The laser pointer is vibrating against the ‘Q4 Projections’ slide, a tiny red dot dancing over a number that should be cause for celebration but feels more like a death warrant. I am watching Marcus, our CEO, trace the 128 percent increase in funded volume with a grin that doesn’t reach his eyes. He is performing. We are all performing. In the back row, Sarah from Collections is gripping a lukewarm cup of coffee with both hands, her knuckles white. She knows what I know. That hockey stick graph, that beautiful, climbing line of revenue, is actually a map of the shipwrecks we’re scheduled to have in six months. It is the kind of growth that doesn’t build a company; it just builds a bigger pyre.
I remember a moment last week where I sat in my office and literally closed my eyes, leaning back as the door clicked shut, and just pretended to be asleep. It was easier than looking at the 888 new applications sitting in the queue. My staff was cheering because we’d hit a new record, but all I could see were the cracks in the foundation. If you move fast enough, you can outrun the sound of the house crumbling behind you, at least for a while. We were funding deals at a rate of 48 per hour, a pace that made the risk assessment team look like they were trying to catch a waterfall with a thimble. We were so busy counting the water that we forgot to check if it was poisonous.
Conceptual Anchor: Growth as Anesthetic
$5,008,008
Monthly Inflow
$4,980,000
Approx. Outflow
Growth is the ultimate anesthetic. It numbs the pain of operational inefficiency and masks the scent of bad debt. When the money is flowing in at $5,008,008 a month, no one wants to be the person who points out that the outflow is catching up. We are obsessed with the ‘more,’ the ‘bigger,’ the ‘faster.’ But in the world of commercial finance and factoring, speed without control is just a more efficient way to go bankrupt. We’ve turned our sales department into a high-pressure hose, blasting clients into our ecosystem without checking if our pipes can actually handle the pressure. The result isn’t a larger reservoir; it’s a series of bursts that we’re currently patching with duct tape and hope.
The Lighthouse Keeper: Clarity in the Fog
Rio H. understands this better than any executive I’ve ever met. Rio H. is a lighthouse keeper I met years ago on a desolate stretch of the coast, a man who has spent 38 years watching the horizon. He doesn’t care about the number of ships that pass his light; he cares about the 18 ships that are currently fighting the riptide. To Rio, a busy day isn’t a successful day; it’s a dangerous one. He told me once that the most dangerous time for a navigator isn’t the storm, but the fog that follows a period of clear weather. When things are too easy, you stop looking at the charts. You start trusting your gut, and your gut is a liar that wants you to feel comfortable.
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The gut is a liar that wants you to feel comfortable
In our boardroom, we’ve been in the fog for 98 days. We’ve convinced ourselves that our risk assessment models are robust enough to handle the volume, but the models were built for a world where we had time to breathe. Now, we’re cutting corners to maintain the ‘growth’ narrative. We’re accepting 78 percent of applicants who would have been rejected a year ago. We tell ourselves it’s about ‘expanding our footprint’ or ‘market penetration,’ but it’s actually just hunger. We’ve become addicted to the top-line numbers, and like any addict, we’re willing to trade our future health for a current high. Sarah’s team is now dealing with a default rate that has climbed to 28 percent, up from a steady 8 percent just two years ago. The math doesn’t lie, even if the CEO does.
The Trade-Off: Commission vs. Due Diligence
Commission Demanded
Aging Report
I spent an hour yesterday looking at a single file-a $238,000 credit line for a trucking company that has ‘disaster’ written in the margins of its soul. Their aging report looked like a crime scene. But the sales rep was screaming about his commission, and the regional manager was screaming about the quarterly target, so we funded it. We pushed the button and watched the numbers go up. We felt that brief spark of achievement, the dopamine hit of a closed deal. But later, when I was alone, I felt that same cold dread that Rio H. must feel when he sees a ship steering too close to the jagged rocks. We aren’t building a portfolio; we’re building a collection of mistakes that we haven’t had to pay for yet.
The Exponential Nature of Risk
This is the great irony of the modern business cycle. We have better data than ever before, yet we use it less than ever. We have the technology to see exactly where the risks are, but we choose to look at the ‘engagement’ metrics instead. We’ve replaced wisdom with velocity. If I could go back to that boardroom and stand up, I’d tell them that 58 solid, reliable clients are worth more than 508 volatile ones. I’d tell them that the most important metric isn’t how many deals we funded today, but how many of those deals will still be paying us in 408 days. But I didn’t stand up. I just sat there and watched the red dot on the screen.
The Compounding Lie
There is a specific kind of arrogance in thinking you can outscale risk. It’s a belief that if you get big enough, the failures won’t matter because they’ll be a smaller percentage of the whole. But risk doesn’t scale linearly; it scales exponentially. When you increase your volume by 68 percent, your risk doesn’t go up by 68 percent-it compounds. Every new client that isn’t properly vetted is a potential landmine. And when you have a field full of landmines, it doesn’t matter how fast you run; you’re going to lose a leg eventually. The companies that survive the next decade won’t be the ones that grew the fastest; they’ll be the ones that had the discipline to say ‘no’ when the ‘yes’ was too expensive.
Volume vs. Risk Compounding (Conceptual)
+68% Volume
Compounded Risk
The Need for Clarity
In the messy reality of high-volume funding, you either have a system like best factoring software that filters the silt from the gold, or you’re just drowning in very expensive mud. Without a platform that integrates real-time risk assessment into the very DNA of the sales process, growth is just a fancy word for suicide. We need tools that don’t just tell us how much we’re making, but how much we’re actually risking. We need a way to see the 88 red flags before they turn into 88 write-offs. Rio H. doesn’t guard the light with a candle; he uses a massive, rotating lens that cuts through the thickest gloom. We need that same kind of clarity in our ledgers.
98
Days in the Fog
We’ve replaced wisdom with velocity.
The Reckoning
I think about the 158 employees we have now. They all have mortgages. They all have families. And they’re all riding on a ship that is currently aiming for the rocks because the captain wants to set a speed record. It’s a heavy realization. I find myself wondering if I’m an accomplice. By not speaking up, by pretending to be asleep in my chair, am I just waiting for the crash so I can say I saw it coming? That’s a coward’s way out. Real leadership isn’t about celebrating the wins; it’s about having the courage to stop the momentum when it becomes destructive. It’s about being willing to be the ‘boring’ person in the room who cares about the 8 percent default rate more than the 128 percent growth rate.
Yesterday, the sun set at 5:08 PM, and I stayed late to look at the numbers one more time. I found a discrepancy in a series of accounts we onboarded last month-nearly 38 percent of them had misrepresented their primary debtors. It was a classic case of growth-blindness. We were so eager to get them on the books that we didn’t do the basic due diligence. I could feel the ghost of Rio H. standing over my shoulder, pointing at the screen with a weathered finger. ‘That’s the fog,’ he’d say. ‘That’s the part where you lose the ship.’
Tomorrow: Reclaiming the Rudder
I’ve decided that I’m done being silent. Tomorrow, I’m going into that boardroom and I’m going to present a different graph. It won’t be a hockey stick. It’ll be a jagged, ugly line that shows exactly where our operational capacity ends and our recklessness begins. I’ll probably get shouted down. Marcus will probably tell me I’m not a ‘team player.’ But I’d rather be off the team than on a sinking ship. We need to reclaim the idea that quality is a prerequisite for quantity. We need to stop treating our risk department like a hurdle to be jumped and start treating it like the rudder that keeps us from spinning in circles.
Course Correction
There is a strange peace that comes with admitting the truth. Even if the truth is that we’re currently $2,008,008 in the hole on paper because of bad decisions, it’s better than pretending we’re winning. I think about Rio H. in his tower, watching the tide come in. He doesn’t try to stop the tide; he just makes sure everyone knows where the shore is. We’ve been pretending the shore doesn’t exist, that we can just keep sailing into the horizon forever. But the horizon is a line that moves as you move. The rocks, however, stay exactly where they are. And we are currently 8 miles away and closing fast. Is it possible to change course when you’re moving this fast? I don’t know. But I know that trying to steer is better than closing your eyes and pretending to be asleep.