Rather than elaborate on one specific deal that worked out for the better, this article will expand on three surefire attributes all involved parties (brokers, factors and prospects) need to have in order for a factoring relationship to run smoothly from beginning to end. All it takes is a little preparation, good communication and some organization.

Preparation

Brokers:
Before a factoring broker even thinks about referring a prospect to a funding source, it’s important for him/her to do some behind-the-scenes prep work ahead of time. Examples of this prep-work include:

• Knowing all of the pertinent details about each of your funding sources(i.e. Monthly minimums/maximums, industries they serve, general fee structures, length of time it takes to close a deal, how they prefer to receive referrals, etc.)
• Educating yourself as much as you can about the prospect’s company and/or industry (i.e. Do they provide services or products?, Who are their customers? How much do they bill?, Why do they want to factor? How long have they been in business? Do they have any liens?, etc).
• Gathering pertinent information from the prospect to help the factor qualify the lead appropriately (i.e. Current invoice aging report, Articles of Incorporation or Articles of Organization, Contact information for company principles, etc.)

Factors:
Factoring firms also need to be adequately prepared to receive a lead from a broker. This can easily be accomplished by having a structured referral program already in place so brokers know upfront what the factor expects from them. In addition, factoring firms should have dedicated personnel available to help brokers through the process of submitting a prospect.

Prospects:
The best prospects to work with are those who are prepared to answer questions pertaining to their business and who have pertinent business documents on-hand and ready to distribute to the broker and/or factor. For example, most companies should be able to easily access their most recent tax returns, provide financing reports (i.e. invoice aging, profit/loss statement, balance statement, etc.), and supply copies of company registrations.

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