Questions can include, but are not limited to: When a factoring broker consults with a client, he or she will ask the client a multitude of questions to determine the best fit for sourcing a provider. The broker may want to review the client’s application and the factoring agreement, as well, to understand the provider’s process and terms.
Some brokers may receive an upfront commission as well, dependent upon the factoring provider’s mutually-agreed-upon terms.Ī factoring broker will want to review and execute a referral agreement with each provider prior to submitting referrals to the provider. Many providers will compensate a factoring broker with a recurring monthly residual based on the profitability of the referred client’s account. What is my notification process? How am I compensated for my referral?.How does the funding process work? How does the client submit invoices and receive funding?.How does the underwriting process work? How long does it take? What is the approval ratio?.What is the client experience once referred? Who helps them with their questions?.
How do I refer a client? Who will be my day-to-day contact?.When researching a provider, a factoring broker should be able to understand exactly how the following processes work within that provider’s organization: Before sending referrals to a provider, a broker should be thorough in his or her provider research. Where one client may fit within an individual provider’s requirements, another may not.įactoring brokers will want to ensure the providers in their network are providing a high level of client and customer support, to ensure the broker’s relationship is strongly maintained with the client.
Factoring providers range in the types of industries served, minimum and maximum funding amounts, and risk tolerance level. His or her clients may or may not range in business size and type, and the broker acts as the conduit between the clients and providers.Īlthough independent, factoring brokers are directly involved in both the supply (sourcing the factoring providers) and the demand (companies needing working cash flow.) A good factoring broker should be skilled in developing client relationships and competent in an array of alternative funding solutions, some of which include:Ī factoring broker typically will not have an exclusive relationship with a single provider, but will utilize a variety of factoring providers for their clients’ specific needs. Factoring brokers are independent commercial finance consultants that are able to offer different accounts receivable financing options to businesses through their unique network of providers.Ī broker will typically work for himself or herself, under an assumed corporate name that separates the brokerage from the providers.
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