Finding Your Factoring Firm’s Post-Pandemic Purpose Part 2

When we are confident in our holistic approach to serving small to medium-sized enterprises (SMEs), we need to communicate that we are not just competitive, but value added to a prospect or client since we place purpose over profit. When we approach all prospective client opportunities with a mindset of purpose first, we ask tough questions upfront to help us assess our level of interest and pricing on each new client we are in discussions with. If we focus only on profit, we miss the most important tenet of any long-term relationship: does the client believe that the value of the professional services we provide significantly exceeds the professional fees we charge?

If they can answer “yes” to this question without exception, we have succeeded in accomplishing our mission and strengthen not just our bottom line but purpose. If not, we have only (for whatever reason) performed at a level that in the clients’ eyes only is acceptable and it is not a matter of if but when they find a more attractive alternative than our menu of services.

So how do I know if I am focusing on profit rather than purpose in my factoring firm? What questions should I be asking as part of my quest to make sure that we focus on purpose first and then profit on a secondary basis? I found an excellent framework to help us analyze the differences between the two on www.mcleodandmore.com.

Their research can serve as a template for each of us in the global factoring industry to look at this important aspect of our firms in five key areas:

1.?????our sales narrative,

2.?????our marketing messaging,

3.?????our leadership approach,

4.?????how we provide client or customer service,

5.?????and our day to day operations.

It challenges us to look at each of these key metrics and presents language that indicates what we might find in each area for both a profit driven firm and a purpose driven one. I will present their diagram on this in the next part of this article. ?

It should be quite clear by now that purpose is one of the requirements for success for any business or other enterprise. Unfortunately, it is easier to develop a Purpose Statement than it is to use it daily. The McKinsey article notes that about “70 percent of them fail to reach their stated goals, in large measure because they fail to change—and sometimes fail to even think of changing—the mindsets and behaviors of employees” when it comes to a firm’s purpose statement.

Purpose needs to be something well beyond the usual rote Mission Statement posted on the break room wall. It needs to be compelling, easy to understand and perhaps even emotional. There are as outlined in the November 2020 McKinsey research five major elements that should be addressed as you formulate or amend your factoring firms purpose statement:

1.????Portfolio strategy and products: the products and services your organization provides, and the “where to play” and “how to play” choices you make to best serve your customers. So, what products does your global factoring firm offer now, and are there some that should be dropped or added? What is our process for the introduction of a new product or service? Are we constantly looking at the pricing of our professional services and when appropriate revising the pricing to realign with our purpose (value over price)?

2.????People and culture: the talent—and the talent management—your firm deploys. How are we finding and seeking new employees that can help us better implement our strategies consistent with our purpose statement? How are we aligning our team with our purpose and helping them to develop personally? Do we purpose our KPIs and hold our employees and partners accountable to perform and exceed our targets for performance, growth, return and other key metrics? Do we have an incentive plan in place that aligns compensation and purpose?

3.????Process and systems: the operational processes you adapt to meet purpose-related targets; the ways you ensure that behavior up and down your value chain is in line with your purpose. Have we reviewed and changed our operations to meet purpose related targets? Does our IT function both understand and embrace these targets, or not? Do we also work with our suppliers and other partners to ensure that their behavior and performance helps support and achieve our purpose related goals and initiatives?

4.????Performance metrics: the target metrics and incentives you use to measure what you wish to achieve, how your firm is progressing, and the way you create and distribute incentives to make your organization’s purpose tangible. Are our global factoring performance targets and metrics established with purpose in mind? Do we currently allocate capital and other resources (human, intellectual, etc.) to help drive our organization to meet our purpose statement? Have we considered other avenues like M&A to help us accomplish key performance and target metrics???

5.????Engagement: how do we align our external positions and affiliations to be consistent with, and consistently deliver on, the purpose your company has defined. Are the external communications that we use consistent with our Mission and purpose statement? Have we critically looked at and revised our marketing materials to make sure it communicates clearly what our purpose is? Are we aligned with Trade Associations and other groups that help us accomplish our purpose? What do they provide us to do this?

In the next part of this article, we will review ideas on how to analyze key areas of our global factoring firm (including sales narrative, marketing messaging, leadership, customer/client service and operations) to determine if we are consistently focusing on purpose.??