Discover how to start a business as a factoring broker or consultant!
The factoring business is a trillion dollar industry offering financing solutions to companies throughout the world. Growth is strong both here in the United States and internationally with overall volume increasing 22% last year.
A career in the factoring industry even made the Yahoo™ Top Jobs List a few years back. If anything the need is now even stronger as reflected by the Factoring Volume Statistics published by Factors Chain International for the past 7 years.
Why the Ongoing Demand for Factoring Services?
Banks aren’t known for thinking outside the box. They have rules that limit traditional business loans. This creates a need for alternative financing.
When a business needs cash but doesn’t want to borrow money they can turn to Invoice Factoring. Rather than a bank loan, outstanding invoices are sold at a discount to a factor.
3 Ways to Participate in the Factoring Business
The three main ways to take part in this growing industry are to sell, refer, or invest in accounts receivable.
- Sell Invoices – Business owners factor accounts receivable to gain access to cash without waiting 30, 60, or even 90 days for payments from their customers.
- Factoring Broker – Consultants refer deals to the funding companies for a commission.
- Factoring Company – Factors buy invoices at a discount and earn a fee upon payment.
What Is A Factoring Broker?
Factoring brokers or consultants are industry professionals that bring together factoring companies and businesses that want to sell invoices. The broker locates companies in need of cash, conducts an evaluation to determine a suitable factor, and places the account for a commission.
A broker is able to develop a personal relationship with the client providing a level of personalized service large factoring companies find difficult to provide. Factoring companies benefit by having a greater marketing reach through independent contractors receiving compensation based on results. The broker network, bank lending restrictions, and the sound financial reasoning behind factoring all contribute to the current industry boom.
Brokering accounts receivable deals is a great way to earn while you learn. The benefits include:
- Flexibility – set your own hours.
- Reoccurring Income – get paid for the lifetime of the customer.
- Virtual Office – work from a home office.
- Growth Industry – increasing demand for A/R financing.
- International Reach – over 50 countries have a strong factoring market especially in the United States, Canada, Europe and China.
- Low Start-Up Costs – get started for under $500 when you have access to a phone and computer.
- Investment Potential – take the next step and start factoring small business receivables.
Setting Yourself Up for Success
This industry is pretty straightforward. It really only takes four things to get started:
- Industry Knowledge
- Sound Marketing Plan
- Professional Website
- Reliable Funding Companies
But why start from scratch?
You can get a jump-start on marketing and training by visiting our Learn Invoice Factoring page. For a list of broker friendly factors refer to the Directory of Factoring Companies. Need an affordable website that works for you 24/7? Turnkey Factoring Websites can be up in running in as little as 48 hours.
You will also find this collection of articles a great starting point to decide if a career in accounts receivable funding is right for you.
»Starting Your Own Factoring Business? It’s Your Call – Advantages of learning the industry as a broker or consultant before becoming a factor.
»Getting in the Factoring Business Part 2 – Where do you find clients? Can the business be worked part-time? What are the best resources? Get answers to 3 important questions before starting your company.
»How I Run My One Person Factoring Business – A look at how Jeff Callender ran his company with no employees using a virtual office.
»Tips for Starting a Small Business Factoring Company – From start-up broker to funder, this 20-year veteran shares strategies for investment success and finding value in small invoices.
»How Factoring Brokers Earn Fees – Referring deals as a consultant? Here’s a look at common calculations for earning commissions.
»Top 10 Accounts Receivable Factoring Questions – How to answer the ten most common questions a business owner will ask when considering a/r funding.
»Common Objections Encountered From Invoice Factoring Prospects – Addressing the top three fears a business owner may have about selling invoices.
»Learning the Industry Language – How to establish credibility, use industry lingo, and avoid 4 common pitfalls when marketing your business.