Jun 4, 2019

What Robert Frost’s Poetry and Factors Have in Common

Ernane Iung

Ernane Iung – President and Owner of ei Funding

What do Factors have in common with famous American poet Robert Frost? Well actually, quite a bit – and I’ll explain what I mean in my comments below.

The phrase “Good fences make good neighbors” comes from the Robert Frost’s “Mending Wall,” published in 1914 and deals with the sometimes-arbitrary separations and divisions we, as human beings, create between ourselves.

According to Frost, good neighbors respect one another’s property and the wall is used to symbolize the actual need for some type of separation between people, and in Frost’s case, neighbors.  

In Factoring, we can make an analogy to Frost’s “fences being good neighbors” when we say “good Customers make good Debtors”. Because in Factoring, a “good Customer” helps consolidate the opportunity for Factoring to occur, since they are the ones who will be ultimately paying the invoice the Factor has purchased.  So, very much like the fence between neighbors in Frost’s poem, the Customer is key in holding together and solidifying the factoring relationship between Client and Factor.

So analogously, what then makes “good Customers”, from a Factor’s perspective? Well, from my experience, I will label a Customer as “good” based on their performance in two very distinct areas:

  • How they behave from a Factoring perspective – meaning, are they a good payer?
  • General attributes of a good Customer

Factoring Perspective:

1.The first thing a Factor, or any company owner wants to know is if the respective Customer is a “good payer”?  No amount of sales to a Customer will compensate you for someone who doesn’t pay for the goods and services you’ve worked so hard to deliver. So, this is the first, and most simple litmus test in evaluating potentially good Customers.

That said, what else constitutes receiving the noble designation of a “good payer”? Well here are a few more thing to consider when assessing the quality of your Customers as payers.

2. A history and consistent payment record showing no significant deviations to the “Days Past Term” (DPT) in their trade credit record.  The DBT score is a metric used to measure how well companies pay their bills and it stands for “Days Beyond Term”; or in other words, how many days do they go beyond the Payment Terms stated in your invoice to pay their bills? Obviously, the lower the score (fewer days) the better the payer.  This is Experian’s equivalent to Dun & Bradstreet’s PAYDEX Score which is a weighted score from 1 to 100 (higher score the better payment performance), but Experian uses a day measurement which I find much easier to understand since it is expressed in “days”. When we add this DBT term to the existing commercial sales terms, the result is when you can expect to be paid – in total number of days.

3. Payment terms – are they reasonable? Are they consistent with the cycles by which you run your business, or will the sale to this Customer disrupt your cash-flow management by extending you out too far, forcing you to make alterations in various areas just to accommodate the long payment terms of this Customer?  Obviously too much accommodation is never good, and you must see where and to what extent these terms will impact your business, and then make the best decision on what to do – either from a Customer side or internal-business perspective.

4. Are they Dilution payers?  Dilution is a fancy term for when Clients whittle down your expected sales receipts with things like allowances, returns, chargebacks, rebates, discounts, and the famous “2% net 30”, meaning you’ll get paid in 30-days, but your Client will discount 2% from the payment amount for doing so.  I don’t know of any company, anywhere, who likes and appreciates dilution. It’s an unfortunate part of business, and some companies have made it a habit to nickel-and-dime you to death with dilution, further eroding your gross margin. So, before you sign on the dotted line, understand the full impact dilution from your Client may have on your business.  

That takes care of looking at “good payers” from a Factoring perspective.  

The second criterion we use at Orlando-based ei Funding to impart the vaulted distinction of “good Customers” relates to how a Client performs on 5 specific attributes, which I detail below:

General attributes of a good Customer

  1. Easy to work with and collaborative
  2. Do things right the 1st time
  3. Are Responsive – they promptly answer Emails, return calls, answer questions or surveys about the operation being provided.  Do generally and vividly embody the meaning of the word “partnership” in most of its implicit meanings?
  4. Provide clear concise, objective feedback as to the quality of the services being provided them by your company?
  5. Lastly, is this a company you would feel totally comfortable referring to another service provider in your personal Network?

Very different than the metric-driven attributes employed in the first example taken from a Factor’s perspective for a “good Customer”, this second group consists of many of the “warm and fuzzy” measures of what it’s really like dealing with people at a Company on a day to day basis — at the operational level, relationship level, and communicational levels.  Probably the most critical of the five criteria is the last one relating to referrability – “would you refer your Customer to someone else”?  Are they that good?  Ultimately, this is the greatest compliment when someone has the confidence to refer someone to another and represents the true measuring stick of the worth and value of a really good Customer.  

In summary, although Frost was referring to an inanimate object  when he wrote “good fences make good neighbors”, we can take a few of his queues and apply them to assessing real life Customers and whether or not, in strict business terms, they are “good” for our business, or not.

To learn more about the benefits Factoring offers to business owners, please check out some of the other blogs on this website, or you may contact us directly at info@eifunding.com. You can also find me on Twitter and LinkedIn.

Thank you and best wishes for success,




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