Management

Some Accidents Were Meant to Happen…
Community-Based Factor Focuses on Giving Back

ABF Journal, April 2006 Issue, Vol. 4, No. 3

 

An Interview With Patricia Burns, President, Primary Funding Corporation

Primary Funding Corporation President Patricia Burns cannot say enough about the importance of giving back to one's community. It's evident in everything she does: From Primary Funding's mission and focus to her personal involvement with charitable organizations and mentoring programs, Burns truly lives her company's community-based philosophy, and could not be more thrilled with her profession.

 

Accidental Beginnings

When Burns first got into the financial industry in 1974, she was a recently divorced single parent just looking for a job. She found one at Riviera Finance, where she worked with their factoring group and discovered a natural aptitude for that aspect of the industry, especially working with small businesses. But even so, when she left Riviera in 1983 to obtain her degree in business administration with an emphasis in accounting, she had every intention of moving on. But something happened on her way out the door.

"It pulled me back in," Burns says with a laugh. "I had investors talking to me, saying I knew too many people and that factoring was a 'natural' for me. And it's a great industry to be in as a single parent, since it gives you the flexibility you might not have in other industries."

So with factoring Burns stuck. After finishing her degree, Burns formed a partnership with a financial backer and started San Diego Commercial Finance in her hometown. And in 1994, Burns struck out on her own after a leveraged buyout resulted in the formation of Primary Funding Corporation, a traditional accounts receivable factoring company that markets exclusively to the Southern California region.

 

Committed to Community

Being a community-based factor is Primary Funding's most defining characteristic. So what exactly does that mean? "My perception of a community-based factor is a company that works within its own community, not only servicing clients within that community, but also giving back to the community. If you want to be successful, you have to give back," Burns explains.

And even though the company is not as geographically diverse as others in the factoring industry, Burns is confident that this works to Primary Funding's advantage. "A community-based factor is able to provide their clients with more guidance," she says. "Most clients who qualify for factoring are not people with a lot of extra money on the table, so someone like myself who has 32 years of experience working with small businesses can relate to them. We're not only servicing their factoring needs, but we're also providing them with consulting services from our personal experience."

Staying focused on the community while still maintaining a successful business has not been a difficult task, thanks to the company's "keep it simple" mantra. "Part of our forte is keeping things simple for the client, letting them know we're here to support them," Burns says. "We want to service our clients and we always want the collateral to be the receivables. We work with the younger start-ups, the people who need a lot of help, guidance and nurturing — not just in terms of money. And as our clients' business grows, there will be times when we can provide them with a little over-advance as needed. It's not something we want to walk into, but we nurture our clients so they're able to succeed."

When asked whether community-based factoring will always have a place in the financial world, Burns responds with an emphatic yes — although she's noticed a trend that could have an impact. "It's an evolution. A lot of the community-based factors are bought and absorbed into bigger organizations, and then there's a fall out and it starts all over again," she says. "I've had two serious offers to sell my business over the years and I've declined them for a couple of reasons. Once you become a part of a large, national program, there can certainly be more streamlined operations, but when you're dealing with smaller companies, many of those streamlines don't always work."

 

The Importance of Education

Burns also uses her community involvement to educate others — whether it be clients, colleagues or the general public — about the factoring industry, a sector she believes to be often misunderstood. "People are sometimes put off by factors because they still think of us as loan sharks," she explains. "They don't realize that by using a factor's capital as a substitute for their own, they can grow their business without diluting equity. A lot of times people will borrow money and it's not sufficient enough to support their business. Factoring allows a company to grow at its own pace from a financial standpoint. You can have a constant stream of cash flow as long as there are receivables to support it."

Burns continues by alluding to a "spend money to make money" mentality that many in the business try to avoid. "People think we charge too much, that we don't give enough back. They don't really know how to justify the charges," she says. "Accountants look at the bottom line and they sometimes forget that cash flow is more important than profitability. Eventually you have to be profitable, but you have to get there first."

When educating new colleagues who are just getting into the factoring business, Burns again offers "keep it simple" advice. "Today's environment is focused on particular industries — factors shouldn't try to be something to everyone. They really need to focus. It will help limit the mistakes that are made," she notes. "Every time we get something a little unique and outside the box, we have to re-educate ourselves. So it's better to keep it simple and focus on industries that you're familiar with and that you know you can service."

 

Watching Them Walk Away

Of all the satisfying aspects of her job, Burns admits that she most enjoys watching clients walk away— for her, this means a job well done."I live for seeing my clients' successes. I find it incredibly fulfilling to be a part of the transformation of the company and taking it to the next level. I can't tell you how exciting it is when you see somebody move on who has used our services and now understands how important cash flow is," she says. "I'm passionate about helping entrepreneurs and helping them grow their business. It's kind of a feeding frenzy — you work with new entrepreneurs and they have such enthusiasm for what they're doing. Some of them have good ideas, but others are great ideas. And that's where I get my kicks."