September 2012

Class Is In Session… CIT Goes Back to School, Launches Factoring University

Although factoring has been around for centuries, Jonathan Lucas, president of CIT Trade Finance, and his colleagues found themselves discouraged by the lack of accurate information about this longtime financial service. Determined to raise awareness and educate business owners on factoring, CIT launched Factoring University as a comprehensive, yet accessible, online resource.

For a financial service that’s been around for centuries, you would think factoring would be better understood by the business community. After all, factoring is a key lever for companies looking to grow. But just recently I came across an article in a well-known newspaper that contained a number of inaccuracies and misconceptions about factoring.

It is apparent that despite having benefited thousands, if not millions, of companies over the years, factoring still baffles many business owners. I can’t tell you how many times I have told people about factoring and the concept is completely new to them. In most cases, these are folks whose businesses could take the next step if they brought in a factor to help manage their customer credit and accounts receivable, and bring some added predictability to their cash flows.

A Fresh Look

About a year ago, my colleagues and I decided to review the factoring information available on the Internet. What we found was, in a word, discouraging. There simply was no one-stop, go-to comprehensive resource available to small- and mid-sized businesses to help them understand factoring — how it works, what its key benefits are and how it fits into a company’s overall growth strategy. That lack of information, in my opinion, was doing a disservice for the entire factoring industry. Think about the last time you researched a product online and couldn’t find anything meaningful. Did that make you more or less likely to buy it?

As one of the leading providers of factoring services in the United States, we felt an obligation to raise awareness of the service and educate business owners about how factoring works and what the benefits are. We felt it was important that we act as stewards of the factoring community at large, with the underlying hope that some of those newly educated business owners might pick up the phone and call us.

Factoring tends to be somewhat tied to the retail industry, so it’s important that factoring companies like CIT diversify and expand into new industries, as well as seek innovative ways to engage prospects and win new business.

Trying Something New

From the start, we knew that we would have to disseminate information in new ways. The process of learning has changed dramatically since most of us were in school, so it was important for us to take a fresh look at how we could make the information accessible, easy to understand and engaging.

With that in mind, we designed a website that would educate business owners about factoring and related services. The site, CIT Factoring University (, provides information through videos and infographics on the basics of factoring and how the service can help companies.

The first animated video, “What Is Factoring?” is less than two minutes long. In that short time frame, it shows how business owners use factoring to run their business. In the example depicted, a furniture maker receives an order from a retailer for 100 tables. The manufacturer ships the tables and invoices the retailer, but he doesn’t have enough cash on hand to buy new raw materials to make more tables and pay his employees. Add in the problem of the retailer not paying the invoice on time and the furniture manufacturer is in a hole — depicted literally in the video.

The factor comes to the company’s aid: giving it assurance of the retailer’s creditworthiness, managing collections and even advancing funds for the manufacturer to put back into his business. The video ends with the furniture maker sleeping well at night.

The second animated video provides information on how companies can minimize bad debt losses. If business owners find that task is too daunting, they can hire a factoring company, which has professional credit analysts that check the creditworthiness of their customers. Plus, a factor provides the peace of mind that the business owner will get paid on all undisputed factored receivables.

Coming soon is a video that will give business owners information on managing collections efficiently. Of course, an alternative is to factor their receivables and then the factoring company would assume responsibility for collecting the factored receivables.

In addition to the videos, Factoring University has detailed explanations and infographics that explain the factoring process step-by-step, because it really is a mystery to people outside of the factoring industry. At its core, factoring is a tool that helps companies manage risk, but it also frees up significant time and resources. When business owners see all of the processes that a factor handles, the value of the factoring service becomes much more apparent. It is a cost effective and efficient way for business owners to outsource several time-consuming, yet critical, functions.

Of course, it’s one thing for me to tell business owners about the value of factoring, and quite another if they hear it from one of their peers. So we asked several companies that use factoring to talk — on camera — about their companies, their decisions to use factoring and the value it provides. In every case, these companies describe the value of factoring in ways that are better than I could have said myself.

In one such video testimonial, we showcase Brittany Dyeing and Printing Corp., a textile company based in New Bedford, MA. Brittany is one of the few remaining textile companies that produces 100% made in America goods. Brittany’s CEO, Ken Joblon, relates how using CIT as its factor helped the company steer clear of credit losses over its 30-year relationship with CIT. “Our customers know the credit people at CIT,” Joblon said in the video. “It’s a wonderful thing.”

In a bid to keep the “course offerings” fresh at Factoring University, we have rolled out additional content including frequently asked questions about factoring, a glossary of terms, and diagrams and illustrations that explain the factoring process.

One infographic illustrates the factoring process from the first step of a retailer placing an order, to a factor evaluating the creditworthiness of the retailer and approving an order, and on to other functions such as shipping, invoicing, collections and payment.

We’ll continue to add new and engaging content to help business owners understand factoring and how this service may be helpful to them.

The Results

To date, the response we have received to Factoring University has been very positive, giving us confidence that the message is resonating with the people that matter.

The launch of Factoring University generated more than 3,800 page views in a week for CIT Trade Finance — more than three-and-a-half times our normal amount of views. Since it was created, the first animated video has been played more than 1,600 times as of the writing of this article, and it has been embedded on nearly 30 other websites. That is no small feat in an industry that is just now warming to social media platforms.

The personal feedback has been just as promising. My colleagues have had a number of calls and e-mails from factors, brokers and business advisors thanking us for helping to raise awareness about factoring in the business community. It’s rewarding to hear the impact we’re making on behalf of the industry as a whole and for business owners around the nation.

Ultimately, our goal is that by educating small- to mid-sized business owners about the benefits of factoring, we will raise awareness of factoring beyond its traditional core markets and into new industries, which will help more businesses grow and move our industry forward.

Class is now in session.

Jonathan A. Lucas is president of CIT Trade Finance, one of the nation’s largest providers of factoring, credit protection and accounts receivable management services. Lucas has spent his career developing financing solutions for companies in all stages of the business cycle. Prior to his current position, Lucas held various positions including chief sales officer, regional manager and sales manager. Individuals interested can continue the discussion about factoring on the Factoring University LinkedIn group at