Local businessman wants to turn away his clients

Sammamish businessman James Penny looks forward to the day when his clients no longer need the service he provides.

While most ventures thrive on the concept of a solid customer base, The Penny Philosophy strives to provide enough working capital to allow a new business to meet its obligations and expand without becoming dependent on an expensive line of credit from the bank.

“Banks are often reluctant to extend credit to a new business that does not have a proven track record of positive cash flow,” Penny explained. “If a company has the cash flow, it would not need a loan from a bank.”

Penny owns and operates The Interface Financial Group, a subsidiary of Pennywise Financial and Consulting LLC. Simply put, his firm buys outstanding invoices from new companies, which in turn allows them to meet payroll and plan for expansion.

“Customers expect, and even sometimes ‘demand’ terms on their purchases, usually 30 days,” said Penny. “Those 30 days can often extend to 45-60 days. The problem is then compounded by reluctance by many business owners to call and ask for payment.

“The bottom line is that a business can tie up valuable working capital while trying to be passive with new customers.”

Penny’s company offers to buy a selected number of invoices, from new companies to help streamline cash flow and eliminate the highs and lows many new businesses suffer during the first few years of operation.

The system works for Ben Griner, the president of Griner Landscape and Design in Queen Anne and Issaquah. The 1999 graduate from Washington State University had a grand vision for his landscape and maintenance business as just the first division of Griner Enterprises.

In less than two years, Griner’s landscape service had already expanded from Seattle to the Eastside, but the nature of the business has made his revenue seasonal and his cash flow unpredictable.

“I had enough work to add a fifth crew, but providing my customers with 30-60 days to pay an invoice put a dent in my plans for rapid expansion,” said Griner. “Without any changes in my relationship with my customers, James and Interface helped me to pay cash for my new truck and equip it with all the right tools to provide the type of service my customers have come to expect.”

Griner said Interface has allowed him to continue his commitment to accommodate the needs of his customers by providing the flexibility to work with individual situations.

“We cannot have customers that are simply satisfied,” said Griner. “They should be thrilled with every aspect of what we do. James helps me accomplish that in a manner that is seamless to my customers.”

Penny stressed that his service allows any business to operate with a Cash-on-Delivery (COD) mentality. Invoice discounting with Interface is not factoring, a term to describe companies that sign small businesses to long-term contracts by providing loans against the terms of outstanding invoices.

“This is not a loan,” Penny emphasized. “When I hand over a check in exchange for a company’s outstanding invoices, I am actually purchasing an asset in the form of accounts receivable. The money belongs to the person (or company) that provided the goods or service and they can use it for anything they choose. No strings.”

The amount an invoice is discounted depends on a number of aspects, including the terms of payment, the credibility of the customer and the client as well as the tangibility of the asset. Penny said his service should not be considered a dumping ground for slow paying customers.

Interface reserves the right to return invoices that remain unpaid or qualify for collection.

Interface has already provided $25,000 in working capital to a temporary nursing agency, more than $110,000 to a company that provides high-tech coatings for airplanes, and $140,000 to a manufacturing firm just to name a few.

In addition to buying invoices, Interface offers commission discounting to companies that are heavily dependent on keeping its sales force both well paid and happy.

According to Penny, Interface typically buys 50-65 percent of a company’s outstanding receivables. But there is no minimum and no long-term commitment. Once a business relationship has been established, Penny can usually have funding available for the business within 48 hours.

By providing enough cash to bridge the dips in a seasonal business and cash flow, Penny feels confident that his clients will be able to grow and expand as fast as manpower and demand will allow.

“I realize that if I do my job well, in a few years my best clients will no longer need me. They will be able to walk into any bank and demand a favorable line of credit,” Penny said with a smile. “I might be losing a client, but I am gaining another referral and a success story to inspire other new businesses ventures in our community.

For more information contact James Penny by email at jpenny@interfacefinancial.biz