Any company generating accounts receivable with creditworthy customers can take advantage of the cash flow benefits offered through factoring.  

In factoring, like any industry, there are certain clients that make up the greater share of business.

The textile and apparel industry has long dominated the factoring business, generally attributing to over half of the factoring volume.   This makes sense since factoring in the United States evolved from European textile mills using stateside agents to sell their fabrics.   Agents earned commissions on sales and then began establishing credit terms and advances to the mills for delivered goods.

Many other businesses also benefit from discounting their invoices to Factors. The most recent factoring survey results published by the Commercial Financing Association (CFA) reflects the following breakdown of U.S. factoring volume by industry:

Textile/Apparel Factoring                  54%

Furniture                                                                                  8%

Business Services                                                                7%

Electronics                                                                                        5%

Transportation                                                                        3%

Other                                                                                                        23%

The survey also reported $135.5 billion in factoring volume in 2007, sustaining its 30- year pattern of growth.   Follow the link to the Commercial Financing Association (CFA) site to review the complete annual survey results for asset based lending and factoring.

A factoring broker has excellent earning potential referring business to factoring companies for accounts receivable funding. But before there are commissions there must first be prospects, which all stems from active marketing.

Successful factoring brokers continually turn to referral based marketing as a key component of an effective marketing plan.   Consider these five proven performers when developing factoring referral business:

Banks

The banks are often in the unfavorable position of saying ‘NO” to requests for business funding, especially in the face of the current credit crunch.   Many lending officers find the burden of turndowns is lightened by being able to say, ‘While we can’t help you with this current funding need you might consider ABC Factoring for financing alternatives through accounts receivable factoring.”     Use this strategy to develop working relationships with corporate lending officers, business account managers, and other bank contacts regularly involved with financing business.

Accountants and Bookkeepers

Any professional that is involved with the financial records of a business can be an excellent source of referrals.  Accountants and bookkeepers can be the first to know when their clients are in need of additional cash flow to pay bills, meet payroll, or fund expansion.

Business Networking Groups

Networking with other business professionals is a standby to business development.   These are often found through the Chamber of Commerce or national organizations such as Business Network International or LeTip.   The internet is also a source of network groups dedicated to creating qualified leads through member interaction.

Purchasing Agents

Factoring companies prize clients that have creditworthy customers that are reliable payers but take an average of 30 days to pay.   Rather than focusing first on the ultimate business client try contacting the purchasing agents for government agencies, school districts, utility companies, or large corporations.   These purchasing agents work with the vendors that provide their company with goods and services.   A factoring broker can then target business development with these vendors that are creating invoices with strong creditworthy customers favored by the Factor.

Personal Contacts

The first place to naturally turn for referral business will be people you personally know.   These are friends, family, co-workers, business owners, or any acquaintance with which you have developed a personal or business relationship.

When developing referral business always keep in mind the WIFT (What’s In It For Them) principal.   A personal contact might refer business just to help you out while a business contact might be more concerned about earning a referral fee or meeting the needs of their own business client.   By targeting referral marketing a factoring broker can develop qualified business prospects in need of funding through accounts receivable factoring.