By  on September 17, 2007

J. Michael Stanley, managing director at Rosenthal & Rosenthal Inc.'s factoring division, one of the country's larger factoring firms, knows the ins and outs of the apparel business. He has to because the job depends on an intimate level of knowledge of both retailers and vendors.

But he was not always an insider. Thirty years ago, Stanley admits that the "only experience I had with apparel was wearing apparel." Today, Stanley is a key player in the industry, and earlier this year assumed the managing director title at the firm. Stanley, who has been with Rosenthal for 10 years, is also a member of the firm's executive committee.

Stanley was drawn to the factoring industry by a feeling that it represented a growth opportunity and was an interesting part of the financial services world.

Rosenthal & Rosenthal does in excess of $4 billion in annualized volume in its factoring division, Stanley said. The firm also provides financing for asset-based, real estate and fine art transactions. The company employs roughly 200 people in its factoring division, divided between offices in California and New York.

Since joining the industry after earning an undergraduate degree in business and finance in 1975, Stanley worked with a few factors before joining Rosenthal. He started his career with United Factors and also spent time with Capital Factors. Since then, Stanley also earned an MBA in finance.

He currently serves as a board member at the Fashion Institute of Technology's Educational Foundation for the Fashion Industries. He is active in trade organizations such as the Decorum Manhattan Credit Club, the Commercial Finance League and the Commercial Finance Association, as well as in a number of charitable organizations.

The factoring industry, like many others, has evolved through a prolonged period of consolidation. That consolidation has altered the landscape of the industry, but has mirrored movements in the apparel sector.

"The biggest change we've all seen is the consolidation of both the vendor and the retail spectrums. And the sourcing shift to low-cost-producing countries and the challenges it takes to finance that supply chain," Stanley said. Indeed, in looking forward, Rosenthal is considering the possibility of opening an office in Asia, he said.Stanley said today's factoring industry is more complicated than it was in the days when factors simply gave a company a line of credit, they borrowed 80 percent against receivables and that was it.

"Today, it's just not that simple. You're borrowing against inventory, you're borrowing against receivables or borrowing against letters of credit, in transit inventory, the intellectual property and trademarks," he said.

The kind of clients Stanley works with also have changed some, he said. Typically the firm sees two types of clients: those that are doing very well and need financing to help support their growth, and those that are challenged and need support in restructuring, downsizing or merging.

"It's paradoxical in the sense that they're going in opposite directions. One is going up very rapidly and one is going down and challenged," he said. "Those are the companies that are the most needy."

Because Rosenthal is a private institution, it is able to commit and give an immediate response to clients who are in need of additional support, he said. The ability to anticipate the potential problems of those clients and respond consistently is the most difficult part of his job, Stanley said.

"The most challenging thing is trying to be consistent with what we do, to effectively treat people we're doing business with fairly, evenly and consistently. That's what we strive to do."

The payoff, he said, is in seeing clients succeed when they receive the support they need. Some clients predate Stanley's time with the company, but Rosenthal has always operated on a business model that encourages loyalty, he said.

"That's what I'm endeavoring to do as managing director of the company, to really continue that business model in a different era," he said. In the current era, the company operates off a different platform, which includes an electronic platform and other developments.

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