On this episode of #TheMoneyFactor, CEO of Eagle Business Credit, Ian Varley discusses challenges to janitorial companies and how to push past those barriers to growth. Janitorial or commercial cleaning companies have unique challenges in their industry to cash flow and business growth. It can be difficult to compete in the market when you owe upfront costs like supplies and payroll before collecting on invoices. Here how to push past those janitorial small business growth challenges through janitorial invoice factoring and other ideas!
Below is the transcript, edited for clarity, from this episode of #TheMoneyFactor:
We’re going to be talking about janitorial companies and some of the specific challenges that they face when trying to grow their companies. Also, we will tackle how factoring can be a great tool for commercial cleaning companies.
How Can You Get New Customers for Your Janitorial Company?
So, growing a janitorial business like many businesses can be challenging, particularly if you’re trying to add new customers. It’s an extremely competitive market, and it’s quite a sticky product. What do I mean by that? Well, if someone calls me and says, “I want to sell you a new cleaning service,” it may not be the first thing that I want to talk about. Maybe I’m happy with my cleaning service right now. It’s a big thing to change. My cleaning service comes into my office and does a great job. Why would I want to move that?
So, we recognize that, and one of the things we always talk to our janitorial clients and any other prospects about is to take a look at your marketing. How are you actually getting hold of companies? Are you going around a business park knocking on doors and putting leaflets, or are you creating a good online presence? Maybe you’re sending out some email blasts.
How Can You Revisit Your Marketing to Grow Your Janitorial Company?
It’s always hard when you are taking on business. Can you handle the cash flow strain that that’s going to equate? The pressure on your cash flow to add in those new customers is where factoring can help. We’ll talk about that, but mainly when you’re adding new customers, an online presence is a great idea for a janitorial company. Keep all your marketing on point with a similar look and feel, and if you do postcards, they can be quite dramatically effective.
What Are Some Things You Could Change to Accommodate COVID Commercial Cleaning?
If you’re canvassing new business parks right now, particularly with a pandemic ongoing, many companies are looking for janitorial companies that will add additional services such as deep cleaning and other things that are going to be peace of mind for those companies. I always think if you talk to the company about how happy they are with their existing service, ask for some things that they would look to change. That’s a great route in to talk to existing and potential new customers about switching cleaning companies.
What Makes Janitorial Invoice Factoring a Fit?
So, why is factoring particularly a good fit for janitorial companies? There are a number of reasons. A janitorial company is going to have that classic cash flow gap. What do I mean by that? Well, you have to buy supplies and cleaning supplies. Not only that, but you’ll have a team of staff that you employ to go out and perform the service.
Meeting Payroll as a Commercial Cleaning Company
So, when you have a team of staff, you have a big payroll bill. Those people will want to be paid perhaps weekly or bi-weekly and maybe your customers are only going to pay once a month. So immediately, you can only bill out once a month, but you’ve got to pay out several times a month not only to buy supplies but to pay wages. That’s the cash flow gap, and janitorial invoice factoring will help you cure that problem. As soon as you’ve completed that monthly billing, we will advance funds to you. Then, you can use those funds for working capital requirements for payroll or buying supplies.
Vendor Discounts for Janitorial Small Businesses
Remember also that if you’re working with a particularly large supplier that you’re reliant on and you pay on extended terms with them, you can actually go back to that supplier and hopefully negotiate a discount for early payment or quicker payment. Invoice factoring will help you pay earlier without the need of extended credit terms since factoring will improve your cash flow. If you renegotiate payment terms and agree on an early pay discount, you can actually use that to offset the cost of your factoring service.
What Is the Cost of Janitorial Factoring Services?
A lot of our clients, particularly in the janitorial space, will use the cash flow that we provide not only for their running money and payroll but also to get great vendor discounts. Janitorial factoring services are really not expensive. It is a cost of two or three percent of your invoicing value. We don’t have any hidden fees and we are transparent about our pricing, so really what the factoring cost entails is just the two or three percent of your invoice amount. If you can cover that with a discount from a supplier, that is a great way to manage and offset the cost of factoring. We see it with our clients all the time.
Will Financing Repayments Slow Your Janitorial Small Business’ Growth?
Invoice factoring is debt free. It’s not a loan. With factoring, you give us the invoices. We advance the funds. Then, we get paid by your customer. So, you don’t have to worry about making a loan repayment and having debt on your balance sheet. It’s not like that at all. Janitorial invoice factoring is an early advance or prepayment against your receivable while we then wait for your customer to pay us and repay that advance that we made to you.
So again, it’s a very simple process that works extremely well for janitorial companies. It’s really a pain-free and simple approach. We have many janitorial companies very satisfied because it just becomes an extension of their business. Janitorial factoring helps them pay their people, get their supplies, and not have to worry about repaying the financing. It’s a great fit.
Why Choose Eagle Business Credit for Janitorial Invoice Factoring Services?
So, if you’re a janitorial company, why choose Eagle for your factoring needs? Well, we understand your space. We have a number of janitorial clients on board. We understand the terminology that you use and the kind of customers that you have. So, for example, it wouldn’t surprise us if you said, “okay well my billing has to be issued on the first of the month for that month’s service,” that doesn’t scare us. Some other factors will not like that and will not be able to fund you. They may want to only fund your contracts after you finish your service. With us, we get it. We know that you have a contract that is a month-to-month thing, probably. We’re comfortable, and we’ll certainly fund you.
What Makes Eagle’s Janitorial Factoring Services Different?
You have access to a specialist that understands this space. You are going to have a quick turnaround time about how much it is going to cost and whether you get approved. Typically, our turnaround from receipt of application and supporting documents can be a number of days. The approval process is a couple of days through to a week from application until your first funding. Compare that to talking to a bank. It is very different. With us, again, it’s not a loan. You’re not going to make repayments. You are going to have access to that specialist that understands your space, and we’re very focused on getting your deal approved and funded quickly. That way, you can have access to that cash right away and not wait to get paid.
Solving Credit Challenges in the Janitorial Sector
Another reason people come to us, particularly in this space, is if they’re adding new customers. If they’re wanting to grow, they want to make sure that those customers are going to be credit worthy and are going to pay. Part of our service (it’s all included in the price) will be to help you underwrite or credit check those new customers. You just let us know the name of the company that you’re thinking of doing business with. We’ll run some credit checks on them and make sure that we can approve them for funding. It’s possible we’re already dealing with them for another company. We have a number of customers in this space, as I mentioned.
Invoice Factoring for Cash Flow Challenges in the Commercial Cleaning Sector
So, another great reason to come to us is the speed of funding. If you submit your invoices to us by 12 PM eastern, you’ll be funded same day for no extra charge. A lot of other factors will charge you for same day funding. That’s not something we try and do at Eagle. Janitorial companies are very welcome here at Eagle with our factoring services. We understand your pain points and the particular cash flow needs that you have to grow, be it getting supplies or paying your people on time or checking out new customer credit. It’s important that you do that wisely before you start doing business with people.
That is it for this episode of #TheMoneyFactor. Thank you for watching. If you’re a janitorial company, please contact us. You can find us at eaglebusinesscredit.com or you can call us today. We would love to talk to you about your business. Thanks again for watching #TheMoneyFactor