When Do Factoring Brokers Get Paid?

Brokers and consultants earn lucrative and reoccurring commissions for the referral of business owners that use accounts receivable financing services.

But when are these factoring commissions paid?

Last week Factoring Investor received this question from a factoring broker on the handling of referral fees that we asked Michael Ponomarew to answer for our readers. Maybe you’ve wondered the same thing.

Question: Are there are any factoring companies that pay a referral fee at the time the advance is made on the invoice or do all factoring companies wait until the invoice has been paid and the reserve released to pay the broker’s commission?

Michael Ponomarew: In answering your question, I do not know of a Factor that would pay the referral fee/consultant commissions until the customer (debtor) has paid for the invoice(s). A factoring transaction is not complete until the customer (debtor) has paid for the total value of the invoice purchased by the Factor.

It is important to know that the reserve is released pending the aging of other outstanding invoices. The release and payment of the reserve is a non-issue when it comes to paying consultant commissions or referral fees.

What typically happens is a Factor will pay commissions for the preceding month’s collections or payments of the invoices that the Factor purchased. For example, on all of the collections or payments received during the month of May the consultant would be paid their commissions during the first week of June.

Michael Ponomarew brings with him more than 24 years of experience in entrepreneurship, marketing, and factoring business management. Mike can be reached at mikep@millenniumfunding.com or by calling 888.652.8298 ext. 45.

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