Note Course Bonus: Consider Factoring
Published: Tue, 06/10/08
In this Note Course Bonus Lesson, Robert McMahon, president of
Aegis Factors, will introduce you to the possibilities of
brokering business invoices, a.k.a. factoring -- a little-known
but very lucrative part of the investment paper business.
Each time he sells an invoice, a factoring broker earns 10% of
the factoring fees for as long as the client-factor relationship
exists. This often lasts for many years!
Mr. McMahon will host a free one hour teleconference on
Wednesday, June 18, from 9:00 p.m. - 10:00 p.m. Eastern time.
This is an opportunity for you learn first-hand from one of the
true experts in the country and to ask questions to decide if
factoring is for you. A one hour investment of your time could
produce a lifetime of returns!
Space is limited by bandwidth. Sign up at
www.PaperSourceOnline.com/factor.htm
Cheers,
Bill Mencarow
President, The Paper Source, Inc.
www.PaperSourceOnline.com
www.cashflows.org
********************************************************************
Consider Factoring!
by Robert McMahon, President, Aegis Factors
At some point virtually every broker of discount residential
mortgage notes will be drawn to the lucrative commercial side of
the cash flow industry and the world of invoice factoring and
alternative commercial finance -- and rightfully so.
With its almost legendary potential for earnings and its
uniquely prestigious nature, factoring offers an exceptional career
option for those exploring opportunities in the cash flow
industry.
Factoring Defined and "Debunked"
Traditionally, factoring is most often defined as a
well-practiced method of commercial finance in which a company
(the factor) purchases commercial trade debt (invoices) from a
business (the client) at a discount to their face value.
An accurate definition, but so what? What does it tell us
about its benefits, and why a business would want to sell their
accounts receivable, anyway? If you are going to define factoring,
and you will have to when making sales presentations, present the
definition in terms of benefit to the business owner. A "working
man's definition" is as follows:
Factoring is nothing more than a method of commercial
finance that relates to the accounts receivable of a business.
It is not a working capital loan to be used at the business owner's
whim. It is arguably the most powerful of all commercial finance
tools and simply does one of two things:
1) Allows businesses that are currently operating on a cash
basis with their customers to offer terms of payment (30, 45, 60
days) for goods or services provided. In virtually all cases,
when terms of payment are offered, customers tend to buy more.
Therefore, factoring is a form of commercial finance which finances
terms of payment and allows the customers of a business to buy more
products and services on credit provided by the factor.
2) Allows businesses that are currently offering terms of payment
to their customers and subsequently may have tens of thousands or
even hundreds of thousands of dollars of working capital "trapped"
in accounts receivable, to free up those funds by selling the
accounts to a factor for immediate cash. Once sold, the business
can use the freed-up capital for any number of reasons, such as
purchasing inventory, paying vendor obligations, purchasing new
equipment, investments, payroll, etc.
Therefore, factoring is also a form of commercial finance
which liquidates the accounts receivable of a business and frees
up capital for growth and expansion.
The Role of the Independent Broker
In Today's Factoring Industry
Although a $125 billion industry in the United States
annually, factoring is not a well-known source of finance in small
and mid-sized business circles. Large providers of domestic
factoring services have easily recognized names such as Wachovia,
SunTrust, GMAC, and CITI Financial, yet a trip to a local branch
of these banking giants will turn up little information on the
billions in factoring and alternative commercial finance services
they routinely provide to cash- strapped U.S. business owners
annually.
Even more unknown than the actual service and its
financial providers is the lucrative sub-industry of the
independent loan broker, or alternative commercial finance
consultant. Each year these knowledgeable and often home-based
entrepreneurs refer thousands of new clients to banks, factors,
asset-based lenders, purchase order finance companies, and other
providers of alternative commercial finance services, earning
attractive consultant fees and residual commissions in the process.
One of the primary reasons many are attracted to brokering
in the factoring industry is due to the way brokers receive such
fees and commissions. As a norm, industry brokers will earn 10% of
the factoring fees charged to the client (seller of invoices) by the
factor. Most importantly, this arrangement is often for the life
of the account. This means once the client is referred and the
factor begins to purchase invoices each week, the broker will earn
10% of the factoring fees charged for as long as the client-factor
relationship exists.
Successful industry brokers learn to build "books" of client
referrals and, as a result, will receive multiple commission checks
each month for their portion of the factoring fees earned on each
referred client. Adding to the earnings attractiveness, such
extended commission relationships (and monthly checks) can often
last for many years.
Entering The Brokering Community
Though some independent loan brokers uncover this lucrative
vocation while performing their normal daily job of accounting or
bank-lending, many others discover this unusual career opportunity
after being exposed to the cash flow industry and, in particular,
the well known product area of discount mortgage notes. In reality,
brokering mortgage notes and consulting in factoring and alternative
commercial finance have little in common from a business standpoint.
However, more factoring consultants are recruited from the ranks of
note brokers and the discount mortgage note industry than from any
other single source.
While some find entering this unique brokering community
difficult, the truth of the matter is success as a factoring and
alternative commercial finance broker is really not that hard to
achieve once you fully understand the various products and the
financial benefits they can provide to cash-strapped small and
mid-sized owners.
In addition to factoring, most industry brokers will also
offer consulting services in asset-based lending, purchase order
finance, import-export trade finance, and equipment leasing as
well. While a certain level of product knowledge in all these areas
is important, most essential to success in the industry is the
ability to develop a "marketer's" mentality and to acquire the
direct marketing and prospecting skills necessary to make the
business of brokering commercial finance transactions not only
financially rewarding but physically and emotionally enjoyable as
well.
Successfully entering this challenging area of commercial
finance requires acceptable product knowledge, a strong work ethic,
and general marketing savvy and is clearly not for everyone. For
career minded, success-driven entrepreneurs willing to meet the
challenges, few professions offer the combination of prestige,
respectability, and income pot*ential as those found in the
factoring and alternative commercial finance industry.
Robert McMahon is president of Aegis Factors, Inc, a small
business community factor in Ft. Myers, FL and also president of
Datamax Marketing Systems, provider of the FactorMax Guerrilla
Business Development and Broker Training System.
Phone (239) 274-7990, email aegissupport@aol.com
Want To Know More About Factoring?
Get In On The Free Teleconference
Wednesday Evening June 18
If you want to explore career opportunities in factoring and
alternative commercial finance, there's no better way than the
free 1 hour teleconference on Wednesday, June 18, from
9:00 p.m. - 10:00 p.m. Eastern time.
Included with the teleconference is An Introduction to
Factoring & Consulting in Commercial Finance, a comprehensive
industry overview and look at the opportunities available in
brokering commercial finance transactions (PDF format).
The teleconference is available on a first-come basis.
Space is limited by bandwidth. Sign up at
www.PaperSourceOnline.com/factor.htm
A one hour investment of your time could produce a lifetime
of returns!