Growth Trends for Related Jobs
Businesses often need quick access to additional capital or funding to manage day-to-day operations. Accounts receivable factoring allows a business to borrow against debts owed by the company’s customers. Factoring lenders charge a fee to front cash to the borrowing company and then collect payment directly from the business’ customers. Many companies are not able to borrow using conventional methods and factoring is often a reasonable solution. Many private investors and lenders offer factoring financing and they often solicit factoring brokers to refer new customers and help close deals. Factoring brokers can earn substantial commissions and residual incomes that make the business lucrative for knowledgeable entrepreneurs.
Enroll in a factor broker’s introduction course. Learn the basics of factoring and its viability as a lending alternative for small businesses with cash flow problems. Many factoring companies offer these courses to potential brokers interested in referring customers to them. Alternatively, visit the International Association of Commercial Finance Brokers website and check for training courses that might be available in your area (see Resources).
Browse to the Internal Revenue Service website and apply for an Employer Identification Number, or EIN (see Resources). Even if you have no employees, an EIN helps to facilitate applying for a business license and bank accounts. Using the IRS’ online system, you receive your EIN with a few seconds of submitting your application. Print the confirmation page for your records and keep the number in a safe place.
Visit your local city hall or business license office. Apply for a local business license and pay the required fee. Many local business registrars require your EIN when you apply for a license, so make sure you have it with you when you go.
Visit a local bank with your business license and EIN in hand. Open a business checking account and make the required minimum deposit. Pay for subsequent business purchases with a company check to facilitate better record-keeping and ensure expenses are tax deductible.
Establish a relationship with several factoring companies. Take note of requirements the various companies have for approving factor loans and disbursements. Also, negotiate commissions and residual payments for referring customers. Line up at least three or four companies as possible factor sources. This allows you to present potential customers with several options and help them choose the factor that offers the best rates and terms.
Go to a local commercial printer and have business cards, brochures and other advertising materials printed. Include information in brochures and other materials that instruct business owners how invoice or accounts receivable factoring can help them receive faster payment for credit accounts.
Create a website that explains your brokering services and how you can help business grow or meet capital needs with account or invoice brokering. Compose articles and information about factoring that is informative and teaches potential clients how to reduce the time needed to receive payments on their accounts receivable. Alternatively, hire professional designers or writers to design your website and create informative content.
Market your factor brokering business. Always keep business cards on hand and visit businesses in your area often. Introduce yourself and leave a brochure or literature on factoring with owners or managers of small businesses.
Inform clients of factoring options and help them choose the company and factor plan best suited for them. Help clients with applications and paperwork. Receive your commission from the factor lender.