We manufacture retail packaging products and while we are based in Winnipeg, Canada, about 70 percent of our customers are in the U.S. When the exchange rate moved from $1.30 (C.D.) to close to par $1.00 (U.S.), we started to lose money. But I couldn’t walk away from those customers; you have to stick with it until you can make money in manufacturing in this new economic environment.
The thing about banks is they don’t understand how small business really works. First they want your first born and a personal guarantee. Then, in tough times like these, rather than give you the money you need to run your business, they take it back. When we hit our bump in the road, our bank got mad at us. I couldn’t keep up with the loan debt-to-equity covenants and I got tired of spending countless hours filling out endless reports for the bank. And just when I needed to use my line of credit to buy materials to respond to growing customer demands, they wanted to pull back. Then, along came Bibby Financial Services.
I’ll admit to being scared to work with a factor. Our largest customer asked if we were going broke. I was very clear: We are not going broke, I told him, but I cannot function under a constrictive bank relationship that hurts, not helps, my business. Bibby is our new banker.
Working with a factor helps us answer customer needs faster because we have money in hand. With the cash they make available to us we buy supplies faster and at better prices. Now we can say to our supplier, "I’ll take four truckloads of cardboard, what’s my cash price?" It gives me the flexibility to move at a faster pace.
The result is that sales and bottom-line profits are growing. We aren’t stuck in the old 30-60-90 day world of getting money before we can buy materials. Now, when I see a deal on raw materials, I can belly up to the bar. Bibby Financial Services has given us back our entrepreneurial spirit! I may be paying a higher fee, but I am making more money. In the end, I know it’s a good deal for me.
Bibby Financial Services has a terrific system for handling collections with my customers. Because we can communicate over the computer, with timely updates, I know everything that is happening. And we stay active in collections, too, staying close to our customers. We have a notoriously tough payer – always paid in 90 days. Now he is paying in 30 days; he’s happier because he is getting his stuff faster and his business is doing better as well.
As part of a 200-year-old company, Bibby Financial Services has the things I wanted. I wanted stability. I wanted to know that it was a company backed by some great long-term experience. I wanted a company that I knew wasn’t going anywhere. I wanted a company that would work with me and not against me like my bank. That’s what Bibby Financial Services is all about. They have given me true financial freedom. I think factoring is the modern way of banking. Factoring is the future.