How Factoring Brokers Earn Fees

Factoring Broker ComissionsWith numerous factoring courses and factoring books available online, many people wonder just how factoring brokers earn their fees.

While factoring commissions are paid in a variety or ways, there are some standards to start with.

The factoring broker will earn a percentage of the factoring company’s fee. For example…

If the invoices factored had a total balance of $50,000 the factoring company may have a fee of say $2,000.00 or 4 percent.

The broker typically receives a percentage of the factoring fee (in this case, a percentage of the $2,000).

Although the factoring broker’s percentage varies between factoring companies, 10% would likely be the minimum a broker would receive. So in this example, once the invoice has been paid, the broker would receive a commission check in the amount of $200.

It is important to note that a Factoring Investor typically honors the payment of commissions to the factoring broker on all future invoices with the same client. This can be a great source of ongoing revenue for the broker as many companies continue to factor for a considerable time frame.

As the broker brings in more business or larger clients, the broker may begin to earn a greater percentage of the factoring fee – up to 15%. Combine that with residual income and it is easy to see why so many people are interested in a career in the factoring industry.

Comments

  1. Hey guys,
    So I’ve decided to embark on a factoring career and am at the stage currently where I am reading up on how to be a successful, or at least semi-successful, part-time factoring broker. I’m reading Jeff Callender’s incredibly insightful, “How I Run my One Person Factoring Business” and was a little more than discouraged to find that most factoring companies don’t buy small invoices from brokers and that the large ones are hard to come by for beginners like me. I don’t have enough working capital to start factoring of my own accord. My question is this: will small factoring companies buy these smaller invoices from you for commission. I’m assuming assuming the answer is yes. Thanks for all you do. This website has been a fabulous source of information for me.

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