Capital-Plus is devoted to the financial needs of small businesses-from factoring to invoices, to business advice given for free.

Capital-Plus is devoted to the financial needs of small businesses-from factoring to invoices, to business advice given for free.

When Bob Setzer started Capital-Plus Inc. 25 years ago, he imagined it as a venture capital firm to help small and emerging companies. Instead, Capital-Plus became a factoring company, serving new businesses by providing cash for accounts receivables, but always with the goal of fostering a small business network with access to capital.

Today, Capital-Plus is in transition from Setzer's leadership to his daughter, Renee Tyack, an experienced small business banker who will own the business in about two years and hopes to hang on to that original vision.

"When Bob founded the firm, the market in central Ohio wasn't what it is today. Now we have incubators, we have Rev1, we have venture capital firms and a city that is drawing entrepreneurs," Tyack says. "There is an opportunity right here at home to continue providing excellent service, supporting entrepreneurs and facilitating growth."

Where does Capital-Plus fit in?

"We're in the business of providing short-term capital against short-term assets," Setzer says. "Basically, it's a revolving door. We're providing short-term cash so that you can create short-term assets, specifically accounts receivable."

"When you're a young entrepreneur, young in the business cycle, you're looking at growing your business. But in order to take on new business, you need additional capital, just short-term working capital," Tyack says. "You're too young for a bank. You don't fit the criteria for a loan ... However, you can take an advance on receivables."

That business model converts about $160 billion of receivables into cash for businesses each year, says Bert Goldberg, executive director of the American Factoring Association. "Clients get capital access. It's fast, it's fairly inexpensive, and it's safe. Factors normally are fairly knowledgeable about an industry, and many do back office work for clients to make sure customers have the ability to pay," Goldberg says.

That's true for Capital-Plus, which doesn't just provide factoring. "We input invoices, manage invoices and reduce the days sales outstanding (that is, the average number of days needed to collect on sales)," Tyack says. "We improve cash flow for the business potentially even without providing cash advances on receivables."

Capital-Plus customers may need a quick cash injection, better collections on slow-pay customers or better analysis of whether to grant customers credit. Some move on after the problem is solved, but others stay on as clients for years.

"We handle invoices for a bread maker who hand-writes his invoices, and he has been with us 25 years. We have (had) a commercial cleaning company for more than 12 years, and he does the same thing," Tyack says. "Both can take advances when they need them."

Some customers outgrow the need for factoring but not the company relationship. "I'm very happy with the relationship," says Phil Wilson, president and CEO of Fine Citizens, a web and user interface designer and Capital-Plus customer for five years. "We are kind of scaling past (factoring). Our capital needs have started to outgrow their sweet spot."

But Wilson still taps Setzer and Tyack for business advice. "They're so well connected, personal and responsive, so even if it's something they don't directly do, they get you a contact and some help."

Technology is a challenge, as online lenders and online factoring markets can seek some of the same customers. "We'd be foolish to ignore the rise of online marketplace lenders," Tyack says. "But the idea of providing access to capital based on receivables has been a viable financing solution for centuries," she says, and technology will only make that more efficient over time.

Mike Mahoney is a freelance writer.