Factoring Broker Opportunity
What is factoring and how does it work ?
Factoring, also known as invoice factoring, is a type of business financing where a company that does factoring buys accounts receivable invoices from a client in exchange for an immediate payment. The client wants instant access to funds because he/she does not want to wait 30 to 90 days for customers to pay their invoices. The factoring then notifies the client's customers that they will collect the amount on their invoices and verifies the accuracy of the invoices. In short, factoring provides a line of credit based on the sales or accounts receivable by a company, not on a company's net worth.
Key Points Of Invoice Factoring:
- Risk Level: factoring is given to companies that are both new and growing in size since they don't qualify for traditional bank financing due to not having a credit history.
- Cost: factoring lines of credit are determined and priced by discounting the full value of the invoice by a percentage. This discount can vary between 1.5% and 3.5% per 30 days.
- Size: factoring lines of credit have no minimum borrowing amount, therefore they can deal with small businesses and startups as well as large and established companies.
- Customer Contact And Interactions: factoring requires a high degree of interaction between the company that does factoring and the customers that are paying the invoices due to the factoring company regularly checking the invoices that they have purchased to verify that they are accurate.
- Due Diligence, Voluntary Investigation, Or Appraisal Of A Business Or Person: in most cases, factoring companies only use minimal due diligence because many of the companies they deal with are either new or start-ups who have little or no credit history for the factoring company to check. In most cases, the factor will perform a review of the client's financial situation and undertake a search for collaterals. Most often this is not expensive and can be accomplished in one or two days.
What is a factoring loan broker?
A factoring loan broker is either a person or a firm which takes a companies' accounts receivable invoices to financing firms that specialize in factoring, that is, firms which purchase accounts receivable portfolios from companies on a non-recourse basis. These financing firms then bid on the accounts receivable package, with the highest bidder purchasing the accounts receivable portfolio from the company. The firm which purchases the accounts receivable portfolio is known as a factor, and the money or financing given to the company which sold its accounts receivable portfolio to the factor on a non-recourse basis is known as factoring. If this financing process is carried out on a recourse basis, then the financing is known as accounts receivable financing.
Where does a factoring loan broker offer a companies' accounts receivable portfolio?
Depending on how the factoring brokerage is set up, a factoring broker takes a companies' accounts receivable portfolio either to an open market or to a specified group of factors or financing firms that specialize in factoring that he or she does business with. The factoring loan broker does not purchase the accounts receivable portfolio, but merely acts as an agent to find a factor that will accept the accounts receivable portfolio.
What industries use factoring ?
Seasonal industries use factoring because they have to manufacture goods in advance such as seasonal clothing or ready-to-wear clothes for delivery at a later date.
What are the benefits of being a factoring loan broker?
As a factoring loan broker, you can potentially earn a six-figure income if you apply yourself. The main benefit of being a factoring loan broker is that you can have repeat business as companies are always creating fresh invoices. More invoices mean more income for you.
How can I become a factoring loan broker?
With our high-income loan broker program, you can have an exciting career as a high-income invoice factoring broker. Our easy-to-follow, step-by-step instruction manuals will enable you to get started as a factoring loan broker in about ten days. With our loan broker program, you also qualify to become an accounts receivable loan broker.
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