Construction Factoring Risk: The 1% Margin of Error

In factoring, you only have about a 1% margin for error—and your processes work until they don't. Dare Capital CEO Cole Harmonson breaks down 30 years of lessons in operational risk, invoice verification mistakes, and why traditional factoring software from the 1980s leaves portfolios exposed. From scaling Far West Capital from zero to $85M in assets to building Dare Capital's proprietary NN6 (Non-Negotiable 6) and First Glance AI systems, Cole shares real-world stories of what goes wrong behind the scenes in commercial and construction factoring—and the exact systems required to stop costly losses before money goes out the door. In this episode, you'll learn: • Why operational risk—not funding speed—is the biggest threat to growing factoring companies. • How a portal-only invoice verification mistake on a construction deal led to a changed remittance address (and how Dare Capital recovered 100% of the funds). • How an account manager buying pre-bills and missing a $1,600 to $16,000 invoice jump created a $1.6M problem for a fellow factor. • The "Three-Legged Stool" of underwriting construction factoring safely when banks won't touch the deal. • Why a successful factoring business requires 51% brake (credit discipline) and 49% gas pedal (sales). • How one trucking factor used the NN6 dashboard to cut two weeks of collections prep down to a single day. Chapters: 00:00 Intro: 30 Years of Factoring Mistakes & Operational Risk 02:07 What is NN6? The 6 Non-Negotiables of Factoring 05:40 The Construction Verification Mistake We Made 07:46 How Pre-Bills Created a $1.6M Problem for a Factoring Owner 10:35 Why We Built NN6 Instead of Paying Triple for Legacy Software 12:47 Underwriting Construction Factoring: The 3-Legged Stool 16:15 Building a Factoring Team: Why "A-Team Only" Comes First 19:48 The 51% Brake / 49% Gas Pedal Rule in Factoring 23:03 Case Study: Cutting 2 Weeks of Trucking Collections Prep to 1 Day Visit us at https://darebizcapital.com/ Or say “hello” to Cole on LinkedIn: https://www.linkedin.com/in/coleharmonson/