If you’re reading this article, it probably means that somewhere along the line you’ve stumbled upon the business of accounts receivable factoring and even more importantly, you’ve come to learn that lucrative commission income can be earned in this industry simply by referring clients to factors and other companies involved in asset-based finance. But what has really piqued your interest, is that much of such commission income is styled as “residual” and can be paid for the life-of-the-account, often five (5) years or longer. Still interested? Read on.
What are Factors and Factoring?
Factors are a highly specialized category of commercial finance providers that, worldwide, account for trillions of dollars of financing each and every year. So if you thought this was some small niche industry, you were wrong. So…factoring is BIG business and continues to grow exponentially. As one of the world’s most powerful forms of commercial finance, factoring addresses the problems a small business faces when it’s customers are invoiced for purchases but require (or simply take) 30, 45, 60 days or longer to pay upon their invoices for goods or services. Factoring and factors do nothing else but address this particular problem. And they do so not by lending, but by purchasing B2B invoices as they are created. So with a factoring arrangement in place, a business can continue to grant 30 day or longer terms of payment to customers, but the business itself receives immediate cash for each sale, thus eliminating many of the cash flow problems associated with slow paying customers.
So…Where Does the Broker Fit In?
Most factors of reasonable size will have one or more Business Development Officers or (BDOs) who are charged with locating new clients for the company. Such BDOs are employees and are usually compensated with a base salary plus commission override. In addition to their BDOs, however, virtually all factors readily accept client referrals from almost any individual who has learned of this under-the-radar, income opportunity. Such referrers can operate on the most “occasional” basis, generating leads every so often by simply being in the right place at the right time…or…they can approach the business of freelance brokering on a more professional basis, having a home office, website, and utilizing powerful direct marketing campaigns and networking strategies to generate a constant supply of quality leads. As a broker, it makes no difference what type you fit in to. Your referrals will always be welcomed by the factor and you will earn compensation for them. Freelance brokering in the factoring and asset-based finance industry is an exceptional home-based business opportunity by any measure.
The Business of Commercial Finance Consulting
So, while virtually anyone can earn a commission from a referral or two to a factor and do so with minimal knowledge, there is a very select group of individuals that choose to embrace freelance brokering to it’s fullest, and develop it into a true career. This group is termed “commercial finance consultants” and as true “consultants, they will…
- Develop an in-depth knowledge of the many niches of factoring as well as other forms and types of asset-based finance
- Build large referral networks which include loan officers, accounting professionals, and others that can send business their way
- Work with and become active in local business incubators and organizations such as SCORE and university-based SBDCs.
- Spend much time developing close ties with various specialized industry lenders that can assist them in closing unusual or difficult deals
Understand that consultants earn their living due to their in-depth knowledge regarding a process or product that is beyond the norm of the average person. So to be a true consultant in any industry, you have to either hit the books or gain some significant on the job experience. And…consulting in factoring and asset-based finance is no different, if you intend to make this vocation a true career. Without question, the more you learn about this fascinating industry through research and study, the more value you’ll have as a player in freelance business development.
Where to Get Started
For those wanting pursue a career as a commercial finance consultant, there are several quality schools to assist you in learning the ins and outs of the industry. The schools typically come well recommended, although be prepared for some “sticker shock” when it comes to the subject of tuition. A quality alternative for self-starters and mobile creatives, is the IACFB or International Association of Commercial Finance Brokers. As one of the premier industry facilities for broker training and support, IACFB provides comprehensive introductory training and startup programs as well as advanced training and continuing education in its Campus IACFB. Find out more at www.iacfb.academy.
