risk threshold to access and retain lines of credit as well as more traditional business funding from these sources.  Let the prospective client know that you may be able to help in the event they are unable to qualify for increases to existing credit facilities or new facilities. 

While these financial sources prefer to lend to businesses with only positive financial performance, stable cash flows, and predictable revenues, factoring companies, such as Capstone, can often work beyond these issues and provide funding based on the quality and financial strength of a business owner’s accounts receivable.   Many businesses also often require faster approvals and access to funds than banks and other typical lenders can offer. Because of these obstacles to obtaining traditional loans, business owners should consider business financing alternatives, such as invoice factoring and P.O. financing.  

Invoice factoring and P.O. financing won’t tie up availability and can be used to supplement existing credit facilities. They are easier to obtain than bank loans, and the terms are more flexible. Alternative financing facilities can be custom-tailored to meet a client’s business requirements. More importantly, approval is based on the financial strength of the prospective client’s customers, instead of the business’s credit profile.


Business owners can survive a recession and be in a position to take advantage of opportunities by implementing the above strategies now.  They will also avail themselves to more funding options when they are not operating in crisis mode and when the financial health of their business is at its strongest.   

Whether we’re simply seeing an economic slowdown or a full-fledged recession, Capstone is here to help your clients stay focused on what they do best – running their company.  We have the experience and resources to custom-tailor invoice factoring and P.O. financing programs for your clients.


Recognizing Potential Transaction Red Flags in Factoring

12:24 04 April in Broker Resources, Blog

The key to being a successful factoring broker is to identify and develop leads that have a high likelihood of being approved by the factor company you work with. The flip-side of this is that successful factoring brokers avoid leads that are marginal and have potential issues which may result in their application being denied.

Questionable leads can be a huge time suck that diverts your time and effort from identifying and developing leads to increase your business volume.

Identifying problematic leads can be difficult however experience will help you recognize the signs that point to potential problems. These signs are red flags that the lead you are trying to develop may not result in an approved client.  Avoid problematic leads by recognizing these 10 transaction red flags.

Incomplete information

The prospective client refuses to provide information or documentation and is suspicious. Documentation contains many errors, misspellings, and inconsistencies with company names.  The prospective client is unable to send all their documentation and/ or due diligence in one or two email submissions.  Legitimate clients are cooperative and provide complete as well as error-free information and documentation on a timely basis. 

Account debtors with bad credit

Client customer (“account debtors”) with weak and unfavorable trade references, poor payment history, new banking relationships, and absence of credit facilities are red flags for potential problems. 

Evidence of collusion between the prospective client and its customers 

A sudden large increase in credit terms followed by the customer’s insolvency, or a surge in volume with a new customer that has limited trade and bank references and is unable to pay, are examples of possible collusion.

Transaction has been shopped around to different funding sources or promoted by other brokers Transactions that have been shopped around are a good indicator that there are potential problems. Factor companies most likely will not decline business opportunities unless there are red flags.

Prospective client is a start-up or has very limited operating history 

Companies that are start-ups or have limited operating history have a much higher risk of operating and financial problems.  There is always the chance that the business may be a front for financial fraud or to pass on risk.

Web and social media presence 

Most companies need web and social media presence to be successful. Little or no internet infrastructure is a red flag for potential financial fraud or an indication that the prospective client does not have sufficient business experience.

Spotty client background

Excessive litigation, unfavorable media coverage, and a poor reputation in its industry. Prospective clients that are contentious and difficult to deal with are a higher risk for operating and financial difficulties, and they may simply not be worth the hassle of doing business with.

Body language of the client

A prospective client’s body language can say a lot.  Being overly aggressive or even desperate, nervousness, evasiveness, inability to hold eye contact, confusing and contradictory statements, and unexplained urgency or requests for short cuts with changes to the transaction at the last minute are all red flags.

Transaction has unusual features or trends – size, nature or frequency of transaction 

Unusually large transactions, a few large single-invoice sales, increasing volume in a declining economy, a significant increase in sales to a new customer, and significantly more generous credit terms may be indications of potential problems.  Transactions that are unusual for prospective client’s profile or significantly different than past history and industry norms are all red flags.

If the transaction seems too good to be true, it probably is.  Unrealistic assumptions and projections not supported by past history or expected trends in the industry and economy, and documentation that shows no past due accounts, DSO equal to credit terms, or other unlikely KPI results are warning signs. A sharp increase in sales volume that is not consistent with past history, sales and marketing programs, and industry and economic outlook may indicate falsified sales.

Direct-to-consumer (DTC) sales or other sales issues

Sales must be business-to-business (B2B) for the accounts receivable to be eligible for factoring.  Many businesses today are trying to sell their products DTC, and some businesses may have both DTC and B2B sales so be on the lookout for any prospective client’s sales that may be to consumers.

Consignment and guaranteed sales which are sales that are subject to any contingency other than normal returns in the course of business for quality or delivery issues are also red flags.  Prospective clients with retail customers experiencing high levels of returns, chargebacks, sales allowances or large sales deductions may result in customer (account debtor) payments not satisfying the amount advanced to the client.  This may necessitate a reduction in the advance rate, or jeopardize the viability of the factoring program.  

Learning to recognize potential transaction red flags will save time for you and the factor you work with. Time that you can use to successfully identify and develop viable client leads to build your business volume. 

Capstone has the experience and resources to help you build your business volume. For more information on Capstone’s broker resources, please read:  Broker Resources – Capstone Capital Group (

Feature: The Secured Lender – Women in Secured Finance 2022

13:54 31 March in Blog

Please join us in congratulating Jessica Governara, National Marketing Director of Capstone, for being featured as one of The Secured Lender Magazine’s “Women in Secured Finance.”

Continuing the celebration of Women’s History Month, we are very proud to highlight Jessica’s contributions to our firm and the commercial finance industry.

Women’s History Month Spotlight – Susan Chavez

11:43 24 March in Blog

The first International Women’s Day was held over 100 years ago in March of 1911.  Since then it has transformed into a month-long celebration of the contributions and accomplishments of women around the world.   To commemorate Women’s History Month, Capstone is pleased to highlight an amazing woman’s contributions and innovative leadership success.

This year, we recognize and honor the woman behind one of the most accomplished companies in our portfolio: 

Susan Chavez, Vice President, Business Development & Operations for Recommerce Group, Inc.  

Susan Chavez is Vice President of Business Development & Operations at Recommerce Group, Inc. She has an extensive resume with over 20 years of experience in financial services and operations management. Based in North Carolina, Susan is responsible for business development, project & client management, forecasting/reporting, recruitment, and strategic planning.

Prior to joining Recommerce Group, Inc. in 2016, she held several executive-level roles in manufacturing and the banking sectors.

Outside of work, Susan has positively impacted many people in her community by teaching at-risk youth, mentoring incarcerated women, organizing various fundraisers, coaching baseball & soccer, and being involved with elementary school PTA. She is a mother and an avid Red Sox baseball fan striving to visit every major league baseball stadium in the U.S.


We interviewed Susan to honor her career accomplishments and celebrate Women’s History Month. She is an accomplished businesswoman and has had a major impact on the growth of Recommerce Group, Inc.

You have worked with a variety of companies over the years. As you have progressed in your career you must have had a number of bosses. Some may have been just managers while others were leaders. In your view what makes you a good leader?

The characteristics of a good leader that I focus on emulating include: versatility, adaptability, and understanding the importance of every role in an organization from the janitorial staff to the CEO.  Taking a stand with a fact-based approach. Having the ability to make decisions while collaborating. Always learning. Dressing for the job you want (not the one you have). Waking up every day and proving why you deserve the role you are currently in with moral and ethical work.  Always giving the “Good, Bad and Ugly” to each client, internal & external, to build trust and open communication.  But most importantly, always mentoring the next you – your successor.

What advice would you offer to women just starting out in business that have a desire to work their way up the corporate ladder into a leadership position?

Learn the industry through leveraging professional associations, such as RLA (Reverse Logistics Association) and various tradeshows (RLA, Consumer Returns, International Housewares, etc.).

Learn your company through taking the time to understand each role, interdependency, clients’ perspective (how do they view you), barriers to success, and what is the “Good, Bad and Ugly” view from associates’ perspective within your Company. 

Build your path by evaluating what roles, skillsets, etc. you need in order to get to the leadership position you strive for (including dressing the part).

As a successful woman have you run into barriers, and if you have please describe them and the tools you used to overcome them?

Barriers are a constant in business, but typically they are just tension/conflict points between various groups within an organization.  For example, Business Development vs. Operations; we both want growth, it’s just a matter of how quickly it can happen.

Most successful people have a mentor or other influential person in their life that they model their behavior on. Is there a particular woman who either mentored you or you modeled your behavior on?

I believe every woman is influential in their own way depending on the topic at hand.  As I look back through my life, an individual I have admired and desire to live like is Princess Diana. Not for the fame or lifestyle, but these simple tenets:

  • Be kind to all. 
  • Serve a purpose beyond work and your home.
  • Always have a servant’s heart and be willing to take a stand.

Some women have to make stark choices to succeed in their business careers.  Can you provide any secrets to our readers on how you have successfully balanced your work and family responsibilities?

As a working Mother, candidly it is a constant struggle. However, I have set boundaries and priorities. Some weeks I am good at keeping them, and other times I fail. I never want to miss a school activity, sporting event, extracurricular activity, field trip, etc. My priorities and what drives me have changed drastically over the last eight years.  

How has Invoice Factoring with Capstone impacted Recommerce’s business growth?

The ability for a startup company, like our situation, to see immediate access to cash flow is what drew us to invoice factoring.  Factoring is more important with larger clients that typically have longer terms. It enhances cash flow stabilization and utilization.  Capstone has provided the ability to increase client mix through funding to support expansion and improved cash flows with larger Fortune 100 companies that expect longer terms. 

The partnership/relationship we have built with Capstone from essentially Day 1 of onboarding some of the Fortune 100 clients we service today has been phenomenal. Recommerce is accountable for ensuring no dilution and presenting credit-worthy clients to be factored. Capstone assisted with not only factoring. They also provided purchase order financing support during expansion phases of our business.


About Recommerce Group, Inc.

Recommerce Group, Inc. is an industry leader in returned product management, return center services, remanufacturing, reprocessing, repairing, and recycling of consumer products. For over two decades the management team at Recommerce has been servicing some of the world’s leading consumer product manufacturers.

Understanding Account Debtor Evaluation Criteria

12:23 14 March in Blog, Broker Resources

A factor company’s underwriting process evaluates new clients for factoring programs and takes into consideration the financial strength of the prospective client’s customer base. The financial strength of the client’s customer, or account debtor in factoring terminology, is a good indicator of the likelihood that the account debtor will pay the client’s invoices within the agreed-upon payment terms, which in turn repays the amount advanced to the client. 

Importance of Account Debtor Evaluation Criteria

It is important for factoring brokers to know the account debtor evaluation criteria that factoring companies use in underwriting. Knowing the evaluation criteria will give you a better understanding of the profile a potential client’s customer needs to have in order to meet underwriting criteria. It will also help you to avoid time wasted pursuing prospective clients that are unlikely to be approved because their customers do not meet evaluation criteria. It will give you more time to prospect for potential clients with customers that are more likely to be approved in the underwriting process.

The following are some of the criteria used to assess the current and future health of an account debtor. The weight given for each criteria may vary on a case-by-case basis depending on the circumstances.

Account Debtor Evaluation Criteria

  • Financial Statements
  • Key financial indicators such as profit margin, working capital ratio, and quick ratio.
  • Appropriate values for assets, particularly accounts receivable and inventory.
  • Reasonable cash reserves and working capital. 
  • Credit Ratings 
    • Business credit reports from credit bureaus such as Dun & Bradstreet (D&B), Experian, and Ansonia provide information on credit scores, years in business, high trade credit amounts, payment history, key financial ratios, as well as litigation, lien and bankruptcy history.
  • Trade References
  • Payment history – A newer relationship may not be acceptable as a trade reference.
  • Highest amount of credit used – Low credit amounts may not be a good indicator of the account debtor’s payment history.
  • Amount owing – Large amounts may indicate slow payment, cash flow problems or over reliance on one supplier.
  • Total past due – Dependent upon length of time past due, frequent and large past due amounts may jeopardize the evaluation.
  • Terms of sale – Limited payment terms, deposits, or cash in advance may indicate prior payment problems.
  • Date of last sale – An old reference may not be useful for an evaluation.
  • Bank References
  • Length of the account debtor’s relationship with their bank – A newer relationship may indicate prior financial problems at another bank.
  • Type of collateral – secured or unsecured.
  • Credit facilities – Facility amount, and current and high balance. Having a high balance or not being in compliance with covenants may indicate cash flow problems.
  • Checking account – Current and high balance, and NSFs. Low balances and NSFs may indicate cash flow issues.
  • Client’s Internal Pay History
    • Length of time the client and account debtor have been doing business.
    • Previous payment history the client has with the account debtor – High credit, total volume, average payment days, past due amount, and write-offs.
    • Concentration – A client having a large portion of its invoice volume made up by only a few account debtors may affect the approval decision. 
  • Public Filings
    • Public companies are required to regularly submit public filings and financials -information may be more accessible on the internet by using websites such as YAHOO Finance or EDGAR on the website.
    • Things like stock performance, financials, existing lines of credit, disclosures, etc. are evaluated.
  • Bond Claims – applicable for construction industry contractors
  • Surety bonds – amounts and terms
  • Claims against surety bonds – Claims may compromise accounts receivable eligibility for factoring.
  • Web Presence
  • The account debtor’s website, social media, and news articles may all contain information relevant to the underwriting process.


The following are some potential red flags that may indicate problems for an account debtor evaluation.

Potential Red Flags

  • Low bank account balances – Low balances may indicate a cash flow and working capital problem.
  • Lack of existing credit facility – May indicate problems obtaining credit in the past and/or insufficient investment capital.
  • Limited trade references – Limited trade references may indicate past credit problems and insufficient working capital.
  • Very limited operating history – Companies with a very limited operating history tend to be higher credit risks due to the increased likelihood of operating problems and the financial difficulties they create. 
  • Prior bankruptcy – May indicate a risk of continuing operating and financial problems.
  • Excessive litigation – More litigation than normal, and a reputation for being difficult to do business with, may increase the risk of operating and financial difficulties.
  • Contra-accounts – If the prospective client and the account debtor have account payables and receivables with each other, the account debtor could offset the payment of the client’s account receivable, which would compromise the factor’s collateral.
  • Affiliates and arm’s length transactions – Accounts receivable from related party transactions are usually ineligible for factoring. 
  • Credit terms – If the account debtor offers extended terms, it may create an unacceptable level of financial risk.
  • Consignment sales – Consignment sales distort the account debtor’s financial statements – accounts receivable, sales, and profits are overstated and inventory is understated.

Account debtor evaluations are an integral and important part of the underwriting of a new client. Understanding account debtor evaluation criteria will help you to identify prospective clients with customers that are more likely to be approved in underwriting. It will help you to focus your marketing and prospecting efforts more effectively to increase business volume.

Capstone has the experience and resources to help you build your business volume. For more information on Capstone’s broker resources, please read Broker Resources – Capstone Capital Group

Capstone Celebrates 10 Years of Success with its Diverse Funding Program

10:25 10 February in Blog

At Capstone, making sure all businesses have sufficient access to business financing options is at the core of our business strategy.  That’s why in 2012, Capstone created its Diverse Funding Program which is designed to give MWDBEs the financing tools they need for growth and to be successful.  Capstone began their program before “Diversity” was a buzzword thrown around by politicians and certain interest groups.  We have been a leader in the space because it made good business.  

Through this program, Capstone provides minority, women, and disadvantaged business entities, or in short “MWDBEs,” with access to financial and professional development support.  Those businesses participating in Capstone’s program avail themselves of many non-funding benefits including:  

  • Local and personalized services all over the United States
  • One-on-one business consulting and mentoring
  • Customized training, leadership, and executive development  
  • Procurement guidance
  • Relationship building between MWDBE clients and larger corporations as well as access to governmental and municipal markets 
  • Non-legal contract review
  • Access to bonding
  • Bid support letters
  • Budgeting and forecasting development and support 
  • Referral services for accounting, estimating, legal, engineering, payroll, and other professional services 

These additional benefits also make sure our clients are able to take advantage of the programs that have been set up for them by Fortune 1000 companies as well as state, city, and federal agencies.  Capstone has served as a primary or secondary financing source for a variety of MWDBEs.  In the last 10 years, we have seen much success with this program and have provided funding in excess of $100MM+ to qualified MWDBEs. 

Client Spotlight

Capstone is proud of the contributions it has made assisting MWDBEs with custom-tailored diverse funding programs, mentoring, and coaching over the last decade.   The below case study highlights the success and level of community improvement achieved by one of our MWDBE clients participating in the program. 

Fostering a Chance in the World through Invoice Factoring

In 2016, Capstone began working with a Pennsylvania-based non-profit advocacy organization dedicated to improving the futures of children in foster care.  Their mission was to provide a safe and caring home for all at-risk children in foster care in the Philadelphia, PA region. The organization also provided food, clothing, and therapeutic services to households of up to six children.

This client, a minority woman-owned business, came to Capstone because they were having a very difficult time accessing working capital as a non-profit organization.  Without sufficient cash flow, the client would struggle to manage cash due to irregular payment schedules.  In an effort to sustain operations, have the ability to expand, and open additional homes so they could get more children adopted, the organization sought out Capstone’s assistance for their funding program.  Invoice factoring would be the fastest way to generate immediate cash flow.  

Capstone’s solution was to provide a factoring facility to inject the necessary working capital required while providing the flexibility needed for a non-profit organization.  The client was able to factor invoices as they needed to.  Capstone also helped the client by increasing their advance rate to give them as much funding as possible and worked with them through contract extension periods.   The client contracted with state agencies and oftentimes there were a few weeks when the agencies delayed payments while they reconciled accounts at the end of their fiscal year.  The factoring solution helped keep the client stabilized during this period.  

After a few years of using Capstone’s factoring facility, the client was able to open additional homes and increase the number of children they are able to foster.  As a result, the client has been able to invoice more as they fostered and tutored additional children, thereby creating more cash flow for them to continue expanding.  They also went on to be awarded a seven-figure public agency project with the City of Philadelphia, which has been renewed for 2022 and is expected to be renewed in future years.   

Since working together, additional homes for boys and girls have been opened and there are plans to add more homes.  The client has maintained an invoice factoring relationship while utilizing other non-funding benefits of the Diverse Funding Program and has chosen Capstone as the preferred funding source.  Capstone’s factoring facility was integral to the organization maintaining operations throughout the COVID-19 pandemic while many others in the industry were stretched thin.  Many state agencies across the nation delayed payments as they struggled to manage the effects of the pandemic.  However, with factoring, the main portion of the payment is provided up-front, so any delays in payments aren’t as harmful. 

About Capstone

Capstone offers flexible factoring options for businesses in many industries. In particular, we understand the unique challenges faced by MWDBEs and we have been able to structure a funding platform specifically to support the working capital needs of these types of businesses. Capstone has experienced professionals on staff to custom tailor financing solutions for MWDBEs, and provide consultation and assistance to help them attain their goals and enrich their communities.  Whether it is a single invoice or full-contract factoring, Capstone can supplement these facilities with its Diverse Funding Program.  If you are part of one of these groups, we encourage you to contact Capstone to discuss your specific financial needs and learn more about our program.

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