It’s not often that I get bested in an argument, at least to the extent that I’m willing to admit it, but it did just happen this last week over on AVC, one of my favorite technology blogs.

In a post about business funding, the author, venture capitalist Fred Wilson, and a commenter, Carl J. Mistlebauer, vented against a financing alternative known as factoring, which is a service that my company, TempWorks, provides with our payroll funding division.

Wilson referred to companies that use factoring as "shaky," which, coming from a venture capitalist whose success is predicated upon getting one big winner while putting a bullet in the head of 10 others, is more than a little odd.

I shot back, “Fred, factoring is not just for the 'shaky'.  We factor some 35 high-growth temporary staffing companies, providing them software, career sites, marketing, and payroll processing to fuel growth.
Our clients are winning because they focus on sales and recruitment instead of all the bookkeeping and cash flow worries that keep their competitors at bay.”

Separately, Mistlebauer followed up Wilson’s post with this comment:  “Sadly, factoring once was a smart business decision, but nowadays, even the big names in factoring, such as CIT, have become shady operations.”



Oh, the indignation. So not only are my clients "shaky," but now this: I’m "shady." Nothing gets the hair on my red neck to stand up faster than somebody being wrong on the Internet.

I fired back:


I didn’t realize who I was messing with. It turns out that Mistlebauer wasn’t some snarky commenter. He keeps a great blog and sports a financing pedigree longer than a fiber optic cable. And he replied back with a lot of great information about how murky things get when a factor gets involved with a major retailer like Walmart.

It was quite a lesson that I’ll try to share in another post since this one is getting so long.  But I’ll share here one zinger he offered:

Yes, and there used to be banks that would loan businesses money!  In fact for 25 years I had a line of credit with my bank, never really used it but it was there.  Then in 2008 they pulled my line and when I went back to re establish the line they wanted 100% collateral as security, and not my business' receivables or inventory but my personal home.  I have over 200 retail customers who have been customers for a decade or so, and over half of them had their revolving credit lines pulled.


A welcome insight, Carl.  There’s a reason we remember so well Shakespeare’s missive, “Neither a borrower nor a lender be."  Financing is a tough business to do right whether you’re a factor or a bank.

Tags: News, Fred Wilson, AVC, Payroll Funding, Carl Mistlebauer, Staffing industry payroll funding, TempWorks payroll funding