September 2011 Archives

What is Factoring?

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Not many know what Factoring is and if they do... they usually think it is overly complicated and don't bother with it.

Let me simplify this.

Basically what you are doing is paying a discount so you can get money today instead of waiting.

Sometimes this makes sense and sometimes it doesn't.

As we all know in business it comes down to CASH FLOW.

And if a lack of CASH will lose you a SALE you may want to entertain this OPTION.

Allow me to illustrate.

Let's say you are a manufacturer or a distributor and you receive a PO from a credit worthy entity who will pay you 30 days after install which is fine HOWEVER you don't have the CASH to fill the order.

FACTORING can get you the CASH so you can fill the order.

Or you have filled the order, invoiced your credit worthy customer and it is going to be 30 days before they pay you or longer. Well you really can't wait this long to get paid as it disrupts your CASH FLOW. Factoring can buy the invoice from you for a small discount. Now you don't get all your money but you will get most of it.

Again it all comes down to CASH FLOW and the TIME VALUE OF MONEY.



Factoring can be a solution and this is the goal of Allstate Capital... to provide our clients financial options. There is no perfect financial tool. What is perfect is having a partner like Allstate Capital to provide you tools so when any given situation arises you are prepared and don't miss a SALE.

Please call me with any questions on factoring or any of our financial solutions

John Papadopoulos

800.949.0018 X 202


The National Labor Relations Board, NLRB, is a United States federal agency that enforces the right of employees to organize and bargain collectively.

The NLRB investigates charges filed by employees and applicants against employers and unions. If they find cause, they also try the "Unfair labor practices". This is more advantageous than most EEO proceedings which are often tried privately and have greater costs for the employee/applicant.

There are regional NLRB offices throughout the nation. There are offices in Washington, DC and Baltimore locally.

The laws enforced by the NLRB involve protecting the rights of employees to organize and the right to "protected, concerted activity".

Protected concerted activity means that more than one employee act together to discuss or protest or bargain for employment wages and other terms and conditions or employment. It applies even if there are no unions or union organizing activities are involved.

"Protected concerted activity" can be a major unknown liability for small employers.


Recently the NLRB issued a final rule requiring all employers who come within the NLRB jurisdiction to post notices like the unemployment and discrimination notices in the workplace notifying employees of their rights under federal law.

While this Alert is not a substitute for legal advice, most employers will meet the revenue requirements for posting of notices.

For example service firms with at least $250,000 annually and retail stores with at least $500,000 and who are "in interstate commerce" are subject to the posting requirement. The notice must be posted by November 14, 2011.

Posters can be downloaded from the website at or ordered from the NLRB offices and will be available November 1, 2011. If you have an intranet, it must be also included in the intranet.

Failure to post the notice may subject an employer to an unfair labor practice charge by the NLRB, and in the appropriate case, toll the six month statute of limitations for an employee or applicant to file a complaint with the NLRB.

A copy of what the poster will look like with an with an overview of the rights of the employees is attached to this Alert, NLRB Notice of Employee Rights



Facebook, Twitter You Tube, blogging and many other websites provide all types of ways for individuals to communicate electronically.

While most outside of work activity is not actionable, if employees use these websites/social media to discuss working conditions, those discussions may be protected under the National Labor Relations Act as organizing or bargaining collectively.

Please contact our office if you are drafting policies or providing training that may involve social media or you have situations with employee issues and social media so that we may advise you to insure that you are in compliance with the law. Additional Information

This alert is not a substitute for legal counsel and is not intended to provide legal advise, services or a legal opinion. If you need help in developing policies which will enable you to be protected by the new federal provisions, please contact Rebecca N. Strandberg at 240-247-0675.Firm Email: [email protected]

SBA Liar Loans

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We all know about the residential liar loans - no income and no asset.  Not surprisingly these loans took on the nature of a gamble, benefitting only the originators who took out their fees early on.  

Are there commercial liar loans - a loan based on projections of income that make no commercial sense?  Is the practice widespread?  If so, what is enabling it and how can we stop it?

In a very good three part investigation on SBA loan fraud, (the first part of the SBA loan fraud is here, and the second story on SBA liar loans is here, and the third part is forthcoming) Don Sniegowski, writes about the SBA liar loans as follows:

A major franchise lender, Banco Popular, has been rebuked by the Small Business Administration for participating in lending chicanery.

The censure has both the lending and franchise industries concerned that the investigation may spread beyond the Puerto Rico-based bank.


Bob Coleman, publisher of the Coleman Report for lenders and a consultant to small business bankers, thinks that the situation isn't limited to just Banco Popular.

Most lenders thought future projections were unimportant. "That was pretty much the whole industry that did it that way," he declares.

He thinks future financial estimates for a business were never a high priority for bankers in screening the viability of an SBA-guaranteed loan.

"Projections were seventeenth on the list," he emphasizes.

While one or two quotes from SBA authorities is not evidence of systemic failure, my personal view is that there is a good possibility of systemic SBA loan fraud.  (I am not complaining that projections are bad, but rather that the mechanisms to rein in or eliminate bad projections are being avoided.)

Here are my reasons why:

1. No bank would lend against any business plan that could be constructed only out from the information in the franchisor's the item 19's claim and whatever local operational information is also available. (There is, by definition, no local information for a new store.) Remember by FTC and State Policy all the earnings information has to be in the Item 19 statement, except for local store information.

2.  If an SBA loan is made then, there has to be "enhanced" earnings report given to the franchisee's bank by the franchisor. There are a number of consultants who will prepare this information, and they appear to be in a difficult conflict of interest being both the franchisor and franchisee's agent.  That conflict of interest is unbearable if the consultant gives the enhanced earnings report directly to the bank with minimal franchisee involvement, oversight or review.

3. The current game, though, is that these enhanced earnings reports will be substantially prepared in advance or before closing, but only given to the franchisee in support of their loan application after the franchisee has signed an agreement.  

In that agreement, the franchisee agrees that the franchisor did not give them any more earnings information than appeared in the item 19, and if the franchisors did so, then franchisee agrees not to rely upon it - despite the enhanced earnings report being prepared precisely so that the franchisee could get a SBA loan!

We could well be slipping down the slope into the worst feature of Russian culture.

"You lie, your listeners know this and you know that they don't believe you...and they also know that you know they don't believe you. Everybody knows everything. The very lie no longer aspires to deceive anyone. From being a means of fooling people it has for some reason turned into an everyday way of life, a customary and obligatory rule for living." 

(Oddly, the current state regulators and state AG's find nothing in this practice to investigate despite all the predicate elements of a RICO fraud being in place.)

What is silly and pointless about this game, apparent from bringing a number of people uncomfortably close to a RICO claim, is that it is all a waste of time.

The franchisor should simply include the enhanced earnings report in the item 19 and avoid the entire problem - unless of course the expanded item 19 could not withstand scrutiny, and has to be rushed through in a pro forma manner.

From a game theoretic or strategic point of view, franchisors who do not include in the item 19 these enhanced earnings reports are signalling that these reports are inherently unreliable if given at a future date, after the closing.

The point here is simple.  After the closing, there is no legal liability to be found in the disclosure document for the information given after the sale.  

It is in the franchisor's strategic interest at that point to be "over enthusiastic" about the quality of future earnings.  It will be difficult right after closing for the franchisee to call the franchisor a liar or worse.  Bad projections will get accepted by both parties, which is bad for both of them - although much worse for the franchisee.

But the strategic franchisee who knows this can prepare a number of pre-closing responses to avoid being trapped.  Waiting until after closing is not a good option, however.

The takeaway for a prospective franchisee is this: if the bank would not lend against a business plan constructed only from the Item 19 information, then any further information from the franchisor is inherently unreliable and dangerous.

The IAFD cannot give you better leaders, but we can provide your future leaders better negotiation training in and mediation with our partnership with Mediation Works Inc.

Is Your Restaurant Management Staff Social Media Proactive or Reactive? 

Delicately handling customer service issues has always been a skill restaurant managers have had to develop to be effective in their roles. 

Comforting complainers and fixing flaws in guests’ orders put all of the skills a manager has to the test. Successful managers are the ones who have a good mixture of quick thinking, empathy and a personal touch. 

But what happens when the world of restaurant customer service goes digitized? Will you have a manager who is savvy enough to know how the world is changing online and that even a quiet dining room could be booming with customer complaints? 

Restaurants are slowly but surely getting into the social media game, some using it as the main thrust of their marketing campaigns, while others are still in the dabbling phase. But no matter what the philosophy of your business is, the managers that you hire should have their eyes on the future and at least have some understanding the role the Internet plays in customer service. 

No matter how engaged your restaurant is in the social web, don’t hire someone who doesn’t understand anything about the online world of guest service. 

A new restaurant manager, especially one who is going to deal with customers on the front line and be able to satisfy the dissatisfied, has to bring some knowledge to the table about the use of social media by consumers. 

Customers who are highly engaged in the social web are now using their phones as the No. 1 way to voice complaints about customer service. They may not say a peep about it out loud to a waiter, host or manager, but they will let their friends and followers know. And for highly influential users in small and mid-sized towns, that could blow a hole in your business that you never saw coming. 

When interviewing prospective managers, ask them what they know about not just Twitter and Facebook, but review sites like Yelp!, check-in sites like FourSquare as well as YouTube, LinkedIn and others. What you are looking for is not so much expertise, but that they have an understanding of how the web is impacting the business. If they shrug their shoulders or say that they are going to just ignore it, it could be a sign of their level of concern for seeking out and correcting any problems that their diners have. 

What they should talk about is listening. The social web is best for that, even you if your business’ level of engagement is not very active. You and your managers should be keeping their ears out for any issues that arise, whether that is from someone sending their food back to the kitchen or someone Tweeting a message about not having any napkins. 

This has been a guest post by  Brian Bruce.  Brian Bruce is Vice President and Executive Restaurant Recruiter with Premier Solutions in Oklahoma City. Author of articles published online and in industry trade publications, he has been cited in multiple news stories as an authority in Executive Restaurant Recruiting. He can be reached at 877-948-4001, by email at [email protected] , or on his blog at . 

I was reading the Declaration of Independents, a really fun read, and they mentioned the autobiography of Benjamin Franklin. I had not read it, but thought maybe I should be familar with it, so I went to the computer and learned that it was available as a free download for Kindle, The Autobiography of Benjamin Franklin.

Sixty second later I had my own copy of Franklin's autobiography, for free, and I reflected on how GDP was not increased, even though my own satisfaction was well increased.

The book is engaging and relevant for our times.

Ben Franklin.jpg

'There are croakers in every country, always boding its ruin. Such a one then lived in Philadelphia; a person of note, an elderly man, with a wise look and a very grave manner of speaking; his name was Samuel Mickle.

This gentleman, a stranger to me, stopt one day at my door, and asked me if I was the young man who had lately opened a new printing-house. Being answered in the affirmative, he said he was sorry for me, because it was an expensive undertaking, and the expense would be lost; for Philadelphia was a sinking place, the people already half-bankrupts, or near being so; all appearances to the contrary, such as new buildings and the rise of rents, being to his certain knowledge fallacious; for they were, in fact, among the things that would soon ruin us.

And he gave me such a detail of misfortunes now existing, or that were soon to exist, that he left me half melancholy.

Had I known him before I engaged in this business, probably I never should have done it.

This man continued to live in this decaying place, and to declaim in the same strain, refusing for many years to buy a house there, because all was going to destruction; and at last I had the pleasure of seeing him give five times as much for one as he might have bought it for when he first began his croaking."

Mr. Mickle's descendants continue to be as pessimisic as he.

But, it is people of Franklin's energy, honesty and intellect that continue to be successful. 


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This page is an archive of entries from September 2011 listed from newest to oldest.

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