Factoring 101

Welcome to the IACFB Academy
Campus Orientation for Agents and Sponsored Agents

Welcome to Factoring 101
at IACFB Academy

Welcome to Factoring 101 for Agents and Sponsored Agents.  This section of the Campus Academy is dedicated to providing our “NETWORK” agents and sponsored agents with training in commercial factoring and its related areas. Factoring is the “cornerstone” of the financial products training at IACFB, and that is primarily due to its ability to provide solutions to so many cash flow problems that face small B2B business owners worldwide, and also, of course, due to the unique method used by factors to compensate brokers for their referrals. Factoring is a powerful financing method used worldwide. While it provides over one hundred billion dollars in financing here in the U.S., that is a fraction of its use in other countries. Great Britain, for example, alone accounts for over two times the dollar volume of receivables financing as the U.S.  And while the business of that being an independent factoring broker in the U.S. is unique and not well known, through out Europe and much of the Pacific Rim is quire common.

Step One: Download Your Factoring 101 Training Guide
Your Path to Commercial Finance Consulting Success. Now Begin Your Lessons

Consultants will be interested in all types of business finance from asset-based lending to purchase order finance.  But, with residual commissions paid by factoring, let’s explore factoring first.  (Click Here)

Commercial Factoring is one of the oldest forms of business finance that can trace its roots of 4,000 years.  Learn about this time honored financial product.  (Click Here)

Like all types of businesses, many include their own jargon and terminology and factoring is the same.  Here we discuss the terms of the industry so you can speak professionally with factors. (Click here)

When it comes to factoring, what requires the need for a factoring facility is because of the liberal terms of payment one company affords to another.  It’s the terms of payment that cause the problem (Click Here)

As a consultant / broker, you will likely find many small business owner ask you what the benefits there are about factoring and why a company like theirs will factor accounts? ( Click here)

Toggle Content

While most factoring arrangements can seem to be “plain vanilla”, there are, however, some types and styles that are needed to provide the unique financing requested.  Learn more.  (Click here)

Recourse and non-recourse determines what occurs when a factor purchases an invoice that subsequently is not paid,  (Click Here)

While the vast majority of commercial factoring requires notification of account debtors (customers), special arrangements can also be made for creditworthy clients in certain cases.  Learn the difference. (Click here)

Reverse Factoring (supply chain finance) is a factoring arrangement that is requested by the customer (the debtor) rather than the service or goods provider.  A powerful tool for brokers (Click Here) 

Spot factoring is a niche factoring transaction usually involving a single invoice of relatively large size and that is out of the norm for a business.  Many factors do not provide spot factoring services simply due to the additional risk of having “all eggs in one basket”.  Others will provide the service but will virtually always charge a higher rate. (Click Here)

International factoring is one of the most used financial tools for not only financing international sales, but also assuring payment upon those sales.  International factoring eliminates the need for expensive (and invasive) letters of credit and is a quick and painless solution for manufacturers and distributors engaged in cross border sales. (Click Here)

Most factoring is very straight forward and falls into the category of “Plain Vanilla”.  There are, however, certain types of industries that require special handling by special factors.  (Click Here)

Toggle Content

Because factoring is a purchase and sale arrangement and not a loan, qualifying tends to be much easier than qualifying for a loan.  As a factoring consultant you need to know the differences. (Click Here)

In factoring, the “Verification” process refers to the validation of the invoice requested for purchase.  Unlike a bank with hard collateral, a factor is only secured by invoices. They must be real (Click Here)

While all those that understand that factoring is all about invoice finance, it is also important that the kinds and types of invoices are also critical.  In short, all invoices are not the same  (Click Here)

While invoices need to be verified before purchase, another problem can surface if a factor purchases two many invoices from a single customer making the transaction too risky (Click Here)

When financing a company based on an asset or assets, a lender will file a “security interest” in the assets as collateral for the loan or financing.  This filing document, called a UCC-1 Financing Statement, is said to “perfect” the lender’s security interest in the collateral.  (Click Here)

When financing a company based on an asset or assets, a lender will file a security interest in the assets as collateral for the loan or financing.  (Click Here)

Advance, Collection, and Rebates refers to the the basics of how a standard factoring transaction works in everyday life.  For brokers, this is the “nuts and bolts” of a transaction.  (Click Here)

  • Overview:  All about factoring  fees (Click Here)
  • Factoring Fees in Windows Method (Click Here)
  • Flat Fee Plus Interest Method (Click Here)

 

Toggle Content

One of the best ways to cement your knowledge about factoring is to view some examples and case studies.  (Click Here)

Brokers who submit clients to factors receive commission reports monthly.  Although each report can be slightly different based up the factor’s invoice tracking software, this is a sample.  (Click Here)

Business Finance Consulting

Taking the Certification Exam

Broker certification is crucial in the factoring industry as it signifies a broker’s expertise, professionalism, and commitment to ethical standards. Certification ensures that brokers possess the necessary knowledge and skills to navigate the complexities of factoring transactions, providing clients with informed guidance and reliable services. It also fosters trust and credibility among clients and financial institutions, as certified brokers are recognized for adhering to industry best practices and regulations. This not only enhances the broker’s reputation but also contributes to the overall integrity and efficiency of the factoring market.

 

Marketing for Agents and Sponsored Agents

Direct Link to Factoring 202
Marketing for Commercial Finance Consultants

Direct Link to Factoring 303
Continuing Ed. for Commercial Finance Consultants