Sometimes, it is easy to “gloss over” the power of business types that offer residual income and the business of factoring broker is one that not only offers residual monthly commission income but offers such income for the life of account. This broker, who we will call “Tina,” has referred a small construction cleanup account to a factor that has been a provider of monthly commissions to Tina for eighteen years. In fact, at an average monthly broker commission paid, Tina calls this account her “New Car Account” because, due to the average commission of slightly over $250 monthly that Tina receives as the “broker of record”, she has been able to pay (and enjoy) a new leased vehicle for 18 years as a result of this single referred account.
Tina’s Story
Tina was a discount note/cashflow broker who discovered factoring and business finance as a lucrative (and powerful) additional service she could add to her current business of purchasing discount mortgage notes. In fact, factoring and business finance were very common add-ons for cash flow consultants due to their residual income features and ease of marketing since leads could be
generated easily using direct mail and her website. She typically offered a free booklet on factoring through her mailings, and one of her first leads and accounts was a painting contractor who strictly provided services to apartment complexes. When a tenant moved out, his crew then painted the apartment interior, made small repairs, and made the dwelling ready to re-rent.
The management companies that paid the contractor were notoriously slow payers, but it was good business and a great niche. The contractor was a perfect candidate for factoring and became her very first client, where she earned over $500 monthly in commissions on average. However, that is just part of the story.
Within a few months, her contractor client gave her a referral. His referral was a local commercial cleaning company that a friend operated. His referral was not as large as the contractor’s, but this referral, a minority business enterprise, received good contracts and provided Tina with her second factoring client.
Time Passes
Though she started in factoring strictly part-time, Tina became a “professional” freelance factoring and business finance consultant over time and it did not take long until her six-figure annual income far-eclipsed her income earned in her mortgage note business primarily due to the residual month-month income common from factoring. Over time, her initial client, the painting contractor, no longer needed her services, and although Tina received commission income of roughly $500 per month for nearly four years ($24,000), the contractor eventually qualified for a large bank loan. Tina’s referral of the commercial cleaning company, however, has been a different story.
Tina is now a perfect example of a factoring consultant success, having been in the industry for nearly 20 years. While her portfolio of factoring clients come and go, she has expanded her services to SBA loans, international factoring, and more. Her business as a broker has matured, and her active prospect and referrer list in her CRM (customer relationship manager) is now over 13,000. Her past work means she now does little new marketing and is able to bring in new clients routinely from relationships she has developed.
As a well-established broker, Tina routinely has clients that use her services in factoring for 3 years, 5 years, and even 7 years and longer. Her longest factoring client, however, has been her very first referred client (commercial cleaning company), who has been an active factoring commission-generating client now for eighteen-plus years. She refers to this client as her “New Car Client” since the average commission earned from this small cleaning company has been (each and every month for 18 years) on average $250. In fact her smallest commission was only $95 and that occurred during the Covid crisis. Her largest monthly commission check was a little over $550. But, on the whole, Tina has average roughly $275 per month in commissions. This single monthly residual commission has provided her with a shiny new vehicle lease for the last 18 years.