Benjamin Zander and his wife wrote a book entitled The Might of Art; Turn professional and personal life. Their idea is that you can create a passionate energy penetrating power that will be a true force in your life. You can create custom rules. Their book is inspiring. You will be inspired if you buy and read it. The question is: How does this relate to customer debt financing?
Its about attitude, enthusiasm and vision of how you do your business. Can you make custom rules about how banks, commercial finance companies and other financial entities seem? Obviously not. Can you make your own rules about using the financial resources available to finance your business? Absolutely.
Here are three examples of how to use the power of customer debt financing sometimes with other types of funding to boost your B2B business.
A solar energy company that designed and supervised the installation of renewable energy systems could not get bank financing. They were one of the areas of low price providers of solar panels, system design and monitoring. One of their biggest assets was State Solar Tax Credits paid to homeowners who install the solar systems. An obligation from one state to a consumer is not within the definition of a customer claim. In other words, it could not be financed because it was not an obligation for a company. With this opportunity, homeowners could be persuaded to allocate their solar tax credits to Solar Energy Company. This transformed a consumer claim into a commercial customer claim. Voila! The solar energy company received customer debt financing as it needed to grow.
An individual bought an Import company that had been funded with a banks SBA loan. As collateral for the loan, the bank filed UCC1 archiving of accounts receivable and inventory of operations. UCC refers to the Uniform Commercial Code in force throughout the United States. In some respects, it simplifies the process of lending, sales and borrowing nationally. In other ways it is very complex. An UCC1 filing from a bank usually prevents additional funding, as there are no collateral left to fund. It resembles a first mortgage on a house. If you have a 95% loan on your house, no other funding is available at the house because there is no equity to lend. With the help of the opportunity, the Importer could succeed in convincing the bank to subordinate its UCC1 filing to another commercial lender UCC1. The import company convinced the bank that it would be mutually beneficial to lower the UCC1 lien banks to a secondary position to allow a commercial finance company to offer new customer debt financing and stock financing. Voila! The import company has a new credit line available for growth. It is now more profitable and the bank is more likely to be refunded. This is a winwin situation.
A start clothing company involved in the manufacture, distribution and design of Tshirts landed a significant purchase order for its product. The product would be manufactured in China and the clothing company lacked sufficient funds to pay the costs of manufacturing and distribution. With the opportunity, Kl