In yet one more step towards gaining full acceptance as a valid and viable method of financing, the practice of receivables factoring was fully embraced by a bank in South Dakota this week. First Bank & Trust, of Madison, SD, has launched FirstLine Funding Group, a freight factoring entity which will operate as a division of the banks commercial lending group.
The division is being staffed by a team of seasoned freight factoring veterans and will service trucking firms and independent truckers nationwide. While the focus is esclusively on factoring freight invoices at the moment, the group will likely expand into servicing other industries in the future.
When a bank introduces a receivables factoring division, it is another clear indication that the mainstream financial sector is realizing that invoice factoring is a truly legitimate financial service and not just some shady financial scheme targeting poor credit risks and desperate business owners.
I am reminded of a similar relationship within another industry. I liken it to the way the healthcare industry has viewed massage therapy for a very long time. Massage has been practiced since ancient times, not just as a method of stress reduction but as a serious healing practice. But as modern medicine evolved, massage became just another one of those alternative medical practices that was offered in gyms, spas and chiropractic offices. It was the poor man’s physical therapy.
But nowadays, there is more acceptance of massage therapy as a valuable healing tool and more and more therapists are being employed in what is now termed medical massage. Many a doctor’s office will now have a therapist on staff and will prescribe their services a s part of a treatment program along with medications. Massage has moved out of the realm of healthcare voodoo and into the limelight of the medical community.
As evidenced in Madison, SD, receivables factoring is also edging into that type of limelight. I predict that more and more banks will begin offering factoring services. And banks do need all the help that they can get.
