Looking for a part time, home based business that will help you meet the bills at the end of every month? Was your job one of the hundreds of thousands of lost in tech-related fields in the last few months? Do you actually like your current job or position but you just need some additional income monthly income until this inflation goes away? If so, we may have the perfect solution for you. And the great news is, learning this home business opportunity is actually FREE. And it’s all right here at the IACFB Magazine. You need only learn how to become a Factoring Industry Referrer.
So What Is Factoring?
Accounts Receivable Factoring or simply factoring, is a powerful financial tool used worldwide as a method of business finance and more specifically, to address the cash flow problems which arise when a business sells on “open terms” and provides attractive terms of payment to it’s customers. By “terms of payment”, we refer to the time one business actually grants to another business to remit payment for goods delivered or services performed. It is important to understand that when one business allows a customer 30, 45, 60 days or longer to pay for goods or a delivery of services, they are actually providing a type of inventory finance or a short-term loan to that customer.
Because factoring is only utilized to address the working capital problems which arise when granting extended time for customers to pay for shipments or services, it is generally considered to be a business-to-business (B2B) form of finance and almost never consumer related. Plain and simple, factors only finance invoices due and payable by business. They do not finance real estate, notes, vehicles, franchise purchases, etc. They do not provide start up cash or loans of any kind. Factors only finance invoices payable from one business to another or B2B financing.
Not a Household Word
While certainly not a household word, factoring in the United States is an enormous industry with a current sales volume of approximately $130 billion annually. For many startup and “first stage” businesses having little access to traditional bank financing, factoring simply has no equal in its capacity to free up working capital for growth and business expansion.
When first introduced to its many characteristics as a proven form of business finance, it is important to make immediate note as to the major differences between factoring and the more commonplace methods of commercial finance such as business term loans and asset-based lending. As it is traditionally recognized, factoring is never a loan. It always involves the actual purchase of the accounts receivable of a business at a small discount to their face value. Contrarily, asset-based lines of credit are always structured as a loan and though many modern day factors have developed some rather exotic hybrid fee and purchase structures for their financing models, the financial basis for these transactions is always that of purchase and sale rather than loan and repayment.
With the basis for such financing predicated entirely upon the accounts receivable (the invoices) of a business as collateral, factors differ markedly from banks and other traditional lenders that will provide business loans based on more typical collaterals such as real estate, equipment, inventory, and buildings or other structures. In essence, factors simply buy invoices…short-term obligations owed by one business to another for goods and services delivered or performed.
Since factors purchase accounts receivable, they own them. And, because of their actual ownership of the purchased invoices or accounts receivable, factors tend to become very involved in the day-to-day operations of their client’s business and often perform most functions of collection and accounting. They will be in periodic contact with customers ( known in the industry as account debtors) to make certain timely payment is made upon the invoices purchased by the factor and, in most cases, will insure that payments upon the invoices will be mailed to the business address (or lockbox) of the factor rather than to the address of the client or the business selling the invoices.
So the Factoring Basics: Recognize Your First Deal (and Commissions)
So to sum up the basic characteristics of factoring:
- NEVER A LOAN: Factoring is never a loan such as a typical beank loan, but rather a purchase and sale transaction where invoices are sold.
- B2B BUSINESSES ONLY: Factoring is a business-to-business (B2B) transaction and typically does not involve consumer financing
- INVOICES ONLY: Factors only purchase invoices (accounts receivable). They do not provide financing for equipment, real estate, business startup seed requirements, etc.
- ACTUAL SALES: Factors only purchase invoices representing goods actually delivered or services actually performed. They additional do not purchase delinquent invoices of invoices of questionable quality.
- NORMAL COLLECTIONS: Factors will become directly involved in collections and accounting regarding invoices that they have purchased.
- PAYMENT DIRECTED TO THE FACTOR: In most cases, payments from customers will be directed to the factor’s business address or a bank lockbox.
Get Involved: Become an IACFB Referrer
While most opportunity-seeking entrepreneurs who learn about this unique “under-the-radar” business will focus their effort on becoming full-time career business finance consultants, the industry actually has a very large number of lead-generating “referrers.” Most enter the industry as referrers and continue to have a regular 9-5 job. They like it and don’t want to quit. They are simply looking for more income in today’s challenging economy. They are looking to create multiple income streams. And for these individuals, there is almost nothing better than learning a little bit about factoring. And to learn more about this business opportunity, we have everything you need right here at IACFB Magazine.
As you can see, this Referrer Course is completely FREE, and all you need to do is complete this short course, frequent the IACFB consultant magazine, and sign up for IACFB’s Broker Group on LinkedIn. Depending on who sponsors you, you only need to simply download your Sponsor’s Referrer Agreement. Complete the agreement and email it back to your sponsor. Once you complete the course and begin submitting SQL (Sales Qualified Leads), you are well on your way to earning your fair share of the residual, life-of-account commission income that has made our industry famous.
