What is a Factoring Broker (Commercial Finance Consultant)
Similar to traditional banks that have loan officers, factors employ Business Development Officers or “BDOs”. It is the job of the factor’s BDO to market, network, and bring business into the factoring firm. In the factoring industry, BDOs are well compensated employees, typically earning a salary of roughly $100,000 per year plus a commission override on all business they generate. Unlike banks, however, almost all factors have a very active referral program for independent brokers that compensates virtually anyone referring a small business owner to them in need of factoring or similar services.
Most referrals for factoring come from accounting professionals, bank loan officers, attorneys, etc. and occur on just a very occasional basis. Others, however, come from a unique group of entrepreneurial individuals that are well aware of the exceptional commissions paid for such referrals and make the business of referring clients to factors their passion and profession. These individuals are known as freelance independent factoring brokers or more professionally as commercial finance consultants.
Part-Time, Full-Time, and Everything In Between
The term “factoring broker” can be a little misleading as many that practice this profession offer more financial services and products than simply factoring. They are truly commercial finance consultants and just like most other independent “niche” consultants, they will almost always work from the comforts of a home office. They work:
- when they want
- how they want
- anywhere they want…and
- answer to no one but themselves
Some part-time factoring brokers have “regular” 40 hour a week professions such as accounting / tax preparation, insurance, etc. that take up most of their time. They refer clients to factors only on a very occasional basis and are considered “referrers”. Others, however, realize the exceptional income potential that comes with a full time career as an industry broker / consultant and devote 100% of their time (and more) to the profession. Industry factors and other specialized lenders naturally welcome referrals from both. It is the full time professional broker, however, that is highly regarded and much sought after in the industry.
A Highly Professional Business
Whether you choose to operate on just a part-time basis or you intend to make this very unique area of business consulting a full time career, you will find this vocation very “professional” in it’s nature. As a consultant, you will be meeting with business owners, accountants, bankers, and many other local professionals as you market, network, and build relationships that can result in commission-generating leads. This is a very, very “cool” profession that few know anything about but for industry success, you must both look and act the part of the true professional.
To make it a career, brokers must have good “soft skills”. As you will learn in tomorrow’s discussion on how brokers develop their business, your industry success will not only depend heavily on your industry product knowledge, but also on your abilities to communicate and educate small business owners about the many benefits of factoring and other types of asset-based finance. Good soft skills are critical to success in any independent consulting business and that of commercial finance consulting is no different.
About The Money
Though we will discuss broker compensation in more detail in Part Five of this mini-training Crash Course, you should understand what’s at stake as you enter the industry and the lifestyle changing benefits that will definitely accompany your success. To put it bluntly, broker compensation for referral business in the factoring industry is exceptional by any measure with a single client referral often paying trailing, residual commissions for 3, 5, 7 years or even longer. Make no mistake, it is an EXTREMELY lucrative business with commission and compensation plans that can lead to complete lifestyle changes for those that successfully address it’s challenges. It is a business that attracts goal-oriented mobile creatives, self-starters and those with the drive, perseverance, and passion to build a successful consultancy over time. As you will soon discover, the earnings potential that accompanies your success in this industry is almost unmatched and can be earned by most if they are focused and dedicated to learning the profession inside out.
Is This Business Right For You?
Almost all who look for viable business opportunities must sooner or later ask themselves that question. And the answer is very simple. Do you…
- currently have the necessary soft skills required to be a high-profile consultant?
- are you willing to invest in the necessary time and hard work to remake yourself, developing the soft skills required for success as a consultant?
Anyone can learn the product areas (such as factoring) associated with commercial finance consulting. Anyone can!!! The issue is can you answer either of the two above questions “YES”? Very few individuals come initially equipped with the skill sets and communicative tools required to be 100% successful as a consultant. They need to be learned and you can certainly learn them as you build your business. So, if you are willing to invest the work and time required to remake yourself if required, then you can certainly succeed in the industry.