One of the most exciting moments related to brokering in the factoring industry is when you submit your first deal, and it’s accepted. This means that you, as a consultant, have not only been instrumental in assisting a small business owner in accessing the financing required to operate and grow their business, but it also means you are about to earn your first monthly residual commission checks. Though the deal submission process can differ slightly from factor to factor, to follow is how we address the submission of your first deal at IACFB Wholesale Operations.
Submitting the Company Profile and A/R Aging Report
At IACFB, everything begins with the submission of a Company Profile. Company Profiles are a 3-page document that provides us with an overview of the prospect’s business. Typically, the prospective client completes the profile and returns it to the broker, who then reviews the profile for completeness, adds his / her name and contact information, and then emails the profile to IACFB as a submission along with a completed IACFB Factoring 101 Broker’s Agreement if one is not already in place. If you are an IACFB subscriber, Company Profiles can be downloaded from Factoring 202 as well as the IACFB’s public website for financing from www.iacfb.com.
Client / Prospect Teleconference
Once the Company Profile and A/R Aging Report is received, IACFB underwriters will ask the referring broker to set up a conference call to go over the profile. This is a pre-underwriting task to make certain the prospect understands how factoring
works and the basic requirements to set up a factoring arrangement. On the call, IACFB underwriters will make certain the prospective client understands…
- Factoring involves invoices for work already performed or goods already delivered. It is not used to finance a contract performed in the future
- The Factor must have a senior (first position) assignment of invoices. A previous lender that has filed a lien on invoices cannot be in place
- The size of the account (invoices tendered for purchase) meets the purchase requirement of $25,000 to $2,000,000 per month
- The client’s customers (account debtors) are creditworthy
- There are no tax liens or judgments present that could prevent the factor from collecting upon purchased invoices.
Submission to Underwriters and Contracting
If the results of the teleconference are positive, the deal will then be submitted to underwriting, where a UCC search will be performed and a Terms and Conditions letter, outlining the details of the proposed factoring arrangement will be created and sent the prospective client. If the terms are acceptable to the client, a contract (Master Purchase and Sales Agreement) will be sent the client for signature and once signed, the factoring facility is considered in place and the new client can begin submitting invoices for purchase (finance).
As opposed to traditional bank financing, the entire above process typically takes under 5 days from initial deal submission by the broker to final contracting by the IACFB approved factor.
Broker Compensation at IACFB
Once the submitted referral deal has been funded, residual commissions will begin to be earned by the referring consultant. Since commission payments are based upon the collections of funded invoices, it typically takes about 60 days before the receipt of the first commission check. Once received, commission checks will continue on a monthly basis as long as the client is utilizing the services of the factor. Typically, you will receive..
- Referrer: 50% of the commission earned from the funding factor
- Agent (PAL): 65% of the commission earned from the funding factor
- Sponsored Agent: 10% of the factoring fees earned by the factor
Free Website Program for Referrers and Agents
IACFB members and subscribers receive website program cost reimbursement of up to $100 once their first deal is funded. This means that any client factoring $25,000 or more invoices monthly triggers the website reimbursement. Referrers and Agents are automatically provided with an SA-Series Sponsored Agent website and free hosting through DataMax. Domain fees are not reimbursable.
Periodical First Deal Bonuses
Periodically, first-deal submissions are also eligible for prizes and awards based on their deal size. These are typically featured as “Challenges,” and details can be found in the IACFB Magazine. You can get all the latest “First Deal Challenges or Bonus Awards” by visiting here.
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