With 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.
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.