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When she became a widow, with two kids and a microbusiness
started by her late husband, Hilda Leff dusted herself off
and took over. "I didn't know what I was selling, but I went
out and I sold," she says now. "I just had such a gut feeling
about it." It was the same intestinal fortitude that five
years later let her take on a $50,000 mainframe computer and
put it in her basement to handle the increasing load of work,
a daunting development she shrugs off. "I had to go with my
gut feeling." This time, she's going with her gut and her
son. Together in business essentially since Arnold Leff died
in 1976, Hilda and Leonard Leff have just stepped into their
biggest gamble and the one with by far the greatest promise.
They hope to move the local
success of their CDS Group of companies up the escalator to
the Internet.
"It's the same feeling I had
the other times when I went ahead with the business when a
lot of people advised me not to," Hilda Leff says. "It's the
future for us, and the world. The young people today, that's
all they will know." The jump onto the Net already has cost
the Leffs about $1 million in development costs. Another million
is earmarked for the advertising rollout that is to begin
in earnest next month. And there is no guarantee that the
business sliver they have mined all these years will expand
in proportion to the breadth of the Web.
"It's new territory, so it
absolutely is bold," says Leonard Leff, 38, Hilda's son and
president of the CDS companies. She is vice president. "But
we really don't look at it as a risk, to be honest. We don't
think it's a Pet Rock idea that works or it doesn't. It's
just how big we can make it." This new Internet entry is called
MyReceivables.com. In essence, it builds on the work of the
Leffs' other companies, CDS Services Corp. and CDS Capital
Llc., all based in Baldwin. CDS Services manages the accounts
receivable of about 300 small businesses, including preparing
and mailing bills at the rate of 150,000 a month. It also
oversees house accounts and credit cards bearing the names
of small outfits that let them extend credit like big ones.
CDS Services is an outgrowth of Arnold Leff's Custom Data
Services, whose vision in 1972 was to take over the billing
busywork for pharmacies and hardware stores.
His widow and son created CDS
Capital in the early 1990s as a complementary service to help
companies avoid the cash-flow crunch that results from having
bills on the books rather than the money in the bank. CDS
Capital now buys about $8 million worth of accounts a month
from its 450 small-business clients, who receive the proceeds
on a daily, weekly or monthly basis. CDS does the billing
for the clients and receives the payments, all of which is
invisible to the customer with the house account or in-house
charge card.
Starting with an investor's
$5,000, which the Leffs used to buy small accounts, CDS Capital
has grown into a company with about $15 million available
to invest in the short-term receivables. In a year, Leff says,
CDS Capital buys as much as $150 million worth of accounts.
Total sales last year, he says, were between $5 million and
$12 million.
"MyReceivables is a combination
of both," he says, "plus a lot more on the Internet." It allows
clients to hook up through the Internet, enter their receivables
and have them billed, managed and funded. The Internet company
also is looking for partners in small-business markets, such
as medical billing, that it has not yet approached, and will
pitch to become the behind-the-scenes operation for business-to-business
Web sites. The efficiencies of the Internet, Leff says, will
shave a few percent off customers' fees. The Internet also
gives MyReceivables.com a global reach.
The Web site www.myreceivables.com
allows the customers of its clients to apply for house accounts
and credit cards online. In most cases, the only indication
that Leff's company is involved is the notation "Powered by
MyReceivables.com." Among its first dozen clients are a Manhattan
valet service, a glass distributor, a restaurant-maintenance
company, a florist and a four-store hardware chain in Texas.
"We're pushing the loyalty,
which is what they want," Leonard Leff says.
"These stores know that their
best customers are their house accounts. They come in every
month. They charge a lot and they pay well because they want
to come back the next month. The stores just need us to come
and manage it for them." The Internet site took a year to
develop, he says, in part because the learning curve for a
new endeavor is steep, because the system needs to be "bulletproof"
in terms of security and because the suppliers of Internet
communications, such as DSL lines, are backed up by the enormous
demand for online infrastructure.
The demand on CDS Companies's
office is equally intense, and the Leffs are hoping to find
a new home about three times larger than the 5,500-square-foot
space it now occupies. The Leffs want to stay close to Baldwin,
but as far as possible from the parking crunch imposed on
them by the nearby LIRR station.
Hilda Leff is as enthused about
these moves as she was threatened by the prospect 24 years
ago of keeping a struggling billing-bureau afloat. "I can't
tell you how excited I am," she says. "I think it's going
to be wonderful for us. And I always have to go with my feelings.
We have the old economy behind us, which a lot of these dot-com
companies don't have. We have the experience, and we are making
money. A lot of these dot-com companies are air, and we're
not."
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