Most brokers who join the factoring industry expect to eventually own a factoring company. They plan to start as brokers due to the lower cost. This approach allows them to get some revenues and experience, with the hope of eventually becoming a full-fledged factoring company. This strategy is fine, as long as you realize that running a factoring company is completely different from running a brokerage. The costs, needed skill set, risks, rewards, and challenges are very different. Do you have the capital? The first question to ask yourself is if you have sufficient capital to start factoring accounts. This attainment is not as easy as it sounds. Obviously, you need enough capital to service your clients. This simple table gives you … [Read more...]
PayPal Offering Working Capital To Business Account Holders
Well-known for its online payment processing, PayPal™ is now venturing into the world of working capital funding for businesses. The new financing program is geared towards small business owners and publicized as an alternative to traditional bank loans. We have been using PayPal™ here at Factoring Investor to accept payments online in the Bookstore since we first started publishing our newsletter online in 2008. We are familiar with its ease of use and secure processing. The part that came as a surprise was their recent marketing email touting similar benefits to factoring invoices. Here is a quick excerpt: If you’ve been thinking about growing your business with PayPal™ Working Capital, we’re here to help. It’s easier funding for … [Read more...]
The Sales vs. Underwriting Factoring Dilemma
I’ve written a bunch of articles about what to look for when funding a new client. Whether it’s proper notification or having an ironclad factoring agreement, you should always have a consistent set of due diligence procedures that adequately protects your company in every factoring transaction. With any new deal there will regularly be nuances that are unique and test the funder. In many cases getting past these roadblocks can make or break a deal. With any factoring company, one the biggest challenges is to scale the company for growth while keeping the proper safeguards in place. The friction caused by this dilemma is usually felt by the sales and underwriting divisions within a company. Salespeople complain that the underwriters … [Read more...]
Ongoing Due Diligence Ensures Healthy Factoring Relationships
Every business that extends credit to its clients understands the importance of due diligence. Just as most people would not blindly hand over a stack of cash to a stranger on the street, factoring companies do not begin purchasing invoices from clients whose businesses they do not understand. Once the client relationship is established, it is easy to become comfortable with the routine of purchases and collections and ignore due diligence entirely. This complacence can prove disastrous for the client relationship. Tax issues, debtor concerns, and client malfeasance can all fly under the radar until the situation requires a more serious (often legal) response. Fortunately for factors, a variety of services exist to make the process … [Read more...]
How to Set Yourself Apart from Other Factors and Brokers
As far as I can tell, every factoring broker and every factoring company claims to have exceptional customer service, that they can fund clients quickly, and that their prices are the most competitive in the market. Everybody says and focuses on that almost exclusively. Because of this, factoring companies look the same from the outside. It’s easy for prospects to see how brokers market themselves and conclude that all factoring companies are the same – basically a dime a dozen. Is factoring a commodity? Let’s look at the other side of things. Most brokers and factors complain that prospects often don’t treat them well: prospects negotiate harshly, shop incessantly for better terms, and threaten to leave for a competitor at the … [Read more...]
5 Things Successful Factoring Brokers Do
As a factoring broker, you have the opportunity to work with both factoring companies and businesses looking for funding. This requires plenty of time, effort, expertise in an assortment of industries, and a knack for relationship building. Without a doubt, it’s hard work to become a successful factoring broker. Here are 5 things successful factoring brokers do to lay the foundation for a profitable operation. 1. Never Stop Learning Factoring brokers should always stay up to date on the factoring industry, marketing trends, technology, competitors, and current events. Success comes to active learners who are open to new experiences and willing to seek or create opportunities for growth. Build relationships with other factoring experts … [Read more...]
The Factoring Company Waiting Game
Whether you’re in line at your local grocery store, sitting in a doctor’s office or just looking to grab a bite at your favorite restaurant, we all have to wait. In our modern world of instant text messaging, mega fast downloads and next day deliveries we’ve become a society that expects everything when we want it and the faster the better. The same is true in the factoring industry. How many websites (including yours truly) boast phrases like “Same Day Funding” or “Approvals in 24 Hours or Less”? Let’s face it, with almost any service provider, speed is king. The first question we usually get from new prospects is how long will it take for them to get funded. In most cases they expect to be funded in a few days or less. Brokers … [Read more...]
Top 3 Mistakes That Factoring Intermediaries and Brokers Make
Although factoring is not a seasonal business, per se, it does have its high and low periods during the year. We are about to enter what is often the busiest period for the factoring industry – mid-September to mid-December. This is an important period for your business, and it’s critical that you operate efficiently in order to capitalize on as many opportunities as possible. To achieve this result, you need solid factoring partnerships in place, a well-developed sales technique, and a process to manage your sales channels and increase your closing ratios. At the same time, you must be careful to avoid these common deal-killing mistakes. Not knowing your product well enough This very common problem primarily affects newer factoring … [Read more...]
An Invitation to Connect With Factoring Investor on LinkedIn
We are excited to announce the new Factoring Investor Group on LinkedIn dedicated to providing information on the Factoring Industry. Whether you are a business looking for financing alternatives, a broker receiving commissions, or an investor seeking solid returns this group is here to help. The group is moderated meaning that members need to join and discussions must be approved. This helps reduce the spam and keeps the focus on invoice financing. We invite you to click here to join this factoring networking group today. If you are new to social media networking then we have you covered with... 7 Tips for Getting the Most Out of LinkedIn For Factoring Professionals 1. Use a Profile Picture Sorry but you don’t get to be the … [Read more...]
6 Online Reputation Management Tips for Factoring Brokers
Factoring brokers rely heavily on word of mouth and positive endorsements to drive business growth. No matter how large or small your factoring broker business may be, people are probably talking about it somewhere on the web. Potential clients are Googling your company name, commenting on your social media updates and blog articles and most certainly checking out any reviews that have been posted regarding your services (or leaving their own review). Any content posted online about your business makes the difference in gaining or losing clients. Regularly tracking what is being said about your company online is more important than ever. All it takes is one bad review, mock Twitter account or an angry blog post to go viral and your … [Read more...]