In the past I’ve written about the pivotal role a factoring broker can play in the cash flow industry. In my November 2011 piece titled, “A How to Guide For Factoring Brokers”, we received an overwhelming response from interested people from all parts of the globe looking to get involved in the factoring industry. That’s the good news. Unfortunately, I have also found that a large percentage of these “new brokers” had faded away within just a few months of getting started. The resounding theme for their ultimate demise could usually be summed up by a lack of prospects. As much as I would like to say I was surprised by this development, unfortunately, the story is very common.
The current credit crunch has left tons of companies starving for working capital to keep their businesses going and in many cases expand their operations. So why in the midst of one of the worst recessions since the Great Depression are factoring brokers finding it hard to find companies in need of working capital? The short and easy answer to that much of it depends on you the broker and your marketing efforts. Unfortunately, many new brokers fall into the trap of setting up a website and sending out email blasts. That’s not to say either one is not important but it is a far cry from a focused marketing campaign. I like to say that if you are going to be successful in the factoring industry you are going to have to get your hands dirty. So what exactly does that mean?
First, understand what invoice factoring is and how it can benefit your client. There is a ton of information on this subject available online through great sources such as Factoring Investor, The International Factoring Association and many others. You can also email me at email@example.com to get our free guide for factoring brokers. No matter what source you choose, understand the industry. Also, work with a funder that is willing to walk you through the funding process as it relates to fees, advances, required documents, due diligence, and other important aspects of putting a deal together.
Secondly, find your niche and sweet spot. Every person is unique and what works for one may not work for another. Some brokers may prefer speaking in front of groups of people while others are more comfortable with networking groups. Several of our colleagues are extremely proficient with social media or have very popular websites that draw new prospects through ad clicks. I have found that many successful brokers have experience in a particular industry which utilizes factoring giving them an edge in finding prospects. For example, we have funded many prospects from brokers in the apparel and transportation industry that had previously worked in those industries.
Finally, don’t give up. The prospect or business referral you meet today may not connect with you at first but may bear fruit sometime in the future. I cannot tell you how many times we receive calls and emails from brokers, bankers and CPAs that were from events from months and years past.
If you’re a successful factoring broker or a funder that has success with brokers we’d like to hear from you. If you could give a fellow colleague a start in the right direction what would you recommend? What areas would you avoid? At the end of the day the more businesses that know about the benefits of factoring the better we all are for it.
This article was written by our president Don D’Ambrosio and originally published in Factoring Investor on July 9, 2012.