How This Account Was Sourced
This account was sourced by an IACFB factoring broker (husband and wife team) located in Sarasota, FL. Even though the client (a disaster cleanup contractor) was located in New Orleans, the account lead was generated as a form submission from their website. This broker team focused much of their marketing for leads toward the construction industry with direct mail marketing in the Sarasota / Bradenton FL Area but also published blog articles targeting construction factoring using their WordPress website’s blog. This initial factoring arrangement was initially a “spot factoring” account financing one job, which eventually became a very active client.
About Sourcing This New Orleans Contractor
This is a typical example of the factoring broker opportunities that abound whenever there is a natural disaster. In this case, a hurricane was
the culprit in North Carolina, and actually, this problem and the financial grant were applied for two full years after the hurricane passed, when dead limbs from the storm eventually fell into local streams and caused blockages and flooding in the town. A grant was awarded to the local county, whereas the county would pay for ten percent (10%) of the cleanup cost, and FEMA would pay ninety percent. The cleanup was estimated to be $1 million to $1.1 million.
This broker team’s success was not just about their chosen niche of construction factoring, but also about their innovative marketing strategies. While they primarily used direct mail marketing and cold calling for lead generation in their Gulf Coast Florida market, they also leveraged the power of their website’s blog. Their blog posts about FEMA cleanup opportunities and the need for ‘spot factoring’ not only attracted this particular client but also inspired others in the industry.
As with many contracts awarded for FEMA projects, these are often looked at as “spot factoring” arrangements. Many general contractors are often capable of managing most cash flow and payroll issues payable through the contract’s stipulated “progress payments.” In this case of massive debris removal, progress payments were difficult to stipulate in the contract, and the contractor knew he would require invoice advances and factoring in a contract of this size with FEMA. Additionally, this general contractor was awarded three other sizable cleanup jobs at the same time as this new FEMA project.
Broker Commissions and This Client
For the Florida-based broker team, this blog post had an exceptional income outcome. As the brokers-of-record, they earned commissions related to dozens of periodic “spot factoring” jobs awarded to this construction company over the years. The general contractor quickly learned about the incredible value of his ability to call upon receivables spot factoring when bidding on jobs that would require offering very extended payment terms to earn the award. For example, on the cleanup award above, the final $365,000 payment from FEMA on the $1.100,000 job took a total of 121 days to receive payment (four months) from FEMA after invoicing. No general contractor can expect his subcontractors and employees to wait 4 months for their pay. Factoring such invoices makes saying “yes” to such extended terms of payment possible.
The total commission earned by this broker team on this spot factoring contract was over $3,400. However, the additional factored jobs that followed from this New Orleans-based contractor provided well over $40,000 in commission income over time. All brokers should learn an important lesson reagding the posting of sample articles to their website’s blog as well as authoring such real life case studies to social media outlets such as LinkedIn and Facebook.