Congratulations on your decision to explore an exciting new career path, that of brokering commercial factoring transactions as a freelance factoring consultant. As you may already know, this very unique area of small business consulting is a specialized field of endeavor and one where a successful industry entry will provide
you with the…
- flexibility to reside and earn a living from virtually anywhere or anyplace.
- personal freedom to custom tailor your operating hours and to work as much or as little as you desire.
- ability to enjoy a highly regarded professional status within your community and by all you meet.
What is most important, a career as an industry consultant will provide you with the opportunity to earn the near-legendary fee and commission income that has made the factoring industry famous. Your earnings as an industry broker will only be limited by the:
- product knowledge you acquire
- hours you devote weekly to developing business
- networking opportunities you engage in
- direct marketing skills you develop
Before you throw yourself head first into what you may have heard is the “opportunity of a lifetime”, you should probably develop a little better understanding of just what this business is all about and how you, as an independent freelance consultant, fit into it. First of all, this is a large industry brimming with opportunity and excitement. It is a tailor-made career path for certain types of individuals we will refer to as “entrepreneurial self-starters”. In fact, worldwide, asset-based finance is such an enormous industry you may come to wonder just how you knew so little about it and the many lucrative income-generating opportunities it offers to almost anyone willing to do a little research and exploration. And, though you may currently know very little about the industry’s various inner workings and intricacies, we can assure you that learning more about this career path is very much worth the time and effort you will put forth to gain a little industry working knowledge.
For you, the reader of this article and soon to be factoring broker, this career path is all about being an industry “middleman” whose business involves first prospecting, then educating, and finally referring cash-strapped small business owners in need of financing to an appropriate industry lender. In doing so, you will earn a referral commission or fee paid by that lender. Does it sound simple? Well, believe it or not, it actually is. But an important part of that conversation is that very few people are aware of just how lucrative that fee and commission income can be. And, though you may have heard the business simply referred to as one of “brokering”, there is really quite a bit more to that story.
From a truly professional, career-oriented viewpoint, you are entering a high profile, freelance consulting business that will require you to develop a significant level of industry product knowledge as well as to cultivate certain soft skills needed for developing business. Consulting, as a profession, is one of the most rapidly expanding areas of opportunity in today’s job marketplace. This particular area of consulting, factoring broker, with its focus on small business finance alternatives, represents one of the highest levels of “specialty” consultant opportunity.
So What Are You?
Accounts receivable factoring is just one of many specialized forms or types of alternative commercial finance (alternative to traditional bank financing) found throughout the world and as mentioned, it is provided by members of the asset-based finance community of lenders. This highly regarded group of financiers is comprised of many unique, and sometimes unconventional, capital providers and may even include several institutions right in your local community.
Well, get ready! After absorbing the contents of this guide, the online e-learning training at Campus IACFB and then completing our proficiency exams, you will be poised to join this prestigious community as a member of its most important component, the business development area. You will become a commissioned agent or what is more commonly termed by those in the industry, a freelance factoring broker, a profession of exceptional opportunity, practiced by only a few, and well under-the-radar when it comes to measuring serious competition.
Serving Two Clients
As an independent factoring broker, you are a commissioned “lead generator”. You are a transactional middleman and will actually serve two specific clients. These are the:
- Business Owner…where you will act as a knowledgeable and valued business finance consultant.
- Factor…where you will act as a commissioned freelance independent contractor for business development.
Types of Factoring Consultants
Consultants, from the Latin consultare meaning “to discuss”, are professionals who provide expert advice based upon their above average experience or knowledge regarding some specialized field, process, or product. Operationally, consultants can either be:
- Internal: someone on permanent staff and available
for consultation with others on a daily basis, or…
- External: an independent contractor whose expertise
is usually employed only on a temporary basis and as it is periodically required.
There are many types of consultants found in the world today and certainly one of the driving forces behind the dramatic growth of consulting as a career is that of “out sourcing”. For management, commonsense dictates there is no reason to pay an employee a full time wage when the employee’s area of expertise is only required occasionally. It is much more cost effective to call in a specialty consultant or a “problem solver” only when his or her particular expert advice is required.
A freelancer, is a bit different than a consultant. A freelancer is simply a person who works independently in a specialized field by the hour, day, or job and most often for not one but multiple employers. Whereas many consultants, such as computer programmers, may often work at their employer’s business address, a freelancer will usually work from home or a private office.
In the factoring industry, firms will typically employ several in-house business development officers termed in the industry as “BDOs”. In fact, large factoring firms may have many such BDOs located in dozens of large cities nationwide. These in-demand individuals are usually paid through a salary / bonus arrangement based on their productivity and are true employees of the factoring firm. They do not broker or send business anywhere else unless it is pre-approved by their full time factor / employer.
So in the business of factoring, what are you? Well, you are a consultant to your client, the small business owner, who requires your expert sage advice on how to finance his or her business. But to your factor, you are a valued freelancer or independent broker who will be compensated for referrals on a deal-by-deal basis through a very, very attractive commission fee arrangement.
Commercial Finance Consultants
The term “factoring broker” is exactly what the name implies. It includes those brokers that practice primarily in the factoring side of the industry and provide expert referral services when business owners require assistance in accessing some form of accounts receivable finance. Most often, the need for such expert referral service comes into play when a small business owner is turned down for a bank loan and simply does not know where else to turn for a ready financing alternative.
In some cases, solving this problem just encompasses a simple referral by the broker to a more accommodative bank. More often than not, however, it will probably involve arranging some form of alternative commercial finance solution such as factoring or asset-based lending. And here, of course, is where a knowledgeable broker / consultant is often needed, since such financing options, and how to access their providers, are quite often little known to the average small business owner / entrepreneur.
For some successful industry freelancers, the factoring product is simply not enough. This special group of brokers will expand their areas of financing knowledge and product expertise to the point where they are true small business financing experts. They are a very highly prized and select group of independent freelance individuals providing small business owners with a cornucopia of financial services over an expansive array of product areas. Such professionals, referred to as CFCs or commercial finance consultants, will be able to provide ready sources of finance for accounts receivable, inventory, purchase orders, equipment, and virtually every other type of business asset which requires periodic financing. In some cases, they may even delve into the very difficult and mysterious areas of angel investing and professional venture capital.
So on one end of the group or spectrum of industry freelancers, you have factoring brokers who will focus their practice predominantly in one product area, commercial accounts receivable factoring.
On the other end, you will find some career industry participants who have developed a level of expertise much more expansive and diverse. It will include asset-based lending, equipment leasing, merchant cash advances, SBA lending, ACH term loans, export trade finance, and the many other niche areas of business finance found throughout the asset-based finance industry. It is important to note that in most instances, industry CFCs initially launch their career with a primary focus on the factoring product. Over time, they slowly build on that factoring expertise and expand their product lines to include the many other methods of business finance found in the asset-based finance community of lenders.
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