Six Tips For A Beginning Factoring Consultant or Broker

New Factoring Consultant Broker TipsIf you are new to the factoring industry or are considering becoming a factoring professional, this article is for you.

I have been involved in the industry for a decade and through the years have seen a number of consultants do well. However, I have also seen a large number of consultants leave the business – unable to make ends meet.

Many of those consultants made critical mistakes that could have been easily corrected. These tips are intended to help you avoid making those mistakes.

Tips For Starting as a Factoring Consultant or Broker

Tip #1: Know your product

This is the cardinal rule for success in any industry. You have to know your product, and know it well. However, most beginning consultants don’t spend enough time learning the product. How can you expect to be successful in this industry if you only have the most basic knowledge of your product?

Your objective is to be well prepared so that you can answer any questions and handle client objections. Also as important, having a deep knowledge of your products builds your credibility as a consultant, which is key to your success.

When I first started in this industry I differentiated myself from everyone else by learning everything I could about factoring. In this respect, I am very lucky because I was able to meet Jeff Callender, who has written a number of books about factoring. During my first year in the industry, when small ticket factoring was still in its infancy, Jeff was very generous with his time and mentored me. If I were starting again, my first action item would be to read every single book in Jeff’s small business factoring series to become an industry expert.

Many of my first clients told me that they had chosen my company because I was the only one that had been able to explain everything to them – UCCs, notices of assignment, invoice verification procedures, inter creditor agreements, contract nuances, industry specific questions and product limitations. Basically, I had a lot of knowledge and therefore credibility.

Tip #2: Know finance

Every factoring consultant should have a basic knowledge of finance. At a minimum they should be able to read and interpret the following financial statements:

  1. Accounts receivable aging report
  2. Income statement
  3. Balance sheet

More importantly, you should understand exactly how factoring impacts cash flow and how it helps clients. I am not talking about the theory here. I am talking about knowing and understanding the numbers.

While you can work in this industry with only a cursory knowledge of finance, you should strive to understand it really well. It will help you do your job more effectively, speak with more authority to your prospects, and gain credibility.

Tip #3: Focus

This is perhaps one of the most common mistakes that beginners make. In an effort to try a cast as wide a net as possible, many new consultants offer a number of different products. The biggest mistake is to try and sell a number of unrelated products that have different client bases – such as offering factoring to commercial clients but also buying consumer cash flows. This often leads to a quick failure.

Even if you work with related products, such as conventional factoring or medical factoring, it’s very hard to master them all initially. A better strategy is to focus on one type of factoring, build an understanding and a client base, and then add incrementally to that.

Tip #4: Develop a sales plan, but be flexible

Before getting started, you should develop a sales plan and determine your strategy – or strategies. One simple technique is to focus on industries that you are familiar with. Leverage that knowledge and those contacts to start a client base. Work incrementally from there.

Also, you should try several sales channels at first – networking, referrals, etc – until you find which ones work well and fit your business. Be sure to measure how well your strategies are working and constantly challenge yourself to improve your sales channel performance.

One important component of your sales strategy should be to develop industry relationships with the right factoring partners. This is very important because your factoring partners are a key component of your ability to close and fund deals.

Tip #5: Keep your job

New factoring consultants often make the mistake of quitting their jobs and going full time too soon. They realize, after they have left their jobs, that building a client base and growing a business takes longer than expected. Before long, they are struggling, disillusioned, and looking for a new job.

One important advantage of this industry is that you can start as a part time consultant and build from there. You should give yourself plenty of time, up to two years, to get your business to a point where it is providing reliable revenue. And don’t be surprised if it takes six or eight months to book your first client. You will need that long to develop a credible sales pitch, streamline the sales process and find good factoring partners.

Tip #6: Be prepared to work hard – very hard

One of the biggest myths in this industry is that you can make a lot of money by working only a few hours per day. I wish it were true, but it isn’t. However, you can make a very decent income if you are prepared to work hard. During my first years in the business, 10 hour work days were common. So was working through weekends. Running a business takes a lot of work and you will only be successful if you are prepared to pay that price.

However, being a factoring consultant also affords you incredible flexibility. For example, you can determine which hours you work. Obviously, you need to be available during business hours (at times) to meet with clients and talk to prospects. But there is a lot of work that can be done during the evenings or on weekends. For many, this is the biggest benefit of being in the industry.

In Conclusion

Being a successful factoring consultant or broker is no different than being successful in any other business. You have to know your products well, provide a very good service, follow and execute a sensible sales strategy and work harder than your competitors. It’s that simple. Unfortunately, it’s not easy.

Marco Terry Commercial Capital

About the Author:

Marco Terry is the managing director of Commercial Capital LLC and Commercial Capital LLC (Canada), a leading factoring and purchase order financing intermediary. He can be reached at (877) 300 3258.

About Marco Terry

Marco Terry is the managing director of Commercial Capital LLC and Commercial Capital LLC (Canada) a leading factoring and purchase order financing intermediary. He can be reached at (877) 300 3258 and on Google+