Welcome to the second installment of The Relay, your online connection to Baton. Today we’ll hear from one of Baton’s earliest adopters. Meet Patrick Dudley, President of Cameron Search and Staffing in San Antonio, Texas. From his years of experience, Patrick knows that, “as a small business owner, cash flow is everything.” In the following interview, he explains what that means.
Getting the Most from Baton: A Small-Business Owner’s Story
As one of the first small-business owners to sign up with Baton, it wasn’t long before Patrick Dudley realized he’d made the right decision.
Patrick’s field is staffing, an industry highly dependent on cash flow. That’s the main reason Patrick chose Baton — because he wanted to receive payments on his B2B invoices in as few as 3 days. He also knew that Baton would help streamline his account receivables process, saving him time and money, without incurring incremental debt. But he was pleasantly surprised to discover his Baton account would benefit his company in ways he didn’t anticipate. Baton reduced barriers to further growth by freeing up his cash reserves. By providing qualifying data on clients, Baton functions as a risk management consultant — at no additional charge! And Patrick made innovative use of this information, adjusting payment terms and pricing accordingly.
“If I had Baton when I started 17 years ago, it would’ve saved me a lot of heartache, sleepless nights, and stomach aches.”
With offices in San Antonio, Cameron Search/Staffing has placed hundreds of employees throughout the United States and Puerto Rico in the fields of healthcare, IT, call centers, light industry and administration. In addition to conducting interviews, they provide background checks and payroll services to their clients. What’s more, they offer an exclusive trademarked screening process known as “Matchability,” a quick, effective questionnaire zeroing in on ten essential factors for matching employee to employer.
Q: Explain the dynamics that make staffing such a cash-flow intensive business.
PATRICK: When employers contract with us, we’re basically floating their payrolls — which are paid weekly, so the more your business grows, the more cash you’ll need. And if you have a couple of clients who don’t pay on time as you’re growing, you can get yourself into a big issue. In fact, it’s been my experience that 0% percent of customers pay their invoices on time. All you could do was request “due upon receipt” on the invoice and hope to get paid within 30 days.
That’s why in staffing, cash flow is so important. If you’re tasked with staffing 50 people, that’s a tremendous opportunity, one that could literally end up being $5 million a year revenue. But if you can’t pay salaries upfront, you can’t take advantage of it. And a lot of smaller companies simply can’t compete for those assignments.
Q: How did you feel when slow payments create a cash crunch for your business.
PATRICK: For sure helpless, as a small business owner cash flow is everything. Cash flow, at least in my opinion, is the most stressful part of being a business owner. It’s great to own your own business, but it’s frustrating when on paper you’re doing well but from cash flow perspective you’re not.
Q: How does Baton address those cash flow challenges?
PATRICK: What I think Baton does is give more people the financial leverage to start or grow their own staffing companies. There’s somewhat of a barrier to entry — unless you’re well backed with cash or can bank your own deal.
In staffing, the more you grow, the more ready cash you need to pay out those salaries. Waiting for payments creates a cash crunch. Some small businesses spend as much as 25% of their time on collections. With Baton, you can spend more of that time on what matters: developing new clients and exploring areas for growth.
Q: What other funding options did you explore before turning to Baton?
PATRICK: Well, I have a bank line of credit, which as you know means you’re funding your business with debt. Unfortunately, some business owners are not even in this position — especially the smaller ones – as they might not qualify for a line of credit.
Like Patrick, many Baton customers also have a line of credit. However, often times, these lines of credit do not have sufficient credit limits to meet all the needs of a small business. That’s where Baton comes in – by using Baton to get paid (in as few as 3 days) on invoices owed to your business, you not only improve your working capital position but you free up your line of credit to fund other needs. And, unlike a line of credit, Baton is a B2B invoice payment solution – it’s a payment and NOT debt to your company. In short, Baton and lines of credit are financial products that can work together for the benefit of small businesses.
Q: Have you noticed other benefits to partnering with Baton?
PATRICK: Yes, qualifying clients. That’s the other part that’s kind of nice. You know, small businesses don’t necessarily run D&B (business credit) reports on everybody. So to have that virtual credit check is great. It just makes you feel a little better because you’re not going to get into business with someone who’s just not going to pay you.
Q: So, you don’t do your own credit checking?
PATRICK: No. It’s just my guess, but I bet 99 out of 100 businesses between $1 and $10 million, depending on what they do, they don’t run credit checks.
Do you know the credit worthiness of your customers? You should. Think about it: from the moment your invoice goes out, to the time you get paid, you’re being a bank to your customers by extending 30/60/90 day (or longer) interest free loans.
Q: Have you ever had to modify the direction of the business based on a customer’s slow payments or inability to pay?
PATRICK: Oh, absolutely. Things that we couldn’t do. Opportunities that we couldn’t try to get because we weren’t in a position to go after them. I mean I’ve had problems where we’ve gotten a call from the bank saying payroll is about to come due and you don’t have the funds. And I’ve had to personally put funds in, which obviously is no fun.
Q: How has Baton’s SELLING POWER terms improved the value you’re able to provide your customers?
PATRICK: Having the opportunity to offer different payment terms to my customers. I can now tell my customers, “If I can extend these terms so that, even though your invoice terms are currently 30 days, and you normally pay within that time, we can now offer 90 day payment terms. If we did that, could we charge you 3% on each invoice?” And two of them have said yes, because they would rather hold on to their money and use it in other ways.
Q: Has Baton signaled any customer’s credit as problematic?
PATRICK: Yes, and we’re not placing anybody else there anymore, though they have a bunch of openings, until we get paid. Because Baton didn’t approve a client, we are slowing down. Until that office gets current, we’re not placing any openings with them.
Q: So, in effect, Baton is serving almost like a lending manager or free risk manager as you extend your business?
PATRICK: For sure, because they’re running credit reports on them and if Baton qualifies them at a low fixed-fee, it shows that they probably have some pretty good credit. We’ve talked to the few people we’ve qualified with our Baton account and they’ve agreed to have us add an administrative percentage to our invoice. And it’s going to end up basically as close to paying for itself as you can.
With Baton behind you, because you always know the pricing upfront, you can customize payment terms, accept new orders and accommodate requests for extended payment terms for any desirable client. Baton’s process is virtually invisible to your customer. We call it SELLING POWER™. Simply negotiate the Baton fee into the quote, confident that you won’t have to wait to be reimbursed.
Q: So, all in all, you’re glad you’ve got Baton by your side?
PATRICK: Definitely. If I had something like Baton that was giving me great cash flow early on, could I be ten times bigger than I am now? Maybe. I will never know for sure. But the plan now is as we start to grow more and more, and bring in new customers, we’re probably going to just go straight through Baton at first.
For Cameron Search and Staffing, Baton powers business growth and employer security all while alleviating payroll stress. “It’s definitely better to get your money in 2 days than 42 days,” Dudley says.
He can sleep better at night knowing Baton makes that dream a reality.