Three important questions you will want answered before starting a factoring business as a broker, consultant, or funding company.
Over the last year I’ve had the privilege and pleasure of writing several articles for Factoring Investor on the topic of how you can get involved in the factoring business.
In my July 2011 article, “Starting Your Own Factoring Business”, I discussed several resources to consider if you wanted to pursue your own factoring business as a direct funder. In our November 2011 article, “A How To Guide for Factoring Brokers”, we discussed selling points for brokers to use when approaching potential clients in need of cash flow. We even went as far to supply an instructional guide to help new brokers better understand the industry.
Fast forward to today and I am happy to report that we have received tons of feedback from interested parties wanting to get involved in the factoring industry. I can also report there are some fantastic folks out there which makes me feel confident that our industry’s best days are ahead of us. However, I do feel the need to address several recurring questions that I receive from both new brokers and funders.
1. Where do you find new clients for factoring?
This isn’t always the first question I receive but I can tell you it comes up in almost every conversation. Listen, if there was a magic wand to wave that could find new clients, we would all have one.
Your marketing plan is crucial to your success and it will either make or break your factoring business.
It doesn’t need to be a formal plan consisting of hundreds of pages of text with graphs and charts, but you do need a path to follow or you will get lost very quickly. Maybe you have experience with a specific industry or maybe you prefer to work with a particular client profile.
No matter what path you choose, find your niche and figure a way to penetrate it. There are endless resources you can utilize on the internet to research industries, markets, planning, you name it. It is up to you to figure out how to reign in this information and put it to use to grow your business.
2. Can I work in the factoring business part-time?
Of course you can. Although, I find this option is more suited for brokers than direct funders.
Our company’s experience has taught us that clients are demanding and rightfully so. While our office hours are typically Monday through Friday, I cannot tell you how many emails and calls we answer after hours and on weekends. When a business owner is trying to get his invoices funded to cover that week’s payroll you can understand why they are trying to track you down. Conversely, your company may have a limited number of clients or you only fund on certain days of the week. If this is the case, you may be able to manage your book of business on a part-time basis as a direct funder.
3. Where do you go to find more information about the factoring business?
For those new to the factoring industry there are many associations, professionals and publications that provide educational guidance and useful information about the factoring industry.
To start, “Factoring Investor” is a great resource for information about the factoring industry. There are fantastic posts from “Factoring 101” with different points of view from a variety of experts in the industry.
The International Factoring Association is another great resource. They have a huge library of materials you can purchase for your business from legal documents to recorded teleconferences that can be downloaded.
Finally, I would recommend reading a series of books written by Jeff Callender collectively called the “Small Factor Series”. This series is made up of six books that pretty much tell you what you need to know about factoring account receivables.
At the end of the day it is up to you to determine how far you would like to go in this business. From my perspective there has never been a better time to get involved in the invoice factoring business. Chart your own course, plan accordingly and most importantly, enjoy the ride.
Don D’Ambrosio is the president of Oxygen Funding, Inc., an invoice factoring company located in Lake Forest, California.
For more information, he can be reached at email@example.com or you can visit his company’s website at www.oxygenfunding.com.