The Role of the Factoring Broker
A brokers role and level of involvement varies according to the factor handling the account and the brokers own abilities. A good broker will expertly guide you through the entire process and direct you to the right factor early on. They will know which factors are more likely to accept you as a client, how much different factors charge and how long the approval process will take.
Brokers will usually walk you through application process. As questions arise , brokers seek out the answers for you. An experienced and well educated broker will be able to package a transaction for a factor saving the factor hours of legwork. The role of the broker is to expedite the factoring process for you and for factoring companies by acting as the middleman. When done right you can really come out ahead in terms of saving time and avoiding stress when using a factoring broker.
A well trained broker will place you with the right factor. Not all factoring firms are willing to take on all type business'. As a matter of fact most factoring companies focus on specific industries and specific levels of risk. Many factors have niche markets they specialize in. For instance there are factors that do manufacturing andamp; wholesalers but do not do construction. Other factors just do medical. Some are in the garment industry and others do not touch it. Some do business only in the US and others do international business. These are all good reasons to contact a good broker, they can save you time and money.
Broker commissions are paid directly by the factor as a cost of marketing. When you use a broker the factor does not charge you more. The fee you pay is the same as if you contacted the factor yourself. You see, if the broker does all of the legwork the factor willingly takes a smaller cut of the deal so there is money left over to pay the broker. So as you can see, using a broker does not cost you any more then contacting a factor directly, they can save you time and set you up with the proper factor for your situation. A knowledgeable broker will have a good reltionship with many factors and should understand the different nuances of the factors he's working with. I myself think of myself as working for my clients first,. and creating a relationship of trust. I can collect more information by giving the client all the time he needs and as much information as they ask for, this is good for all parties, then passing this information to the proper factor and creating an introduction.
If the broker does not pass you on to the factor during the application process then ask the broker how the invoices are to be funded. If they are vague or not as forthcoming as you would expect, then you might want to look for another broker or call the factoring company directly.
Factoring brokers represent a large portion of business for most factors. They are the sales forceandnbsp; so to speak, making direct contact with business'andnbsp; in their part of the country.
From a factors perspective, working with brokers is usually beneficial. They bring in business that the factor otherwise would have missed and provide real insight into the clients needs.
To sum up a good factoring broker can be an asset, since he has the ability to work with many factors and can also provide other services that the factor does not.
It is easy to find a broker
If you are sold on the brokering concept you will not have a hard time finding a broker who will want to work with you. Our first suggestion would be to ask around for a referral. It is always safer to network and count on someone who has a proven track record with one of your peers.
Beware: Anyone can call themselves a broker and yet they do not have a clue on how to sell invoice factoring. I have personally had brokers contact me on what they hope is a factoring deal ( most of these brokers are in real estate) and some will try to do anything and everything. Here is my point, in 6 years in this industry I have never completed a deal from not one of these referrals, the deal was 50/50 on commissions. I have had dozens come across my desk, never closed one, so make sure your broker specializes in factoring and PO Funding, just Google them. Good luck in your future ventures.
I am a Master Broker in the Invoice Factoring Industry and Purchase Order Financing. We help business growth through factoring and Purchase order financing. We have many programs to help a company move to the next level through increased cash flow. If you need to take on larger clients and get in the game with the fortune 500 companies then give us a call. HRH Funding Solutions
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