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Kim Lavine
Listen as I tell you a story, of history being made...

Kim is on a mission to inspire people to follow their dreams, empowering them with hope, honesty and faith.

Identified as America’s Expert on Inspirational Business Advice, Kim touches and inspires millions around the world through her appearances on The Today Show, Rachel Ray, Good Morning America, NBC & ABC news, CNN, CNBC, FOX, NPR, Oprah & Friends Radio Network, and features in USA Today, Country Living, Guideposts, Inc, Business Week, Entrepreneur, Women's World, and American Baby to name a few. Read More...

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Factoring 101: Or How To Get Money To Make Money

by Kim Lavine

I meet start-up entrepreneurs every day who don't know what a Factor is and how to use one to get the money they need to make the money they want. Here's what you need to know.

Getting Credit from Your First Vendor

Though I had found a manufacturer for my product, I still had to find a supplier of fabric. I had been dragging my kids to every fabric store within fifty miles, but that had to end. They were starting to revolt, crying “not another fabric store, mom!” During my trips, I began to write down all the information from the bolts of fabric I liked, including the manufacturers and their style numbers. I went to and looked up the phone numbers for all these fabric suppliers, then just called them up.

I can laugh about this now, but it was not at all funny at the time.

Rejection Again

I called up a major fabric manufacturer in New York City and was transferred to a salesman named George. I told him I was interested in buying fabric wholesale.

“Sure,” he responded to my inquiry, he’d sell me fabric. “What are you going to make with it?” he asked out of curiosity.

“Wuvits,” I answered, about to launch into my explanation of what a Wuvit is.

“What?!” he interrupted me.

“Wuvits,” I began again.


Photo I took from the 60th Floor of the Empire State Building NYC

Yes, that’s right. He hung up on me. ‘Guess people in New York don’t have much of a sense of humor,’ I thought. But I was used to rejection at this point. I’d better have a sense of humor if I was going to sell a product named Wuvit. I called George in New York right back. I really wanted that fabric!

Nobody Hangs Up on Me!

The minute I got George back on the phone, I laughed off his hanging up on me—“We must have been disconnected”—and launched into an explanation of what a Wuvit was.

New Yorkers love people with moxie. He didn’t give a damn about any Wuvit, but he obviously was impressed enough that I had the courage to call him back that he didn’t hang up on me again.

What's a Factor?

He was going to sell me some fabric, but I was going to have to, “pay with credit card the first time out, and fax him a credit sheet for his factor for any 30 day terms.”

“Factor? What’s a factor,” I asked him.

“A Factor!” he practically shouted.

I was too embarrassed to admit then that I didn’t know what a factor was, let alone ask what a credit sheet was.

What's a Purchase Order, too?

I asked him to please send me some fabric samples, and he told me to pick out the ones I wanted and send him a Purchase Order with my credit card number attached.

“Purchase Order,” I repeated, not letting on again that I had no idea how to write a purchase order.

“This is the price,” he quoted. “F.O.B. New York”

And What is F.O.B. too?!

“F.O.B?” What this meant I couldn’t even guess, but I had to know, because it meant money.

I could hear the exasperation in his voice on the other end when I asked him.

“Freight On Board!”

I did my research and discovered a commercial factor is like a bank that provides businesses with lending solutions like credit and purchase order financing.

Factoring 101

  • Factoring, I’ve since learned, is when a company sells its account receivables to a bank or financial institution, which purchases them at a discount of anywhere from one to ten percent typically.
  • The advantage is that the company selling them gets their cash in one day instead of 30 or 60, freeing up cash flow while taking the worry and administration out of collecting bills, while the financial institution that buys them makes interest.
  • A lot of companies use factors, and a lot of them use the same big factors, so if your credit goes bad at one account, it will go bad at them all. The good thing is that once you get approved for a credit line, you can use that line with other vendors.

The best and biggest Factor in the world offers a free FACTORING UNIVERSITY online, sharing priceless information on how to Get Money to Make Money!