So what is a factoring broker? The short definition is that a factoring broker is a consultant who specializes in commercial factoring, a powerful business finance tool that is part of the asset-based finance industry. Factoring brokers are professional “middlemen” (or women) that provide expert knowledge regarding factoring and work with small and mid-size business owners in need of that service. The true term for a factoring broker is commercial finance consulting, simply because few factoring brokers limit themselves to commercial factoring as a product. Most provide services in all forms of asset-based finance. Regardless of what a broker calls himself (or herself), however, this unique, under-the-radar niche of consulting represents an exceptional career by any measure. You will find the factoring and alternative commercial finance industries offer a unique opportunity to earn an exceptional income while also enjoying a very high degree of prestige and vocational respectability. For all who successfully enter, it is a career which can be both personally and financially rewarding.
Accounts receivable factoring and the many other products termed “alternative commercial finance” are popular and powerful business finance resources utilized throughout the world by capital-seeking small and mid-size business owners. Those making the decision to enter the world of today’s entrepreneur and start their own enterprise are faced with many challenges and hurdles to be overcome. Most new business operators initially struggle to accumulate the seed capital to buy equipment, inventory, and finally open their doors, only to then find themselves faced with an even greater challenge, the need for ready working capital once the business becomes operational. Historically, such working capital has been provided through community banks. But as everyone in business today knows and is fully aware, banks simply aren’t lending to most small business owners and that is a statistic which is very unlikely to change in the foreseeable future.
Successfully entering the factoring industry as a freelance independent consultant or “factoring broker” means you will be performing a valuable financial service to small and mid-size business owners by assisting with the sourcing of ready financial alternatives to traditional bank loans and lines of credit. Factoring industry brokers are true financial consultants in every sense of the word. They earn attractive fee and commission income based upon their in-depth knowledge and understanding of the various forms of factoring and alternative types of commercial finance which can be brought to bear to solve a particular capital problem affecting a small business. And just as important, they have developed the important marketing skills to convey that knowledge to small business entrepreneurs in need.
Entering the factoring industry as a freelance factoring broker represents an exceptional business opportunity and career path for those individuals who can describe themselves as entrepreneurial self-starters or mobile creatives. Though a well practiced vocation in Europe, this unique area of consulting continues to remain well under-the-radar in the U.S. It is a very specialized area in small business finance and for the most part, you will find competition to be very light in most communities, if it exists at all. Do not, however, look at this business opportunity as the latest highly promoted get rich quick scheme. Many do, only to find that this unique area of consulting, like almost all others, will take much hard work, patience, and determination for success.
In the industry, it is very true that the fee and commission compensation paid to industry freelance brokers by factors and related lenders for referrals is quite often extraordinary. Of the various commission arrangements, factoring is referred to as the “Jewel of the Industry”. Since clients referred to factors from brokers almost always use those services month after month for speeding up cash flow, commissions are also earned month after month. In factoring they are typically paid on a residual basis. Factoring brokers earn commissions month after month and are almost always paid for the life-of-the-account. This often leads to passive income streams that can be collected by freelance factoring consultants for many years, often 3, 5, 7, even 10 or more. It allows creative entrepreneurs to build solid, resilient, recession resistant businesses over time.
To participate in this industry and earn such compensation, however, you will need to acquire a reasonably high level of product knowledge and probably also need to develop certain marketing, networking, and sales skills you likely do not currently possess. As you may already be aware, however, locating sources of truly affordable training for this career path has been historically difficult and often quite expensive. But, that has changed, with the highly affordable training now available for brokers and consultants online at the International Association of Commercial Finance Brokers (IACFB) Academy, which is designed to provide you with all the basic industry knowledge you will require to enter this unique vocation and exceptional area of specialized consulting both successfully and profitably at a truly minimal cost.
To find out more about becoming a freelance factoring broker and explore this industry to see if its right for you, a great resource of the business of becoming a successful factoring broker can be found at the IACFB’s Magazine at www.commercialfinanceconsultants.com