Latest / The Inspired Stories Podcast / The Factoring Revolution: Chad Capooth's Blueprint for Trucking Cash Flow

Transcript

The Factoring Revolution: Chad Capooth's Blueprint for Trucking Cash Flow · The Inspired Stories Podcast

• 0:04
  Welcome to another edition of the Inspired Stories podcast
• 0:08
  where leaders share their experiences so we can learn from
• 0:11
  their successes and be inspired by how they've overcome
• 0:14
  adversity. My name is Anthony Cotespotti
• 0:16
  and today's guest is Chad Kaput, Vice President of Operations at
• 0:21
  Denim. They are an all in One Financial
• 0:24
  platform specializing in flexible factoring solutions
• 0:28
  that help modern freight brokers, trucking companies and
• 0:31
  three PLS manage working capital, carrier payments and
• 0:35
  back office processes. With significant milestones
• 0:39
  including processing over $2 billion in payments since its
• 0:43
  founding in 2019, Denim has quickly become a trusted name in
• 0:48
  the fintech industry. As Vice President of Operations,
• 0:51
  Chad focuses on driving innovation, launching new
• 0:55
  financial products, and collaborating with leadership on
• 0:58
  strategic initiatives. His background spans marketing,
• 1:01
  business development, and operations management, making
• 1:05
  him an expert in growing businesses and creating
• 1:08
  efficient systems. Under his guidance, Denim has
• 1:11
  continued to scale its services while keeping customer
• 1:14
  satisfaction at the core. Today, we'll explore his
• 1:17
  journey, discuss key lessons learned, and uncover how he's
• 1:21
  helped denim embrace challenges and opportunities along the way.
• 1:26
  Now before we get into all that good stuff, today's episode is
• 1:28
  brought to you by my company, Add Back Benefits Agency, where
• 1:32
  we offer very specific and unique employee benefits that
• 1:35
  are both great for your team and fiscally optimized for your
• 1:38
  bottom line. One recent client was able to
• 1:40
  add over $900 per employee per year in extra cash flow by
• 1:45
  implementing one of our innovative programs.
• 1:47
  Results vary for each company and some organizations may not
• 1:50
  be eligible. To find out if your company
• 1:52
  qualifies, contact us today at AD back benefits.com.
• 1:56
  All right, back to our guest today, the VP of Operations of
• 1:59
  Denim, Chad Kapooth. I appreciate you making the time
• 2:02
  to Share your story today. Yeah.
• 2:04
  Hey, Anthony, I appreciate you having me on.
• 2:06
  Excited to share it and tell everybody a little bit about
• 2:09
  factoring for those who don't know what it is.
• 2:10
  Actually, let's start there. It's a great place to start is
• 2:13
  what exactly is factoring. Yeah, this is a question I get
• 2:17
  asked a lot. It's an elevator speech.
• 2:19
  I've practiced quite a few times as there's there's kind of
• 2:22
  multiple ways to explain it. The easiest way to explain
• 2:24
  factoring is, is we are purchasing another company that
• 2:27
  accounts receivable to discount. So we are giving them 9590
• 2:31
  eight, 99% of their AR value. We wait for their debtor to pay
• 2:36
  so they don't have to wait. So we give them that cash flow
• 2:38
  day one versus waiting net 30, net 60, net 90, so on and so on.
• 2:43
  So that's the simplest, it's buying AR at a discount.
• 2:46
  And so then you take on the risk of potentially not being able to
• 2:50
  collect on that receivable, is that right?
• 2:52
  Correct. We take on, we take on the risk
• 2:54
  and the waiting. We also do things like the
• 2:56
  billing. We do the payment application
• 2:58
  when the payment comes in and so we do the collection calls if
• 3:02
  needed. So we take on several different
• 3:04
  services. But at the end of the day,
• 3:05
  you're exactly right. We write the capital we take on
• 3:08
  the risk for your debtor to your customer to pay.
• 3:12
  And this isn't exactly my area of expertise, but if you're
• 3:15
  talking about taking, you know, 1-2 sort of 5% as a fee, this
• 3:19
  sounds like it's much cheaper than, I don't know, kind of
• 3:22
  taking on traditional forms of debt or maybe even selling up
• 3:25
  some equity in order to be able to sort of bridge that gap or to
• 3:28
  fund growth. Yeah, I, I think it's a great
• 3:31
  product if, if you're not looking to take on debt to, to
• 3:33
  kind of raise capital for your company, this is a way to do it.
• 3:36
  Many other countries have this as a mainstream product.
• 3:39
  It's not been a product that's been widely known and popularity
• 3:43
  in the US, but that's growing and changing quickly is more
• 3:45
  technology and creative for coming into space to kind of
• 3:50
  renovate it and bring it up to speed with the rest of the
• 3:52
  industries. But it's a fantastic product.
• 3:56
  It provides that working capital day one.
• 3:58
  And usually we can do it within an hour of you submitting an
• 4:01
  invoice to us, we can get you that capital.
• 4:03
  So it's it's a it's a great tool.
• 4:05
  I think you mentioned the cost. I think if you look back to him
• 4:09
  15 years ago, the cost wasn't really competitive with banks.
• 4:13
  But because so much technology has come in, because so many
• 4:16
  other people have entered the space, the competition has
• 4:19
  gotten stiff. And so now rates are very low.
• 4:21
  And so if you can go grab those one or two percent rates, yeah,
• 4:24
  you're talking about 12% money. But it's always working capital,
• 4:28
  right? There's, there's not like a, a
• 4:29
  drawdown. You don't have a certain amount
• 4:31
  you can draw from the bank. Like if the bank gives you
• 4:33
  $100,000 limit, that's what you can draw down.
• 4:36
  Then you have to pay it back working capital factoring.
• 4:39
  Every time you get an invoice, you can sell it to manufacturing
• 4:41
  company. So it's kind of this, it kind of
• 4:43
  grows with you type of product and then it comes at a really
• 4:45
  good price. And so when a client signs up
• 4:49
  with you, are they just selling you some of their receivables or
• 4:52
  is this they're signing up to do it all with you?
• 4:55
  Yeah. For denim, we, we allow you to
• 4:57
  pick and choose the receivables or the customers you want to
• 5:00
  factor. Other factoring companies may
• 5:02
  ask you to factor everything. You may negotiate a rate that's
• 5:05
  based on the volume you're going to submit.
• 5:06
  So that might kind of say you need how much you need to
• 5:08
  submit. But at dinner, we kind of
• 5:10
  believe submit the debtors or the client, what I call
• 5:12
  customers, what we call debtors to that you want to factor.
• 5:17
  And then if you have ones that pay in really quick terms, you
• 5:19
  don't have to submit those to us.
• 5:21
  And likewise, if you want to submit debtors to us, but don't
• 5:24
  take the financing, we'll still do the collections and the
• 5:26
  payment application for you. So we offer kind of a lot of
• 5:29
  flexibility and we think that's kind of one of the separators
• 5:32
  for denim as compared to the rest of the adopting industries.
• 5:35
  So you mentioned that factoring has not been as popular here in
• 5:39
  the US as some other parts of the world up until now.
• 5:41
  Why do you think that's been correct, Chad?
• 5:44
  Yeah, I, I think, you know, if you look at the kind of the US
• 5:49
  and how we've done business and how we've raised capital with
• 5:51
  companies, I mean that that had been a very powerful tool for
• 5:54
  U.S. companies. So that kind of overshadowed
• 5:56
  everything and banks have a hard time getting comfortable with
• 5:59
  factoring. It's a lot more manual process.
• 6:02
  When you talk about purchasing an invoice, we are buying that
• 6:05
  invoice from you. And so from the client's
• 6:07
  perspective, they just send it to us.
• 6:09
  From a factory's perspective, we've got to make sure the
• 6:11
  paperwork's there. We've got to make sure that we
• 6:13
  are OK with taking on the risk with the with the customers
• 6:15
  submit. Then we've got to build out,
• 6:17
  collect it and apply payments. So there's a lot of overhead
• 6:20
  work that goes into it. So that kind of kept a lot of
• 6:22
  banks out of the industry. I think the second piece is
• 6:26
  again, looking way back in the early, late 90s, early 2000s,
• 6:30
  there was a lot of factoring companies out there that were
• 6:34
  not always above board on how they did things.
• 6:36
  And so they would charge exorbitant fees, They would hold
• 6:39
  clients in terms that were just not reasonable.
• 6:42
  And so this is this created a lot of bad stigma for factoring,
• 6:45
  but if it's grown in popularity, a lot of people in the market,
• 6:49
  they want to do it the right way now.
• 6:50
  And so that's what's happened is it's it's earned or acceptable.
• 6:54
  These are acceptable. And so it's really kind of
• 6:56
  starting to blossom and. I understand your first job out
• 7:00
  of college National Bankers Trust was kind of your
• 7:04
  introduction to the whole factoring space.
• 7:06
  How did that come about? Yeah, it's it's it's a funny
• 7:10
  story. So I graduated from University
• 7:12
  of Tennessee in Knoxville 2009. That's kind of right when the
• 7:15
  economy took a took a turn for the worst housing market wasn't
• 7:19
  doing great and so jobs weren't out there.
• 7:23
  There weren't a ton of them. And but I end up going on a new
• 7:26
  sea fishing trip with a friend and on one of the guest had
• 7:30
  joined on that deep sea fishing trip ran a factoring company.
• 7:32
  His name was Mark Bergen and he was one of the partners at
• 7:35
  National Baker's Trust. And I was like, well, I'm
• 7:37
  looking for a job. He's like, well, do you want a
• 7:39
  factoring of the not a clue? And he said, well, you know, we
• 7:42
  need collectors. And I said, great, I'll take it.
• 7:44
  It's a Memphis home city. Perfect.
• 7:46
  Let's do it. So I kind of started there in
• 7:49
  collections, probably took me at least six months to really get
• 7:53
  an understanding on how factoring worked all the, all
• 7:55
  the moving parts of it. And the more I kind of started
• 7:58
  to, to grow with that company and the more I started to learn,
• 8:00
  I just, I fell in love with it. It's it's an absolutely
• 8:04
  fascinating product and there's untold potential that you can
• 8:09
  kind of branch out into with factoring.
• 8:10
  So that's what kind of got me started and I've pretty much
• 8:13
  been in factoring some form or fashion since then.
• 8:17
  And I still think like, even though the bar has been raised
• 8:20
  and, and, and we're seeing a ton of growth in factoring, there's
• 8:24
  still tons of potential there. And I, I think you're starting
• 8:26
  to see why so many people, especially technology companies,
• 8:29
  companies like denim coming in to disrupt the space because the
• 8:31
  potential's there and the, the catalyst for that is technology.
• 8:36
  So you worked at a company called Transvac Capital for a
• 8:41
  little while and I understand you and the your boss there
• 8:45
  actually went off and started your own company in the factory
• 8:48
  space. Tell me about that.
• 8:49
  Yeah, I went up to Salt Lake City after National Makers
• 8:52
  Trust. They were also a factoring
• 8:53
  company, primarily specialized in factoring freight
• 8:56
  transportation, trucking companies.
• 8:59
  And I met a gentleman named Whitley there.
• 9:01
  He was the owner and president of the company and just really
• 9:05
  got along with really well, helped him run the operation of
• 9:08
  the department, gained some efficiency increases.
• 9:10
  In fact, we, we got to a point where it was good enough for him
• 9:14
  to be able to sell the company and something he'd been looking
• 9:16
  to do. So we were able to, I was able
• 9:18
  to help him facilitate that sell.
• 9:20
  And at that point it was being sold to a company I think out of
• 9:23
  one of the Carolinas. And so I wasn't quite sure what
• 9:26
  I wanted to do as any kind of time you go through that
• 9:28
  acquisition, there's a lot of questions.
• 9:30
  And he kind of talked to me and said, I have a crazy idea.
• 9:33
  You know, I can't go into straight factoring, but I've got
• 9:36
  a concept of taking, what is the concept of factoring applied to
• 9:40
  e-commerce sellers, people that sell on Amazon, Etsy, Walmart,
• 9:44
  all these online marketplaces. And we talked about it and it
• 9:48
  sounded like a crazy idea, but the more we talked about it, we,
• 9:51
  we figured out some ways that we could through technology make it
• 9:55
  happen. And so we entered that space and
• 9:57
  it was a really, really cool experience.
• 9:59
  And we, we saw a lot of growth there when especially when COVID
• 10:03
  hit. And it was, it was really
• 10:05
  awesome. So I really appreciated him
• 10:07
  giving that opportunity and learned a lot from it.
• 10:09
  But yeah, it was still kind of crazy looking back, like we, we,
• 10:12
  we took what's basically this financing product and gave it to
• 10:16
  e-commerce sellers, something that nobody has really been
• 10:18
  doing up to that point because it's such a high risk.
• 10:22
  Because if you think about these our commerce sellers, they don't
• 10:24
  have real estate, they don't have commercial buildings.
• 10:28
  You know, they're basically selling product out of their
• 10:30
  garage or maybe they have a storage space.
• 10:32
  And so it was. It was definitely a learning
• 10:34
  curve and definitely great experience.
• 10:37
  Was that something that you felt like had long term legs to it or
• 10:41
  were you sort of finding cracks in the foundation because of
• 10:44
  some of the lack of collateral issues you mentioned?
• 10:47
  Yeah, I think there's a lot of legs to it there.
• 10:49
  I know there's still a few companies out there that are
• 10:51
  there. I think one of the difficulties
• 10:53
  that we ran into is because there's potential there,
• 10:57
  companies like Amazon and Shopify moved into that space.
• 11:02
  I'm not 100% sure Amazon still have it fairly positive shop
• 11:06
  price a lot, but they have their own lending arms to their own
• 11:09
  sellers now because it's it was such a a lucrative, profitable
• 11:12
  area and it benefits them, right.
• 11:14
  If they keep their sellers in business and their sellers can
• 11:16
  take more inventory. That's more stuff for me and you
• 11:19
  to go buy on Amazon. So it's it's definitely still
• 11:22
  got a ton and ton of potential. Just, you know, as a, you know,
• 11:27
  as I, you mentioned my first job, MBTI kind of worked up
• 11:30
  through the risk ladder there kind of running the portfolios.
• 11:33
  So as a risk person, it was always a little bit difficult
• 11:35
  for me to get comfortable with the risk overall because of the,
• 11:37
  the things you mentioned. But I still think there's tons
• 11:40
  of potential there. And again, like many industries,
• 11:43
  technology is kind of the unlock.
• 11:45
  Yeah, so how did the opportunity to join Denim come about?
• 11:50
  I was still kind of running transacted or sorry, the
• 11:53
  e-commerce dollar financing at the time, but I was really kind
• 11:57
  of wanting to get back into the factoring, more traditional
• 12:01
  factoring. It's just, it's where my
• 12:03
  knowledge was, it's where my expertise was.
• 12:05
  And so I kind of started just searching LinkedIn and they're
• 12:08
  this company called Denim and they had a post up there.
• 12:11
  And the more I read about it, you know, they positioned
• 12:13
  themselves with a tech platform that's in factoring.
• 12:16
  And so I felt like this was always a big missing piece for,
• 12:19
  for, for factoring. I mean, I think about some of
• 12:22
  the competitors that went up against the years, we've all
• 12:24
  kind of did the same way. I mean we had fax machines,
• 12:27
  emails, print off documents, scanner back in, but no one was
• 12:30
  really making this headway with technology.
• 12:33
  And I think there was tons of room for it.
• 12:35
  And some were right with OCR technologies scanning documents,
• 12:38
  but it just, it wasn't there. But when I looked at denim, they
• 12:41
  were doing it and they were doing it with pure technology
• 12:44
  play. And I, I thought, here's a
• 12:47
  company that wants to disrupt the industry.
• 12:49
  Here's a company that that's going to disrupt the industry.
• 12:51
  And so that was so enticing. So I applied and happened to be
• 12:55
  a good match and went through the interview process.
• 12:57
  And the more I talked to the leaders, B and Sean Vo, the more
• 13:02
  I realized just how truly vested they were with technology.
• 13:06
  And so that's, that was kind of a nail on the coffin for me.
• 13:09
  I was like, I've got to go here. This is Chad.
• 13:11
  You have mentioned the word technology multiple times here
• 13:14
  in our conversation. Why is technology such an
• 13:17
  important piece of all of this? Yeah, I mean, first of all, I
• 13:21
  love technology. So you know, I always bring it
• 13:24
  up. I try to be on the kind of the
• 13:26
  front runner of the edge of new technology.
• 13:28
  But for factoring especially, I talked about it earlier.
• 13:30
  I mean, when my first stop we got paperwork via fax and
• 13:34
  e-mail. So literally fax machines
• 13:35
  printing off paperwork. We would then take that
• 13:38
  paperwork, someone had to mainly review it manually scan it in,
• 13:42
  then we'd have to manually make approval rate, manually send the
• 13:44
  money out. And so, you know, I think at one
• 13:47
  company, I counted 12 manual touches to fund an invoice.
• 13:50
  And so your overhead was always going to be tied to your growth.
• 13:53
  So if you brought in 10 more clients, you have to hire a new
• 13:56
  client service Rep, do you have to hire a new processor?
• 13:58
  So it just, it wasn't scalable, right?
• 14:01
  And so it was hard to make that money cheaper because it was so
• 14:05
  much overhead involved. And so the more we could
• 14:09
  introduce and the more we could inject technology, the more we
• 14:13
  could kind of curb that that op X upward trend and start to kind
• 14:17
  of really lower op X lower that spend and get it to a point
• 14:21
  where we could bring on $15 million more of AR, but only
• 14:24
  maybe have to hire one person to take it.
• 14:27
  And I will say that has become so much more evident.
• 14:30
  So with the injection of AI, right, I think there's a ton you
• 14:33
  can do there. But denim has done an incredibly
• 14:35
  well, you know, we most companies our size would be
• 14:39
  double our, our employees. And because we've been able to
• 14:42
  to leverage all the tools that have been built for us, we can
• 14:45
  handle a lot more per employee than than traditional factoring.
• 14:49
  Why focus specifically on the freight industry?
• 14:53
  Transportation. Yeah.
• 14:55
  I mean, I think the freight industry was kind of always been
• 14:57
  a big target for factoring. I think the, the way that the,
• 15:01
  the bills and the payments of those bills kind of progress
• 15:07
  makes it perfect. So in factoring, you typically
• 15:10
  have a set of standard paperwork.
• 15:12
  You have the carrier invoice, what we call the bill of lading
• 15:16
  and then the rate confirmation. So it's like 3 documents that
• 15:18
  are, while every company has their own different version of
• 15:20
  these documents are all kind of standard.
• 15:22
  And then it's extremely common for those customers, for our
• 15:26
  clients to pay anywhere from 30 to 90 days, sometimes 120 days.
• 15:30
  And trucking companies especially, they have a lot of
• 15:34
  upfront expenses, fuel, tires, insurance.
• 15:37
  And so they can't wait these 3690 days.
• 15:40
  And so you get that classic crunch, that capital crunch
• 15:43
  where you've done the business, you've done your service, but
• 15:46
  now you're waiting on your debtor to pay.
• 15:48
  And until that debtor pays, you're kind of out of that
• 15:50
  capital. So it's, it's really just all
• 15:53
  the ingredients are there to make the most sense.
• 15:55
  And so that's, I think that's why transportation's really been
• 15:58
  popular within factoring. But don't get it wrong, there's
• 16:01
  plenty of industries, you know, manufacturing, healthcare,
• 16:03
  construction, there's a bunch of industries that have factoring
• 16:06
  companies that specialize in them.
• 16:08
  But I think transportation's always been kind of seen as the
• 16:11
  the great stepping stone that that kind of entry into it.
• 16:16
  So I'm trying to wrap my head around some of the technology,
• 16:20
  excuse me, that you guys have. So are you doing like a direct
• 16:23
  integration, you know, right, with their billing software?
• 16:27
  Are you still kind of getting some like PDFs or like some
• 16:31
  manual manually like printed out, you know, bills sent over
• 16:35
  that you guys then have to either use some manual or some
• 16:38
  tech process to get into your system?
• 16:41
  Yeah, we we are definitely integrated a lot of what the
• 16:44
  freight brokers, even if basically called TMS
• 16:47
  transportation management systems or software.
• 16:50
  And there's some big ones out there like McLeod and you know,
• 16:53
  Ajax, there's a bunch of out there that that do these TM s s
• 16:57
  which kind of help arrange the fray, keep everything organized.
• 17:00
  And so we integrated with with a lot of these TMS systems.
• 17:04
  So that allowed for the back end seamless transition for our
• 17:06
  client and us. So all the paperwork, all the
• 17:09
  documentation comes through with a click of a button from our
• 17:12
  client. So we don't see as many manual
• 17:15
  jobs submitted through Denim, but we also built the Porter out
• 17:17
  that makes it nice and easy for them to upload their documents.
• 17:20
  Our system goes in and leverages AI to read through the documents
• 17:24
  to identify what every line is and that document or if there's
• 17:27
  potential issues, right? Like if there's page 2-3 and
• 17:31
  six, but no page 5. REI said, oh, we're missing a
• 17:34
  page and going to let the client know, hey, you just forgot this
• 17:37
  page really quickly. So that that allows us with a
• 17:39
  lot of kind of seamless integrations.
• 17:41
  We have connections into accounting softwares.
• 17:43
  We have our own integrated Ledger report, which helps
• 17:46
  clients quickly import into their accounting software.
• 17:49
  The transactions have been done. We've leveraged technology to
• 17:52
  allow what we call our real time payments, which is our express
• 17:56
  factoring, which we can literally get funds into your
• 17:58
  account within minutes of approval.
• 18:01
  So it's faster than a wire. And so these are just some of
• 18:04
  the technologies that we're using back end to kind of make
• 18:07
  this. Our goal is to be seamless,
• 18:09
  right? Like we don't want our clients
• 18:10
  having to spend hours with us a day to get the jobs funded.
• 18:13
  We want them to spend seconds. And so that's really what we've
• 18:17
  been able to accomplish. So it's, it's been awesome to
• 18:20
  see it's, I think there's plenty of room that we can still
• 18:23
  improve on and we've got some innovations on our product road
• 18:26
  map that I think are going to make even a better experience
• 18:28
  for our clients and try to roll them out.
• 18:31
  And one thing that's been really cool working at denim is when we
• 18:36
  say we can knock something out in a month, they knock it out in
• 18:38
  a month. And from my experience of
• 18:40
  previous stops, it's usually delayed a couple of months,
• 18:42
  right? It's, it's delayed the way it
• 18:43
  takes time. But man, we, we, this
• 18:46
  engineering product can they can, they can knock things out
• 18:49
  right and fast. And every time I say I'm
• 18:51
  doubting, I'm proven wrong. So it's it's been humbling, too.
• 18:55
  That's awesome. Yeah.
• 18:56
  Sort of the classic technology timeline is take whatever they
• 19:01
  tell you and multiply it by two or three.
• 19:04
  It sounds like you guys have, you've got a great team in place
• 19:06
  that's been able to overcome that trend.
• 19:08
  So denim's been around for just a few years, but you've already
• 19:14
  processed over 2 billion. That's billion with AB, with AB
• 19:18
  in payments. Aside from the technology, which
• 19:22
  is obviously hugely important in that, what else has made that
• 19:26
  kind of growth possible? Yeah.
• 19:29
  I mean, actual technology, it's people.
• 19:31
  And I think those are pretty close head to head, right?
• 19:35
  I mean, you could build all the technology you want, but if you
• 19:37
  don't have the people behind it to help facilitate it or run it,
• 19:39
  you're going to really struggle. So we built a culture at Denim
• 19:42
  that like we really, really build this kind of teamwork
• 19:46
  culture, innovation culture. But we want our employees to be
• 19:49
  builders, right? And so we have built our
• 19:52
  software on a foundation that allows the, you know, employee
• 19:55
  all the way from a client service Rep all the way to a
• 19:58
  self person to marketing to be able to build within our
• 20:02
  software and innovate. And so what's really, really
• 20:04
  cool is to see the ideas come to life for some of these employees
• 20:08
  who have literally started from scratch and brought it into
• 20:11
  production to help facilitate our clients, facilitate our
• 20:15
  operations, run more efficiently.
• 20:17
  So it's, it's, it's a people thing, it's a culture thing.
• 20:19
  Like you, you've got to have both.
• 20:21
  I know, like in the news, we see a lot of companies, they, they
• 20:23
  weigh it off to higher departments and relying all on
• 20:25
  AI and some of the backtracks and are still going forward with
• 20:28
  it. And I'm not saying that's not a
• 20:30
  I'm not saying that's a bad division, but so my seat, you're
• 20:34
  always going to have to have people in place.
• 20:35
  And so giving them the tools to kind of grow in with this
• 20:39
  technology, learn how to leverage it, learn how to build
• 20:41
  with it has been absolutely crucial for dental.
• 20:43
  But we have extremely talented people in almost every
• 20:46
  department. Our leadership has been
• 20:48
  extremely talented. And so these are things that
• 20:51
  I've definitely progressed and helped, you know, you could have
• 20:53
  built the best technology in the world, but I think without our
• 20:55
  people, without making the right hires, it wouldn't have
• 20:58
  mattered. And so it's, it's, it's right
• 21:01
  out there. I mean people, people in culture
• 21:03
  are huge. Do you get involved in the
• 21:05
  hiring process? Yeah, of course, I, I, I think
• 21:08
  especially when it comes into my department, I'm, I'm, I'm pretty
• 21:11
  heavily involved. We go through about four to five
• 21:13
  interview step process where we're trying to not only gauge
• 21:17
  technical skill, but how they're going to fit.
• 21:19
  You know, I think what a lot of people on, I'm sure you've heard
• 21:23
  previous people to come on the shows, like someone could be
• 21:26
  very technical sound, they could be very knowledgeable, but if
• 21:29
  they're not a culture fit, it could be very detrimental.
• 21:31
  So like we try to very, especially being a remote first
• 21:34
  company, like we have to very, very heavily index on a culture
• 21:37
  fit. And so anytime I can help step
• 21:39
  in and weigh in on any one of those layers that we're trying
• 21:43
  to discover, I'll jump in there and do that.
• 21:45
  But yeah, we typically involve about three to five people per
• 21:48
  interview process to make sure we are hitting, you know, the
• 21:52
  right buyer. And then one of our two Co
• 21:54
  founders, we usually evolved on the last step to even ensure
• 21:57
  further that like it's a good culture fit because while we
• 22:00
  found ourselves technology and it's important, culture's
• 22:03
  really, really big here. How would you describe the
• 22:06
  culture there? Innovative builders and
• 22:10
  teamwork. I kind of know I said that in
• 22:12
  the previous question, but that's what we're going for.
• 22:14
  I think what's what's really awesome to see is like when
• 22:17
  somebody has a big win and they share it, the whole company
• 22:20
  chimes in, right? Everybody's supporter behind it.
• 22:22
  When we have a problem or something's not working, the way
• 22:25
  everybody jumps in to assist. I think, you know, one of the
• 22:30
  biggest areas to have friction, 2 big areas we can have friction
• 22:33
  within factoring is between sales and risk and operations,
• 22:36
  client services and risk. And those are two kind of
• 22:38
  departments that, you know, have a little bit different
• 22:41
  objectives, right? But the cool thing about the
• 22:44
  Internet, like all the departments work together to
• 22:46
  make sure like we're bringing on the right clients, but we're
• 22:48
  also not like soaking out the pipelines where we can't bring
• 22:51
  on clients. So that kind of like in a that
• 22:53
  kind of like inner team work, it's been crucial, but we have
• 22:56
  builders, we have people that want to innovate, we have people
• 22:59
  that want to make a difference, make an impact and disrupt.
• 23:02
  We've got a lot of employees here.
• 23:03
  They've been in other factoring companies.
• 23:05
  They've seen the way it's done. They believe that there's a
• 23:07
  better way to do it and they're trying to do that and they're
• 23:11
  going out and accomplishing that.
• 23:12
  And we give them the tools to keep building on that.
• 23:14
  So that building mentality is something we really index
• 23:17
  everyone. We want our teams not only be X
• 23:20
  forward, but if you think it's a good idea, build it, get it as
• 23:23
  far as you can. And if it takes something that's
• 23:25
  a little bit above, which are capable of it takes programming
• 23:28
  that's above, we'll partner you with an engineer, we'll partner
• 23:30
  you with product person and we'll get it built.
• 23:32
  And we see this every quarter something getting rolled out
• 23:35
  that was built by not an engineer, but built by a client
• 23:39
  service Rep, a salesperson, a risk person.
• 23:41
  So I think those are those are those are what make our culture
• 23:44
  special. How are you able to assess that
• 23:48
  culture fit in the interview process?
• 23:51
  Yeah, I mean, we do obviously face to face interviews or, you
• 23:54
  know, Google meet videos, we do what's called test drive where
• 23:57
  we kind of give different scenarios where we're looking
• 23:59
  for for key metrics. But I think most of all it's
• 24:01
  just, you know, experience. You know, you go through enough
• 24:04
  hiring, you start to know for those key traits, those those
• 24:07
  those key information on the the resume that that just kind of
• 24:10
  stands out that says they're a builder and we don't matter, you
• 24:14
  know, 100% right. Like not every company is a fit
• 24:16
  for an employee. Like I think it's a two way St.
• 24:19
  not only do you have to be a good fit for the employee, but
• 24:23
  the employee has to feel like you're a good fit.
• 24:24
  And so that two ways through. Sometimes it can be difficult to
• 24:27
  make sure, but I would say we bat 95% of the time.
• 24:30
  We are hiring really, really expert people, but it's through
• 24:33
  experience of like knowing what to key on an interview process,
• 24:36
  but that test drive and then it's all five of us, four of us,
• 24:39
  six of us who I mean are involved in the interview
• 24:41
  process coming together and saying this is what I found out.
• 24:43
  This is what feels really good, something I'm a little concerned
• 24:46
  in, you know, and we talk it out.
• 24:48
  And so we try to make a group decision on the hire, which I
• 24:50
  think is also big. I think if you, if you start
• 24:52
  howling in silos, I think your, your accuracy on the hire starts
• 24:56
  to go down because you don't get those outside perspectives.
• 24:59
  And so maybe I'm hiring for what I call a portfolio risk manager,
• 25:02
  but maybe I want to know what my VP of sales says or maybe I want
• 25:05
  to want to know what, what my VP of product says because they're
• 25:08
  going to have a perspective I don't have.
• 25:09
  And so I think that's really important.
• 25:10
  And they're going to get to work with that person on a regular
• 25:13
  basis. And so they, they, they've got
• 25:15
  some input on what that dynamic should feel like.
• 25:18
  Correct. Yeah.
• 25:19
  So, Chad, give us a little bit of insight into what you do as
• 25:25
  the VP of Operations. Yeah, it's a great question.
• 25:30
  I, I, you know, I try to wear multiple hats, but not try, I do
• 25:34
  wear multiple hats. So everything from managing our
• 25:37
  client services to managing our risk to helping establish our
• 25:43
  strategic build outs and designs, especially when it
• 25:45
  comes to our client experience and our employee experience.
• 25:50
  I'm pretty heavily involved with sales, not the closing of the
• 25:53
  sales, but right, how can we bring the client on safely?
• 25:56
  How can we fit them into our portfolio?
• 25:57
  Doesn't make sense. These are all kind of the 10,000
• 26:01
  point views that I'm helping influence.
• 26:04
  You know, I'm also trying to give space to our employees to
• 26:07
  grow as well. And so while I could probably
• 26:10
  pick up a lot of slack and say, let's do XY and ZI want to be
• 26:13
  able to kind of delegate and say, hey, you know, this is your
• 26:16
  time to do a cross departmental project.
• 26:18
  Let's see how you get it done. I'm going to assist.
• 26:20
  But really from operations, it's it's client service, it's risk
• 26:25
  are the two big ones when you look at factoring to get
• 26:28
  involved. The third one is probably
• 26:29
  collections. And so I'd always say especially
• 26:33
  in factoring and I'm sure many industries that kind of lend
• 26:36
  money. It's really, really need to send
• 26:37
  the money out. It's really hard to get the
• 26:39
  money back, right. And so that collection from how
• 26:41
  we do it, because there's there's different ways we can go
• 26:44
  with collections, right? We could be very, very, very
• 26:46
  hard on collections. We could harass the debtor, you
• 26:49
  know, call them every other day to get paid.
• 26:51
  The interesting thing about factoring is that we are
• 26:53
  stepping into a contractual relationship between two
• 26:56
  parties. So we are this third party
• 26:57
  that's coming in. And so we have our clients that
• 27:00
  are running for some debtors that provide them a lot of
• 27:03
  revenue, a lot of business. And so if we do too hard on
• 27:06
  collections and we ruin in our relationship, then I haven't
• 27:09
  accomplished anything because now I've lost that business
• 27:11
  form. If we go too soft and these days
• 27:14
  to pay are turning out and it's taking longer to collect money
• 27:16
  back or there's more defaults, then I haven't accomplished
• 27:19
  anything. So there's always this finesse
• 27:21
  of like how do you come in as a third party into this two way
• 27:24
  contractual relationship and do it seamlessly without upsetting
• 27:28
  the client or upsetting the debtor.
• 27:29
  So there's always this kind of. There's a delicate balance that
• 27:33
  you've got to strike there, right?
• 27:34
  Because, and this, this might be unfounded, but when I think of
• 27:37
  collections, I think of people being very aggressive, calling,
• 27:41
  calling, you know, texting. I don't know if they've got your
• 27:44
  e-mail, you know, sending mail to your house and you're nodding
• 27:48
  your head like, yeah, that, that happens a lot, right?
• 27:50
  Yeah, yeah, yeah, 100%. I mean, some factory company to
• 27:55
  over index on it, right? And so they don't care if they
• 27:57
  ruin that client's relationship. One thing that dinner we pride
• 28:00
  ourselves on is like we want our clients to grow because the
• 28:02
  client grows, we grow. So that means maintaining their
• 28:05
  current business relationships, but also making sure that their
• 28:08
  debtors are paying on time. And so there is this balance and
• 28:11
  you know, plug technology, again, one thing we're working
• 28:14
  on is our AR automation workflow.
• 28:15
  We're kind of using these back end rules and AI agents to help
• 28:19
  us with our collections. So now we can white label our
• 28:23
  collections, we can make it look like it's coming through our
• 28:25
  client. We can change the tone, the
• 28:26
  verbiage, the messaging, the cadence where this is typically
• 28:30
  been very heavily dependent on people.
• 28:32
  We are trying not to interject more AI to make it feel more
• 28:35
  natural in the emails to give a better client better experience,
• 28:40
  so we can actually kind of customize it at that level
• 28:43
  versus a widespread policy. But it is, look, I've been, I've
• 28:49
  run a lot of different collection departments.
• 28:51
  Every single factory company that I've stopped at, I've run
• 28:53
  collections and we've lost client, we've lost our clients
• 28:56
  customers because a collector went too hard, right?
• 28:59
  They, they call too much, they e-mail too much.
• 29:01
  I've been on the optimum where we didn't catch something
• 29:03
  because we didn't make the call right.
• 29:05
  And there is, you said it, there is this balance and finding that
• 29:08
  balance is, it's tricky, but it's absolutely crucial to do it
• 29:12
  right. And so usually once you do it
• 29:14
  right, once the client's comfortable, you've got a client
• 29:17
  that's going to stick with you for a really, really long time
• 29:19
  because it's it, it works really, really well.
• 29:22
  But the more friction you create on the other side, you're
• 29:25
  probably not going to keep that client around for long.
• 29:27
  They're probably going to burn, turn out and then you lost that
• 29:29
  client. So, you know, how do you make
• 29:32
  that a better experience for him?
• 29:33
  So we're going back to your original question.
• 29:35
  Those are kind of the, the ways I can't interject myself from,
• 29:39
  from the VP of Operations role. It's they're just their balances
• 29:44
  on every single area you look at.
• 29:45
  You know, we, we talked about collections, you're exactly
• 29:47
  right. There's also a balance to the
• 29:48
  risk side, right? I am, we are as a factory
• 29:51
  company, we are extending credit for our clients to their
• 29:54
  customers. Most of the customers aren't
• 29:56
  publicly traded, they are private companies and our
• 29:59
  customers are getting half a million to $1,000,000 contracts
• 30:02
  a month. So that's half a million to
• 30:04
  $1,000,000 of they are that we're going to purchase every 30
• 30:06
  days. And I've got to make sure we're
• 30:08
  comfortable enough purchasing that.
• 30:09
  And I've got to rely on what little information there is out
• 30:12
  there. So if I go too hard on credit
• 30:15
  and, and say we can't do that much money, the client's not
• 30:17
  going to come on board or they're going to go to another
• 30:19
  factory incoming at will. If I go too light and something
• 30:21
  goes bad, then I've lost a bunch of money.
• 30:23
  S there's all these different walks.
• 30:25
  Client service is no different, right?
• 30:27
  It's, it's a difference of being proactive, client friendly
• 30:30
  versus maybe the clients ghosted you for three weeks and gave you
• 30:34
  bad paperwork that's that's fraudulent.
• 30:35
  And so how you going to approach that?
• 30:37
  And so there's all these different scenarios.
• 30:39
  They all take finesse, which I think presents a really unique
• 30:42
  challenge for factoring companies.
• 30:44
  Chad, give me an example of a calling script that would be too
• 30:48
  aggressive versus one that you feel like is more representative
• 30:52
  of the approach that you know your team would take.
• 30:55
  Yeah, I think with collections that's probably the easiest one.
• 30:58
  I think the call script that that's outside of frequency, the
• 31:01
  cost script that is, that is too aggressive.
• 31:03
  It's it's calling us debtor. You know, hey Mr. Walmart,
• 31:06
  you're 23 days late with your payment.
• 31:08
  What's going on? If you don't give us a payment,
• 31:11
  you know, by end of day, then we're going to up our collection
• 31:14
  efforts and possibly pursue legal action against you.
• 31:17
  You bring out the legal queue, it's done.
• 31:19
  I mean that really should have done 9 out of 10 times.
• 31:21
  So that's too aggressive, right? Where an alternative approach
• 31:25
  is, you know, hey, you said you're going to pay us day 30,
• 31:27
  it's day 45, you know, do you have all the paperwork you need?
• 31:30
  Is there anything else we can present to you to get this paid?
• 31:32
  Would it be possible to get a payment status by end of week?
• 31:35
  And so I think that approach is a softer approach.
• 31:40
  I think each approach has to be tailored to that client,
• 31:43
  customer relationship, client better relationship because
• 31:47
  there are getters out there that will purposely not pay their
• 31:50
  bills to kind of float their, their cash balance.
• 31:53
  And so you've got to kind of start to recognize who you go a
• 31:55
  little bit hard on, who you go a little bit soft on.
• 31:58
  But more than more the EAGUS indicators, how frequent is your
• 32:01
  client running for that debtor? If this is a one off load, you
• 32:05
  know, you can go a little bit stiffer in, in your approach.
• 32:07
  If this is a recurring customer for your for your client, then
• 32:11
  you really need to find the cadence.
• 32:13
  And I think it's about building that relationship too, between
• 32:15
  that, between our collector and that person in the AP
• 32:17
  department. And if, if our collector can
• 32:19
  build that relationship with John or Jane Doe in that, in
• 32:22
  that AP department, you know, you, you catch more fried or
• 32:25
  honey, right, you're you're going to get better answers and
• 32:27
  you're going to get more insightful information.
• 32:29
  So it's just kind of tailoring that message, that
• 32:31
  communication, that frequency of communication on a per
• 32:34
  relationship basis. I want to kind of go about this
• 32:38
  from a slightly different angle, like specific case studies can
• 32:41
  be really helpful for people to kind of wrap their heads around
• 32:44
  in terms of the value of the service that you're providing.
• 32:48
  Can you think of a specific case study, a specific, you know,
• 32:52
  customer instance where you guys were able to go above and beyond
• 32:57
  for a client that was facing a critical cash flow issue and
• 33:01
  really help them in a big way? Yeah.
• 33:05
  Gosh, this is, it happened quite a bit to me throughout my
• 33:08
  career. I mean, like I said, the goal is
• 33:11
  we want our clients happy, want our clients to continue in
• 33:13
  business because if they're growing, we are growing with
• 33:15
  them, literally, we grow with them, right.
• 33:18
  And so like, I think 1 instance that came up very fresh and
• 33:22
  very, very recently is we have a client that was running with a
• 33:26
  decently reputable debtor and they had a good amount of their
• 33:30
  business concentrated with this debtor.
• 33:33
  And unfortunately, this debtor filed Chapter 11 bankruptcy,
• 33:37
  Chapter 7 originally and got those to Chapter 11, so they
• 33:39
  filed bankruptcy. So the obligations to debt, the
• 33:42
  amount owed isn't getting paid to our client.
• 33:45
  We have two choices of the factory company we can basically
• 33:47
  make at this point. We could say, all right, well,
• 33:49
  we're done. We're going to do everything we
• 33:50
  can to collect out for your debtor, but we're not funding
• 33:52
  you anymore. You owe us several $100,000.
• 33:55
  It's over. Or we can work out a payment
• 33:58
  plan that works for both us and the clients.
• 33:59
  And typically it's a little bit more favorable to the client,
• 34:02
  right? I mean, we're on the hook for a
• 34:04
  bunch of money S we'd like to figure out a way to get this
• 34:06
  paid back, but we want the client to keep going.
• 34:09
  And So what we're able to do, what we're able to do in this
• 34:12
  scenario is workout a payment plan with this client.
• 34:13
  It works like it. We said, OK, what if we did this
• 34:16
  a month and we'll revisit this in 90 days.
• 34:19
  In the meantime, we'll still keep pursuing this Chapter 11
• 34:21
  bankruptcy with the claim in the bankruptcy courts.
• 34:23
  But in the meantime, you let us know you work with us.
• 34:26
  So we check in with them about once a week.
• 34:28
  How are things going? How's your cash flow going?
• 34:30
  And we're working really hard to keep them afloat while we kept
• 34:33
  this going. And this is a blueprint that
• 34:35
  I've been able to accomplish. And in fact, from companies I've
• 34:38
  been able to accomplish time and time again.
• 34:40
  It's, it's just these workout scenarios.
• 34:42
  It's, it's really easy to react and overreact.
• 34:45
  But when you do that, typically it's, it's not a good outcome.
• 34:48
  And so in this instance, we're keeping our client going.
• 34:51
  They're still able to pay their employees, they're still booking
• 34:53
  freight. We're still making headway on
• 34:55
  getting this paid back. And if it continues this way,
• 34:58
  we'll, we'll be paid back in, you know, 8 months.
• 35:01
  And more than likely, I would like to hope to think this
• 35:03
  client's probably going to be a client for life with us because
• 35:06
  we stuck through it with him when things got tough where we
• 35:09
  could just put him out of business and then he's out of
• 35:11
  business. You know, the 20 people
• 35:13
  employees are out of, out of a paycheck and what have we really
• 35:17
  accomplished? Maybe we get our money back,
• 35:18
  maybe we don't. So I think that's something that
• 35:20
  comes up all the time. I think other scenarios are
• 35:23
  again, going back to kind of that collections.
• 35:25
  It's like, hey, bank on the board, I've got these five
• 35:28
  debtors. They are very sensitive.
• 35:30
  They don't want people calling them.
• 35:32
  So we we find out solutions like frequencies or maybe they e-mail
• 35:36
  the the debtor for us and CC us on it.
• 35:38
  So like we found out like all these solutions that kind of
• 35:40
  like fit our product with a client versus trying to fit our
• 35:44
  client into our product I. Like that, how would you
• 35:48
  characterize your clients? Like who are they?
• 35:51
  What, what size companies they're, they're trucking
• 35:53
  companies? Are they also warehouse
• 35:56
  companies like Help? Help us wrap our heads around
• 35:58
  who you serve. Yeah, our two niches are freight
• 36:02
  transportation and freight brokerages.
• 36:03
  So freight transportation, the truckers that are running the
• 36:06
  loads across America, the ATM lawyers you see all throughout
• 36:09
  your city and all in the highway and interstates.
• 36:11
  And then freight brokers. Freight brokers are the ones who
• 36:13
  are arranged in the freight between shippers and carriers.
• 36:16
  Not every shipper wants a department dedicated to raging
• 36:19
  that freight. So that's where freight brokers
• 36:20
  come in involved. We range everything from
• 36:23
  startups, day one startups to people who are flipping $100
• 36:27
  million a year in revenue, you know, for, for freight brokers,
• 36:31
  for trucking companies, it's people that have one single
• 36:33
  truck. They're on the ones out there on
• 36:35
  the road driving it to people who are running fleets, you
• 36:37
  know, 50 plus trucks. So we can kind of take on a vast
• 36:40
  array of, of size. But we, we have, you know, what
• 36:45
  we consider our, our ideal client profile.
• 36:47
  That's typically people that are doing anywhere from from 50 to
• 36:50
  about, you know, 50 million of ARA year, yeah, a year.
• 36:54
  Sorry, it's kind of our ideal client profile, but we're able
• 36:57
  to kind of stretch them above and below that to to bring on
• 37:00
  these clients. Chad, what's your superpower?
• 37:09
  I think I'm. Honest, I think I've, I think
• 37:12
  I've always been able to connect with people really, really well
• 37:14
  and kind of have a high degree of empathy and, and kind of, you
• 37:18
  know, emotional intelligence with them.
• 37:20
  I think I try to take the time to understand where they're
• 37:22
  coming from, where their pain points are and understand maybe
• 37:26
  how denim has done something or another factoring company that I
• 37:29
  worked at has done something that kind of creates this pain
• 37:31
  points for them. It's like, how do we get past
• 37:32
  that? But when you, when you create
• 37:35
  problems for a client, they usually kind of let you know via
• 37:39
  e-mail or video chat, they're usually a little bit upset.
• 37:42
  And so it's like, how do you, how do you calm down that
• 37:44
  conversation and say, OK, well, here's the problems, here's how
• 37:47
  I can fix these problems for you.
• 37:48
  And that's something I've always been good at.
• 37:50
  It's kind of, and let me be involved in not only the sales
• 37:54
  side, but the operation side both.
• 37:56
  And that's kind of where I bridge the gap.
• 37:57
  So I've been, you know, a lot of times called onto a sales call
• 38:00
  with a salesperson to to hear this unique position of clients
• 38:04
  in or this unique scenario they have like, how do we make it
• 38:07
  work and how do we make them feel good that we can make it
• 38:08
  work. And on the flip side, like
• 38:10
  workout scenarios with clients, I've always been very good at de
• 38:13
  escalating situation and then listening, empathizing and
• 38:16
  figure out how to like move forward with it.
• 38:17
  And I think I, I think it's a skill that I kind of undervalued
• 38:21
  myself. But as I gotten older and
• 38:23
  progressed through my career, it's, it's not everybody natural
• 38:27
  tendency to be able to do that. And I'm not afraid of having
• 38:30
  those hard conversations or calling that client that's
• 38:32
  really, really upset and no one wants to talk to because they've
• 38:36
  got a bad e-mail exchange with them.
• 38:37
  But for me, it's like, well, look, we, we've called to pain
• 38:40
  point or this client experience a pain point.
• 38:42
  This is why they're lashing out. This is why they're upset.
• 38:45
  Let's identify it. Let's let's figure out a way to
• 38:47
  fix it for them. And I think it's really
• 38:49
  important. It doesn't matter if you're
• 38:50
  20,000 in AR, if you're a million in AR.
• 38:53
  For us, it's like we want to figure out the pain point and
• 38:55
  solve it. Because if you're having it,
• 38:57
  odds are we have someone else in our portfolio, if not more that
• 39:01
  are also experiencing. So that ability to kind of like
• 39:04
  establish that connect, that connection with clients on the
• 39:06
  emotional, but also the understanding and empathy level.
• 39:09
  I think it's always been something I've I've been really,
• 39:12
  really good at. And the more I get older, I, I
• 39:15
  kind of recognize it that like, that's a skill that like has
• 39:17
  really kind of helped me through my career.
• 39:21
  Chad, in my experience, a lot of times growth comes from the most
• 39:25
  serious challenges that we face in our life.
• 39:28
  I'd be curious to hear about a serious challenge that you've
• 39:32
  overcome. What was it, how'd you get
• 39:34
  through it, and what did you learn?
• 39:37
  Yeah, I think, I think there's there's a lot of different ways
• 39:41
  I could go with this question as are relates to factoring and
• 39:44
  like challenges to like a career business standpoint.
• 39:47
  I think the biggest one for me was learning that risk credit
• 39:54
  and factoring are really tough and I just talked about building
• 39:57
  these kind of emotional relationship, these connections,
• 40:00
  this empathy with clients, and I think that's that's really
• 40:03
  important. I think the other thing is on
• 40:05
  the flip side of that is like, I've also got to realize like
• 40:07
  this is a business and sometimes people will stay and do what
• 40:10
  they need to do to get by. And so you know, where are you
• 40:13
  on when I first stops national makers stressed.
• 40:16
  I worked closely with the client for about four years.
• 40:20
  Trust them. You know, if they said they were
• 40:22
  going to do something, they did it and about towards.
• 40:27
  Year 4, the end of that year 4 came to find out that they spent
• 40:32
  the last six months submitting fraudulent paperwork, fraudulent
• 40:35
  invoices. They got in a really, really bad
• 40:37
  spot. They couldn't pay their their
• 40:39
  people. And I took their word for it,
• 40:42
  you know, prior, you know that the invoices were good they're
• 40:44
  going to pay the debtors are going to pay, don't worry about
• 40:46
  it. And so built up three $400,000
• 40:49
  that they are that was was not good.
• 40:51
  And so I took that one hard. Like, I'm not sitting there
• 40:54
  trying to tell you this is like some sob story, but that that
• 40:56
  one took me hard. Like, like my trust was broken,
• 40:58
  right? Like I want to believe people
• 41:00
  when they tell me something, but that kind of broke my trust.
• 41:02
  And it took me quite a while to like, realize like, yeah, they
• 41:06
  committed a fraud. But it took me a while to
• 41:09
  understand why they did it. They were in a really bad place.
• 41:11
  And so their fear was they couldn't pay their employees.
• 41:14
  And like, I started thinking, like, how bad would that be if
• 41:17
  you had to reach out to 50 people and say, I can't cut your
• 41:20
  paycheck today? And so like, it kind of led me
• 41:23
  to an understanding like, I'm not advocating you should ever
• 41:25
  commit fraud, but it led me to an understanding of why they did
• 41:27
  it. But it, it took me a while to,
• 41:30
  to like do a risk role where I wasn't over indexing on risk and
• 41:34
  being too conservative. Like it took me a while to kind
• 41:36
  of bounce back from that and just realize like I, I, I take
• 41:40
  the motto and, and whether it's a healthy motto or not, it's,
• 41:44
  I'm taking this model. It's not a matter of if, but
• 41:45
  when. And I kind of apply that to a
• 41:47
  lot of things, but especially at risk.
• 41:48
  And it's not a matter if a client goes bad or when, but
• 41:51
  when a client goes bad, it's not a matter of if a data goes bad,
• 41:53
  but when a data goes bad. And so I've kind of adapted this
• 41:56
  model. I try to present the best client
• 41:58
  centric foot forward, but in the back of my hand, I always have
• 42:00
  to kind of weigh like on the flip side, what if things aren't
• 42:04
  as rosy as they appear? What if there is something going
• 42:07
  on? And so it's this kind of trust
• 42:08
  and verify methodology that this brought to me.
• 42:11
  But I think anytime I take a loss, it stings.
• 42:16
  And it just could be from the fault of a client or no fault of
• 42:19
  the client, right? Like if a debtor files
• 42:20
  bankruptcy and it sucks, but it stings.
• 42:24
  I should have seen a cut. I should have seen this slow
• 42:26
  payment, slowed terms of payment.
• 42:28
  I should have seen the news out there that are kind of investing
• 42:31
  in. So anytime I think a loss it
• 42:33
  really seems, but that first one really, really strong.
• 42:34
  I mean, I had built up a high level of trust with this
• 42:37
  individual and never thought that Dave would.
• 42:41
  End the way it How did that situation actually play out from
• 42:43
  a business perspective? You guys just ate the loss.
• 42:47
  Yeah. Well, no, we we kept them around
• 42:50
  until we were able to to be made whole.
• 42:52
  You know, we immediately reached out in front of the client.
• 42:57
  They kind of broke down, told the story why what happened at
• 43:02
  that point though? Our, the, the, the trust was
• 43:04
  gone. But if we, if we shut them off
• 43:06
  right then and there, we were out the money and the clients
• 43:08
  were up and down that they just paid back.
• 43:10
  Just give them time. And so we kind of went to this,
• 43:13
  what I call this full audit proof approach to the client.
• 43:17
  So everything is submitted to us was mean.
• 43:19
  We reviewed, checked and so it took him about six months, maybe
• 43:23
  nine months, but we were able to kind of click back through
• 43:25
  payment terms. It wasn't easy.
• 43:27
  It wasn't easy with the client. It wouldn't be for us.
• 43:29
  Once we did get paid back though, we helped move into a
• 43:31
  different factory home as, as that kind of trust had just been
• 43:33
  violated at that point. And so we, you know, we did
• 43:35
  think it was fair to him and it probably wasn't good for us to
• 43:38
  continue on, but amazing we were able to work out.
• 43:41
  But when it happens in that moment, all I see is that's
• 43:45
  $300,000, you know, out the door gone.
• 43:48
  And you know, at that time I was a, there's either a credit
• 43:52
  manager, I think I was a credit manager.
• 43:53
  And so like that was my #1 objective is don't lose money.
• 43:57
  And here's the $300,000 loss. And I don't care what business
• 44:00
  you're in. I don't care what side you are.
• 44:01
  I mean that that's a lot of money and that's that's staying
• 44:04
  so. Well, not only is the money
• 44:06
  staying, but like you said, you had like this strong personal
• 44:10
  relationship with them as well. And so like, that personal trust
• 44:13
  feels violated. And so it's like this, this
• 44:16
  nasty, like 1-2 punch that you're trying to work through.
• 44:19
  It is and it, it's, it sticks with you.
• 44:21
  Like I, you know, I talk to clients probably every day and
• 44:24
  like going through workout scenarios countless times after
• 44:27
  that, but it's always now in the back of my head.
• 44:29
  It's like, are they being 100% transparent and honest?
• 44:32
  Is there something else going behind that?
• 44:33
  Have you caught it? And I think it's kind of made me
• 44:37
  better at my job. But at the same time, I don't
• 44:40
  also love having that attitude because I do want to believe in
• 44:43
  people. I do want to believe in the good
• 44:44
  in people that are that are within us.
• 44:46
  But now I've also got a healthy appreciation that it's between
• 44:50
  you, the factoring company, and the ability for the client to
• 44:54
  keep their business going and paying their employees.
• 44:57
  There's a good chance they they're going to do what they
• 44:59
  need to do. Yeah.
• 45:01
  Well, if nothing else, like kind of the silver lining and all
• 45:03
  that is now you've got your antenna up like you're a little
• 45:06
  bit more aware of these kinds of situations and you're you're on
• 45:10
  the lookout for them. Yeah.
• 45:12
  And I'm kind of curious, Chad, are there if if you had to
• 45:15
  recommend to our listeners a particular resource, maybe it's
• 45:18
  a book, a podcast, a course, something that's been really
• 45:22
  helpful to you? Yeah, there's one book that's
• 45:26
  kind of stuck, stuck out with me.
• 45:27
  I mean, one thing I've I've been a few startup companies and, and
• 45:30
  companies have gone just a little bit beyond startup, but
• 45:32
  the it's the messy middle is, is the name of the book.
• 45:36
  I think it's by Scott Belsky, but it kind of really talks
• 45:40
  about the challenges from start going from startup to succeeding
• 45:43
  and like what that messy middle is.
• 45:45
  It's it's where most companies live, right?
• 45:47
  I mean, it's when you reach a huge Fortune 500 company,
• 45:51
  there's a lot of processes and put in place that have been
• 45:54
  refine, refine and refine and work really well.
• 45:58
  A lot of people call the red tape, but it's, there's a reason
• 46:00
  why it's there. It, it functions very well.
• 46:02
  But when you're the start up stage, you know, I always like
• 46:05
  to compare ourselves. It's a, it's a, it's a giant
• 46:07
  cruise boat compared to a small speedboat.
• 46:10
  And as a start up, you're a small speedboat, you're pivoting
• 46:12
  and changing on a dime. It's really easy to turn that
• 46:14
  ship. It's really easy to make
• 46:16
  changes, but that creates this messy middle.
• 46:18
  It creates this, it makes it harder to manage through the
• 46:21
  process changes through through the change process with your
• 46:24
  employees, through developing policies that fit it.
• 46:27
  And so you write a policy three months ago.
• 46:30
  Now your product rolls out something new and now you've got
• 46:32
  to write a whole new policy that contradicts that policy that
• 46:34
  you've got to reteach your team. So there's always this messy
• 46:36
  metal. And so I highly recommend it
• 46:38
  because it can feel overwhelming.
• 46:40
  It can feel like you're drowning.
• 46:41
  It can feel like you're not accomplishing anything or you're
• 46:44
  just running in place, but really, really speaks to like
• 46:47
  we're all there, we're all trying to navigate through it.
• 46:49
  And it's like, even though sometimes it doesn't feel like
• 46:52
  you're making change, you are making change.
• 46:54
  And that boat does start getting bigger and bigger.
• 46:56
  And so take, take hold of this moment because it, as your
• 47:00
  company grows, you're not always going to be able to change on
• 47:02
  the dive. So like those changes you want
• 47:03
  to make. And when they, when we do make a
• 47:06
  change, and that's positive, it feels really good, but it gets
• 47:08
  harder as that boat gets bigger, takes a lot more to turn that
• 47:11
  cruise ship. And so like, take a hold of
• 47:13
  this, don't get overwhelmed. Learn how to grasp it, learn how
• 47:17
  to manage through it, and learn how to lead your team through
• 47:19
  it. I wonder if there is maybe like
• 47:22
  a more specific concrete example of you going through that that
• 47:25
  we could talk through. Because I think so many business
• 47:28
  owners that I've talked to, so many employees and their careers
• 47:31
  that I've talked to, they go through what you're describing,
• 47:34
  the sort of messy middle where it's like, am I doing the right
• 47:37
  things? Am I making progress?
• 47:39
  I don't know, like, I, I just feel like I'm sort of stuck in
• 47:42
  quicksand here. Yeah.
• 47:44
  I mean, I'll give you a quick example of kind of like the back
• 47:47
  and forth of that messy metal and like making changes on a
• 47:50
  dime. And you know, we we're not
• 47:53
  diving to the politics behind it, but tariffs have been a hot
• 47:55
  topic now since since the beginning of the year.
• 47:58
  And we are in an industry that that lends money based on our
• 48:03
  clients customers ability to pay.
• 48:05
  And so how would these tariffs impact it?
• 48:07
  And so as we pause and unpause, these tariffs have, have, have
• 48:10
  have changed. I've gone back to My Portfolio
• 48:13
  risk management like we need to be more aggressive, we need to
• 48:15
  be less aggressive, we need to be more aggressive.
• 48:17
  And that's really difficult as a as a risk person to change the
• 48:20
  direction or more aggressive your being on these decision
• 48:23
  making. And so that that's really tough
• 48:26
  to like handle that change of management and there.
• 48:28
  But you know, I think beyond that, I think like as you roll
• 48:31
  out a new process, it becomes really tough as you as you roll
• 48:37
  out things that are innovative and technology driven, they tend
• 48:41
  to disrupt everything you've built prior to that.
• 48:44
  And so, you know, it's AR automated collections, a really
• 48:46
  good example of it. I think if you've asked anybody,
• 48:49
  it's been a factoring collections has always been a
• 48:51
  manual phone call thing. But now here we are, we are
• 48:54
  making a change going from having having a person make
• 48:58
  these individual calls and emails to now training people
• 49:01
  how to manage these leverages that the AI of the system will
• 49:05
  use to make these calls on behalf of you.
• 49:07
  And it's a different concept. It's, it's, it's completely
• 49:11
  different mindset. So I'm asking this portfolio
• 49:14
  risk manager say, hey, everything we've trained on for
• 49:16
  the past two years, everything you've trained on pad or not
• 49:19
  forget it. Here's how we're going to do it
• 49:21
  going forward. And so like when you're in that
• 49:23
  moment of that transition, things feel frustrating, things
• 49:26
  feel tough. It feels like how's it ever
• 49:29
  going to work? How can you see divided the end
• 49:30
  of the tunnel? And as a, as a leader, sometimes
• 49:33
  maybe I have those doubts, but I can't express those to to my
• 49:37
  team members because I want them to embrace this change.
• 49:40
  And so like, that's where it gets really messy in the middle.
• 49:42
  It's like how, how do I, how do I display this level of
• 49:46
  conviction that this is going to work to my police?
• 49:47
  So they embrace it, but also handle this kind of doubt in my
• 49:51
  mind. And, and I think that's tough.
• 49:53
  And I think the best way we navigate it is, is just embrace
• 49:57
  it the best we can understand that there's going to be kinks,
• 50:00
  there's going to be things don't operate partly, you know, great.
• 50:04
  But if you have a good product and engineering team behind you,
• 50:06
  which we do, it does make a lot easier because we can make those
• 50:09
  changes and fixes really, really quickly.
• 50:10
  But it's always that that change mindset is so difficult,
• 50:15
  especially the bigger change, the harder it is to get all
• 50:17
  employees on board and to make that mental model shift because
• 50:21
  you odds are you're going to have one or one or two
• 50:23
  frustrated employees. So it's just going to happen.
• 50:25
  So that messy metal to me is a lot is that kind of change
• 50:28
  management system. But something as simple as
• 50:31
  making credit decisions can also be there because you're, you're
• 50:34
  changing on a dime. And so you spend 2 weeks saying,
• 50:37
  Hey, Sarahs are going to be impacted here.
• 50:40
  We need to, we need to bring it back.
• 50:41
  We need to bring down a notch. Like these 20 debtors are going
• 50:44
  to be hit by it. And then the next week it's
• 50:46
  like, well, it's on a pause. We're good.
• 50:48
  Do whatever you guys need to do, go back to your clients who we
• 50:50
  just hold no to and say yes. They're like that's, that's.
• 50:53
  Painful. It's a little bit of whiplash
• 50:54
  yeah. And and you hit on something,
• 50:56
  you know, you particularly interesting in your comments
• 50:59
  there, which was this idea of how do you show confidence to
• 51:04
  your team when behind the scenes you're not really sure, like
• 51:09
  you've got to sort of put like the good front on, hey guys, we
• 51:12
  got to keep doing our jobs. Things are going to be OK.
• 51:14
  And in the background you're scratching your head like, I
• 51:17
  don't know which way this is going to go.
• 51:19
  I'm not sure like how to react to this.
• 51:21
  It's. Yeah, I mean it is tough.
• 51:24
  I mean, anytime you're messing with collections like they are
• 51:27
  automation, right? It's it's tough because I want
• 51:31
  the innovation, I want the change because I can see how
• 51:33
  viable it is not only to us, but our client experience.
• 51:36
  Now they have a say on how we do certain wording.
• 51:38
  We can white label it. So it makes it looks like from
• 51:40
  them. These are all really positives.
• 51:42
  So everybody, the back of mine is like, what if this doesn't
• 51:45
  work? What if our average days to pay
• 51:48
  goes from 35 days to 45 days? Well, look, yield is very
• 51:53
  important to factory companies. How fast we can get the money
• 51:55
  out and then back in is really, really important.
• 51:57
  So if this starts turning up, you know, I'm going to have to
• 52:00
  scramble to figure out or you know, where like the operation
• 52:02
  going to scramble to figure out how to how to correct this, how
• 52:05
  to fix this, you know, express faction, you know, where we're
• 52:08
  paying clients within minutes. Great product, fantastic product
• 52:12
  in my mind. What if fraud gets in the door
• 52:14
  and we're $300,000 out the door in seconds, right?
• 52:17
  So there's always these like lingering fears in the back of
• 52:19
  my head and I try not to let them rule on how I give my
• 52:24
  opinion or decision, but they're there and they're real.
• 52:26
  And and so it's you have to learn to say there are risks,
• 52:29
  there are challenges. But one thing that's been
• 52:31
  ministered great is we have two Seans.
• 52:33
  We have Sean Smith who runs our product and Sean Vo, who's our
• 52:36
  CTO. And so like, you know, the more
• 52:38
  I work with them, the more I express my concerns, they're
• 52:42
  like, oh, here's what we can do. Like here's how we can put in,
• 52:45
  you know, bumpers to help you there leverage.
• 52:48
  And so that, that, that, that definitely helps.
• 52:50
  But yeah, that that fear is always there.
• 52:52
  It's like that kind of total catastrophe, like it all falls
• 52:55
  apart. What do we do?
• 52:57
  How do we pivot? How do we get back?
• 52:58
  Of course, quickly, because the longer, you know, you can't just
• 53:01
  sit there and bleed out. You have to stop the bleeding as
• 53:03
  fast as possible. Yeah.
• 53:06
  Any daily practices, Chad, that you have found helpful either to
• 53:12
  start your day, to keep your day on the right path, keep yourself
• 53:15
  centered. Yeah, I mean, I, I, I think, you
• 53:18
  know, for me, it's really important to the first two hours
• 53:21
  of every morning. I kind of try to dedicate not to
• 53:23
  meetings, but to myself to, to get aligned on what I want to
• 53:26
  accomplish that day, who I need to reach out to, you know, are
• 53:29
  there employees I need to have to make sure they're doing OK,
• 53:32
  need help, need more training, you know, do I need to prep
• 53:35
  anything? I think that's really, really
• 53:37
  important is to make sure you start your day off with that
• 53:39
  kind of clarity, that kind of thought process and nothing.
• 53:42
  I don't take morning meetings, but I try not to because I, I
• 53:45
  think that's really, really important me to set the
• 53:46
  foundation. Some people might say that the
• 53:48
  day before in the afternoon for me, it's that that kind of early
• 53:51
  quiet morning where I can kind of get that accomplished and
• 53:54
  then more on a not a day necessary daily cadence, but one
• 53:57
  on ones with your employees. I think weekly one-on-one to
• 53:59
  your employees is extremely important.
• 54:02
  I think what that one-on-one should be an Ave. for your
• 54:05
  employee. They'll voice concerns,
• 54:07
  problems, changes, opinions, positives, whatever it may be to
• 54:10
  you. I don't want to steer that
• 54:11
  conversation. I want to let them steer it and
• 54:14
  kind of say, you know, what's going good, going bad and talked
• 54:17
  about it. Like, how can we come up with
• 54:18
  the action plan to resolve that? So that's, that's, that's really
• 54:21
  important. And then, you know, I think it's
• 54:23
  important to set daily, weekly, monthly goals that are
• 54:26
  transparent for your, for your department, that you're, that
• 54:28
  you're operating. And it's like, how do we get
• 54:30
  there? Here's what we want to
• 54:30
  accomplish today. And so like, you know, those
• 54:33
  daily goals don't have to be something new.
• 54:34
  It could just be the same thing, like, hey, we want to revive the
• 54:37
  maximum level service quality to every single client today.
• 54:39
  Or hey, we want to process as much invoices as possible today
• 54:42
  and say, yes, as much as possible today.
• 54:44
  Those are really important. But where do we want to be at
• 54:46
  the end of the quarter, right? And is our goal to reduce our
• 54:50
  client ticket count then desk ticket count from, you know,
• 54:52
  1010 per client to fiber client? Yes.
• 54:56
  Well, here's why we want. To what is that metric, if you
• 54:58
  don't mind, Jen, can you explain that?
• 55:01
  The metric, yeah. So we primarily our support
• 55:04
  calls, our support from our client comes in through emails.
• 55:08
  We use Zendesk to handle those, those those tickets, those
• 55:12
  emails are created and we kind of view every time that the
• 55:15
  client to tell us a problem, it's a problem with our system
• 55:19
  or a problem with our process. Can we fix it?
• 55:21
  And so we feel like if we can reduce the number that our
• 55:23
  clients have to e-mail us a month, that means we are
• 55:26
  reducing the amount of problems they face.
• 55:28
  And don't get it wrong, you get some emails that are just basic
• 55:31
  questions or just telling U.S. news updates and those are
• 55:33
  great, but we do have a problem. We want to resolve it and then
• 55:36
  like take that away. So.
• 55:38
  As an indicator for you, you know, hey, is there something
• 55:40
  that we need to fix in our internal process?
• 55:42
  Yeah. I mean, the best client, the
• 55:45
  best client service call you can get is no call, right?
• 55:47
  Because that means everything's functioning right, everything's
• 55:49
  working. Maybe it's not the best, maybe
• 55:52
  the second, maybe the first best is a referral from a client, but
• 55:55
  second best would be just no call at all.
• 55:56
  Can you see is your system, is your process or your people
• 55:59
  functioning in such a way that the clients aren't hitting a
• 56:01
  friction point? And that can be tough, in fact,
• 56:03
  because there are natural friction points.
• 56:05
  But for those part, our ticket, our ticket's low because we are
• 56:10
  constantly trying to improve. And you know, one thing we do at
• 56:12
  denim, I'm sure other places do it, but we have a cab, right?
• 56:15
  We have a place where some of our clients can come and we do a
• 56:18
  query meeting with them. Where are your pain points?
• 56:20
  How can we make it better? And so we try to take those
• 56:22
  warnings and actually apply them as quickly as possible.
• 56:24
  And so I think that's a, that's a, that's a big difference for
• 56:27
  denim. But yeah, back to that metric.
• 56:29
  That's why we we feel like the less tickets we get, it's the
• 56:33
  less friction our client has when they deal with our with our
• 56:35
  platform. It's the question I should have
• 56:37
  asked at the beginning. What's behind the name Denim?
• 56:40
  I mean, it's quite a domain name that you guys have denim.com.
• 56:43
  Yeah, we were actual before that, but there was someone else
• 56:46
  in that space, not a competitor, but in that same space.
• 56:48
  And so we had to make the transition and denim is is
• 56:52
  something that kind of really stuck with the owners.
• 56:54
  I wasn't on board when we when they made that decision.
• 56:57
  So I'm not 100% sure on the story wide behind denim, but it
• 57:00
  was short. We wanted something short that
• 57:02
  was catchy. The domain needed to be
• 57:04
  available. I think there's also something
• 57:06
  about, you know, denim, you know, kind of an all American,
• 57:09
  you know, denim jeans that that kind of reads this idea of kind
• 57:12
  of growth and and fertility that that funds kind of the growth of
• 57:17
  these companies. And so that was really
• 57:18
  important. But it's catchy, it's short and
• 57:22
  it's something we we've always appreciated.
• 57:24
  I, I think the longer the name that the harder it is to like
• 57:27
  really kind of some interest off in there.
• 57:29
  But that was some of the thought process.
• 57:30
  That's something that the the owners could probably give you a
• 57:33
  better, better example of why they went with denim.
• 57:35
  But I know the if the lengthy process.
• 57:37
  They had several good names and eventually settled on denim.
• 57:40
  Yeah, it's a solid 1. I like it.
• 57:42
  It is catchy and it's a single word domain name.
• 57:44
  Those are hard to get these days.
• 57:45
  Yeah, every once in a while we'll get emails from people
• 57:48
  saying they they don't like the jeans they bought or they bought
• 57:50
  the wrong size jeans. So everyone wants to look at
• 57:52
  those and get a kick out of them.
• 57:54
  So I just got one more question for you, Chad, But before I ask
• 57:57
  it, I want to do 2 things. First of all, I'm going to
• 57:59
  invite everybody listening here to go ahead and hit the follow
• 58:02
  button on your favorite podcast app.
• 58:04
  We've had a great interview today with
• 58:05
  chadkaputhofdenim.com. And I want you to continue to
• 58:09
  get great interviews like we've had today, Chad.
• 58:12
  I also want to let people know the best way to get in touch
• 58:15
  with you. How would that be?
• 58:17
  Yeah, with me you can e-mail. It's probably the the best way.
• 58:21
  If you if you got questions, concerns, if this product
• 58:24
  interests you, if you just want to know more about it, feel free
• 58:26
  to e-mail me thatsckapooth@denim.com
• 58:29
  soccapooth@denim.com. Pretty quick to get back to you.
• 58:35
  But I'm always happy to have this conversation in any in any
• 58:37
  regards. I think factoring while it's a
• 58:39
  growing industry, it's there's still a lot of light that could
• 58:42
  be shed on it and I think there's still a lot of
• 58:43
  positivity that can come from it.
• 58:44
  And so maybe it's a good thing for you, maybe it's not, you
• 58:47
  know, reach out. Happy to have a conversation,
• 58:49
  Ian. You just want to know more about
• 58:51
  it. Even if you just want to have a
• 58:52
  conversation about it, happy to happy to answer it.
• 58:54
  That's generous of you. And we'll make sure to include a
• 58:56
  link to your e-mail in the show notes.
• 58:58
  The last question I have for you, Chad, you and I were going
• 59:02
  to stay in touch and say a year from now, you're sitting down,
• 59:05
  you're celebrating one thing. What is that thing?
• 59:08
  I'd like to think I helped denim become the disruptor in this
• 59:11
  industry and why I think we've made headway.
• 59:13
  I think there's a lot more to go.
• 59:14
  I think there's a lot more process changing and technology
• 59:19
  we can interject in this industry and continue to take
• 59:22
  this industry from what has been archaic into this century and
• 59:27
  provide a better client experience.
• 59:28
  And you know, one thing is I'm sure we're all heard about by
• 59:32
  now, but I think AI is going to play a big part of that.
• 59:34
  And so I really like to be one of the front runners, one of the
• 59:37
  one of the leaders behind. How do we take the process is
• 59:40
  outdated and now leveraged it with AI and like, what does that
• 59:43
  look like? And I kind of said earlier on in
• 59:45
  the show, I think a lot of companies are going and say,
• 59:47
  well, hey, we can wipe out a whole entire department with AI.
• 59:50
  That shouldn't be the goal. The goal is to be how can we
• 59:52
  build AI or AI agents that can do what we need to do, but still
• 59:56
  need to be managed by a team because these things aren't at a
• 59:59
  stage where they're perfect. And so how do you build these
• 1:00:01
  processes around them and how do you do it effectively?
• 1:00:03
  That's not only good for your business, but good for your
• 1:00:05
  client. So I want to continue to be a
• 1:00:07
  disruptor. I want to be able to look back
• 1:00:09
  in here and say I. Helped, you know, Outlook, I'm
• 1:00:11
  not going to program the code, but I helped, I helped kind of
• 1:00:14
  design it helped kind of lead the journey.
• 1:00:16
  And like we have now invented or created a product.
• 1:00:18
  We have now made a product that is so disruptive, people are
• 1:00:21
  knocking down at our door to get to it.
• 1:00:23
  And I think we're on that direction.
• 1:00:24
  And that's Ben Dennis Vision from from day one is a kind of
• 1:00:27
  these leaders in technology, but it's, it's really important to
• 1:00:31
  me to like also make sure the client experience is there.
• 1:00:33
  And I think that can be easy to get lost.
• 1:00:35
  So I'm going to continue to be an innovator and I want to be
• 1:00:38
  able to look back and say, man, we changed it, right?
• 1:00:40
  Like factoring is a completely different animal now because of
• 1:00:43
  the technology differences. You know we made a demo.
• 1:00:46
  Well, and I like what you're hitting upon there, Chad, sort
• 1:00:49
  of this balance of, you know, how do we use the the tools and
• 1:00:52
  AI is a big one lately to make us better at what we do, make
• 1:00:57
  the customer experience better, but not replace the human
• 1:01:01
  element wholesale as a subscriber to several software
• 1:01:06
  services. And I've seen a trend recently
• 1:01:08
  where not only are more of the chatbot responses coming from
• 1:01:13
  AI, and I'm fine with that, but when the AI can't get the answer
• 1:01:19
  right, I need to be connected with a human being.
• 1:01:21
  And increasingly, it's becoming harder and harder to get to a
• 1:01:24
  person to the point where, you know, one of the softwares that
• 1:01:28
  I rely on on a regular, on a daily basis, very integral to my
• 1:01:32
  business. It takes at least one week to
• 1:01:35
  get a human reply now. And so that's not what you guys
• 1:01:38
  are talking about. You're like the, the human
• 1:01:40
  element's still very important. How can we, you know, bring AI
• 1:01:44
  and bring the software in to help us be better at our jobs
• 1:01:47
  and free those people up to do more of those parts of the
• 1:01:51
  interaction that require the human experience?
• 1:01:54
  Yeah, I mean, first of all, the AI chats, I understand it, but
• 1:01:57
  like you, they can drive me up the wall.
• 1:01:59
  And I agree with that. I, I, I was, I was flying on a
• 1:02:02
  major airline the other day and my flight got cancelled.
• 1:02:05
  And so like I'm trying to go on the website and change it, but
• 1:02:07
  it won't let me. So I reach out on the chat.
• 1:02:09
  I get the AI chat bot takes me an hour to get to a human and
• 1:02:13
  it's just it, it was not a great experience, right?
• 1:02:15
  And look, I'm sure they saved a ton of money with it, but for
• 1:02:18
  me, not a great experience. And so like to go to answer now
• 1:02:22
  to answer your question, like I think the role of AI where it
• 1:02:26
  needs to be in for the days, it needs to empower your employees,
• 1:02:29
  right? And it doesn't mean you need to
• 1:02:31
  replace whole department. It needs to say, OK, we have 5
• 1:02:34
  people in collections a day. So how do we take AI and empower
• 1:02:37
  them to continue doing their job to take on 5X the book where
• 1:02:41
  previously it was a flat 1 to one ratio, you know, per dollar
• 1:02:44
  per collector ratio. How do we now 5X them?
• 1:02:47
  So how do you take your employees that are there?
• 1:02:48
  I thought you built a foundation where you've got to, because it
• 1:02:52
  takes employees to build a foundation.
• 1:02:53
  It just does. And so if your goal is to
• 1:02:55
  replace them, then I think you've missed the point.
• 1:02:57
  Your goal should be to empower employees with AI and let them
• 1:03:00
  continue doing their job more efficiently.
• 1:03:02
  And then they win and you win, right?
• 1:03:05
  And so now you're 5 * 10 * 50 times your size, but your Optex
• 1:03:09
  spend your spend on your operations employees or you're
• 1:03:11
  spending on your employees overall.
• 1:03:13
  So your, your revenue per employee has skyrocketed, but
• 1:03:15
  your spin has gone down because you're, you've empowered them,
• 1:03:19
  right? And so, you know, how do we take
• 1:03:22
  what used to be 1 client service Rep could handle about 7 million
• 1:03:26
  dollars, $10 million of AR before you had to hire another
• 1:03:31
  one. Now how do you empower them?
• 1:03:32
  And now they can take on 50,000,075 million because AI is
• 1:03:36
  there prompting them, helping them, providing them feedback,
• 1:03:40
  points of interest, ways to phrase things like it's, it's
• 1:03:43
  remarkable. So it's got to empower, it's not
• 1:03:46
  to replace, it's got to be to empower.
• 1:03:49
  And, and I think that's the way you get ahead.
• 1:03:50
  And I think we've probably seen companies that have tried to go
• 1:03:55
  the replace route and now they're starting to, to
• 1:03:57
  backtrack it, right? And they're, they're starting to
• 1:03:58
  hurt. And I think that's AI.
• 1:04:01
  It's just, it's not perfect and it's going to take humans to
• 1:04:03
  kind of guide it. But more importantly, you need
• 1:04:07
  to build it till it empowers your employees otherwise.
• 1:04:09
  Empower, not replace. Empower.
• 1:04:11
  Not replace Chad Kaputh, VP of OPS at Denim.
• 1:04:16
  I want to be the first to thank you for sharing both your time
• 1:04:18
  and your story with us today. I really appreciate it.
• 1:04:21
  Really Trish, you have me on. Anthony, this was a blast.
• 1:04:23
  Happy to talk about it anytime. So if you ever want to have me
• 1:04:25
  back, let me know. But if anyone was interested
• 1:04:27
  about factoring, reach out or search the web.
• 1:04:30
  There's a ton of information out there.
• 1:04:31
  But Anthony, out of blast. I really appreciate you having
• 1:04:33
  me on. Folks, that's a wrap on another
• 1:04:35
  episode of the Inspired Stories podcast.
• 1:04:37
  Thanks for learning with us today.