Factoring Broker Training – Don’t Make These 3 Mistakes!

factoring broker training sosWant to earn referral fees as a factoring broker working full or part-time?  Be sure to avoid these three common mistakes when seeking prospective clients in need of accounts receivable financing.

#1 – Targeting the Wrong Business

Factoring financing is all about “business to business” transactions. That means targeting companies that provide goods or services to other businesses. If they sell retail the invoice will be direct with the consumer, which doesn’t qualify for accounts receivable factoring.

When starting out it makes sense to further maximize marketing efforts by focusing on businesses that are frequently cash strapped and easier to qualify. Service companies like temporary staffing, janitorial, guard services, etc. are historically great candidates. While industries like medical, construction, and transportation can be more competitive and/or harder to place with investors.

#2 – Confusing Factoring with Purchase Order Financing

These are two different types of financing which are often confused. Factoring is the purchase of an invoice after the goods or services have been delivered. The sale is complete and the invoice has been generated.  The invoice or receivable is purchased at a discount.

Purchase order financing occurs before the service has been rendered or product delivered. It is PO Funding that often provides the capital to manufacture or complete the goods so they can be shipped, delivered, and invoiced.  Some factoring companies will consider offering Purchase Order funding in conjunction with invoice factoring.

#3 – Failing to Get Face to Face

Successful marketing is all about getting one-on-one with the business owner. Networking through professional groups like the Chamber of Commerce is effective for factoring marketing. It is estimated that over 50% of new factoring clients are located through networking.

Networking allows for personal interaction. It’s unlikely a business owner will share their needs for financing until they are comfortable with you and that takes personal interaction.

If your marketing involves any type of direct mail know it will take diligent telephone follow-up to set-up meeting appointments. The ultimate goal is to get face to face with the potential client to see if invoice factoring will meet their needs for business financing.

Looking for more factoring broker training?  Be sure to grab your copy of How I Run My One Person Factoring Business in the bookstore.


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