Factoring & Alternative Commercial 1

Transcription

1 An introduction to brokering... Chapter Factoring & Alternative Commercial 1 Finance Transactions

2 Welcome Lifestyles in America continue to change rapidly. Twenty years ago, few would have believed that America, as the manufacturing center of the world, would be replaced by third world nations and that American families seeking just a modest living standard would be forced to find two or even three jobs to get by. In an era where double digit unemployment and foreclosures abound, the recession still forces thousands of layoffs each month. Job security in virtually all sectors of the American economy is all but a fading memory. For many Americans, a change in career is not a choice but a necessity. Corporate downsizing and the relocation of high paying jobs to distant offshore locations is now commonplace. Job opportunities that provide salary levels which can actually support an average family are becoming more and more scarce. Unemployment and underemployment in many areas of the country is nearly 20%. The solution to many faced with continued job loss and salary reductions is to exit the world of the employee and to begin their own entrepreneurial business venture. The career path that is the subject of this introduction (factoring and loan brokering) is one that can offer a unique opportunity with exceptional income potential and a high degree of prestige and vocational respectability. While its parent industry (commercial business finance) is well founded, very few individuals know of the lucrative commission and fee income opportunities that exist for independent industry brokers or commercial finance consultants who earn their living by referring new clients to specialized financiers such as asset-based lenders, factors, factoring banks, and others. YAHOO Hot Jobs recently documented a career in factoring as being one of their "Top 10 HOT Professions for 2009". But even with such a powerful endorsement, the industry remains a virtual secret to most career opportunity seekers. This short booklet along with its introductory tele-conference presentation available through the IACFB, is designed to introduce you to a fascinating industry full of opportunity and challenge. For some, it represents a first step in becoming a highly regarded and sought after independent commercial finance consultant (CFC), a career that offers successful candidates... an attractive income with trailing recurrent commissions a work-from-home unlimited career opportunity an opportunity to be your own boss, set your own hours and work as often or as little often as you desire. For those armed with the required knowledge and work ethic, the industry offers an exciting new career path in today s difficult economy. Your partnership with the IACFB, Datamax Marketing Systems (DMS) and their authorized agents, can be the catalyst for an exciting new, take-charge career with exceptional income potential and prestige in the exciting factoring and alternative commercial finance community. 2

3 The Factoring & Alternative Commercial Finance Industry The Factoring & Alternative Commercial Finance Industry provides business financing alternatives for companies that, for one reason or another, cannot access traditional bank credit. In some cases this is due to poor credit of the business owner. In others, the business simply is new or has not been in existence long enough to have any true credit history. For whatever reason, the business is "cash-starved" and unable to grow or even operate efficiently without the assistance of an alternative finance source. Alternative commercial finance comes in many shapes and forms. Among others, these include... Factoring...the purchase of the accounts receivable of a business at a discount by an entity known as a "factor". Purchase Order Finance...the financing of an order from a large, creditworthy customer where the goods must be manufactured and where the business owner does not have the cash to do so. Equipment Leasing...an alternative to the purchasing of equipment with certain tax and cost advantages. Asset-Based Lending...revolving lines of credit which are collateralized by accounts receivable, inventory, and sometimes equipment. The Alternative Commercial Finance Industry,...a source of financing alternatives for small and mid-size business owners worldwide. Import-Export Trade Finance...often involving certain combinations of international factoring, domestic factoring, and purchase order finance. Merchant Cash Advances (MCAs)...the advancing of cash on future credit card receipts. While some industry components are well known to business owners, others are not. One of the tasks, therefore, of industry lenders is to educate small and midsize business owners regarding their options if and when the banks say...no!. One of the primary sources of such education is a small community of highly specialized industry consultants known commonly as loan brokers or Commercial Finance Consultants. Factors, for example, typically receive up to 25-50% of their new business referrals from such consultants, yet few outside of the industry know of this exciting and exceptionally lucrative entrepreneurial profession. 3

4 The Commercial Finance Consultant The factoring and alternative commercial finance industry offers innumerable opportunities for talented sales associates or brokers for two important reasons. First, because of the myriad of unique financial products and services they can represent, there is literally no limit to the number of needy business owners and individuals that require a broker's assistance and services. Second, although the industry offers almost legendary opportunities for compensation, status, and prestige, very few know of its existence as a true career or profession and therefore competition within the brokering community is relatively limited. Worldwide, for example, factoring is considered to be one of the most powerful financial tools available to small and midsize business owners for management of their cash flow and for their working capital needs. Most domestic business owners, however, know little of its existence. In fact, as many begin their brokering business and network with those they know, they will commonly hear the comment, "If I'd known about this, my old company would have never failed!" It is, therefore, one of the primary roles of the commercial finance consultant to educate the business community about the availability of factoring and alternative capital sources for the growth of their businesses. At any given time, the true number of practicing independent industry brokers is difficult to determine. This is due to the fact that until recently, with the formation of the IACFB (International Association of Commercial Finance Brokers), there was no formal membership organization in the U.S. to support the true industry professionals. Additionally, there have always been a significant number of non-professionals briefly exposed to the industry through late night infomercials or seminars who subsequently attempt a brief and poorly prepared fling at the business, only to fail miserably and then quickly drop out in most cases. At any given time, the true number of practicing independent industry brokers is difficult to determine. This is because until recently, with the formation of the IACFB there was no formal membership organization in the U.S. to support the true industry professionals. This is a consulting business. And, while a solid grasp of the various product areas, such as factoring, is essential for a new entrant's prosperity, ultimately what will determine a broker s success will be his or her ability to market their knowledge to small business owners effectively. They must be able to generate and qualify sales leads in sufficient numbers to ultimately develop commission-generating clients. A career as a commercial finance consultant can be exceptionally lucrative with earnings potential well into the six-figures. Many new brokers, however, make the mistake of over-complicating the business. Brokering is simply about lead generation, understanding the different funding types, and then introducing the prospective client to the proper capital source. 4

5 Setting Up a CFC Business Whether a full or part time, most commercial finance consultants enter the industry and begin their careers from the comforts of a home office. Many, such as bookkeepers, financial planners, insurance professionals, mortgage brokers and investment professionals find that part-time consulting in the factoring and alternative commercial finance industry is a perfect revenuegenerating supplement to their primary career or vocation. If you are setting up a home-based office, whether as a parttime supplement to your existing profession or as a full-time new career, you will find a little time (and money) spent in design will pay substantial dividends in the form of increased productivity and comfort. You will need a quiet area with no distractions. Well designed office furniture can be sourced from almost any office supply store to increase your effectiveness. For those without home-based office options, executive suites will provide you with everything you need to operate your consulting business at a very modest monthly cost. Executive suites almost always include "common areas and services" such as a meeting room, copying equipment, and a receptionist. They will add a certain "professional" atmosphere to your business from day one. Consulting, in general, is an industry that requires little in the form of expensive support products. Most new entrants to the commercial finance consulting community already have virtually everything they will require to get started. To begin your career as a broker / consultant in the factoring and alternative commercial finance industry, you will not need much more than the following: As a component to your overall success, your office working environment is more important than you may think to your productivity. If you have a window with a great view, that is the place for your desk. Natural light and interesting views are a known contributor to above average productivity. a computer a printer a fax machine an office telephone (two line) with call forwarding a cellular phone database management software a dependable vehicle proper apparel (this is a suit and tie business) You should also have substantial area for storage in the form of file cabinets and book shelves. You will be surprised at how quickly these are filled with educational information, industry broker packages, newsletters, magazines, marketing materials, and other business support items. 5

6 The Three Keys to Industry Success as a New Industry Broker For those new to the industry, the task of business development in a new and rather complex financial industry may seem a bit daunting. In actuality, the business of brokering and consulting in the factoring and alternative commercial finance industries is an entrepreneurial paradise...if you are made aware early on of the "Keys to Success". Become aware NOW!. These keys to success are: KEY #1...LEAD GENERATION. Whether full or part-time, you are building your new business slowly. The knowledge to do so does not come overnight for. The pathway to getting a firm "toe hold" in the business is to first become an expert in lead generation by developing strong direct marketing skills. It is not necessary that you immediately become an expert sales person, a master "closer", a talented public speaker, or an authority in every aspect of factoring and alternative commercial finance. That can all come gradually through experience. You simply must first develop the direct mail marketing skills necessary to generate a steady supply of qualified leads and prospects. KEY #2...DATABASE / CONTACT MANAGEMENT. By definition, all modern day direct marketing is "database marketing". Becoming successful in lead generation always requires exceptional organizational skill. You simply cannot succeed in producing the number of qualified leads necessary for you to excel as an industry broker without a state-of-the-art database management system (and the knowledge to use it properly). FactorMax Business Development Software is a powerful database manager which was designed specifically for brokers and business development personnel operating in the factoring and alternative commercial finance arenas. WORKING WITH A BDO For many CFCs, the key to success is to begin their careers by working closely with a factor's or lender's BDO. These are highly trained industry sales professionals that can assist you in closing your first deals. KEY #3...STRONG ASSOCIATE RLEATIONSHIPS. While you are slowly developing the sales skills necessary for you to become a true industry professional, learn to depend on the sales skills of others. Business Development Officers (BDOs) are employees specifically charged with generating new business for factors and lenders. Developing a close relationship with BDOs can greatly shorten your "learning curve" in the sales process. Become an expert lead generator and let the BDOs help you close your first deals. 6

7 The Day-to-Day Business of Commercial Finance Consulting The business of being a commercial finance consultant is relatively unknown in the U.S. although highly established in most of Europe and a few other parts of the world. The day-to-day work flow is similar to almost any other consultancy and will include... researching for suitable "suspects". building lists of such suspects and entering them into your database manager. developing and implementing marketing campaigns to generate "leads" from your lists. calling and qualifying those leads. setting up appointments (if geographically convenient). attending meetings of networking organizations such as local Chambers of Commerce. building relationships with those that can send business to you such as bank lending officers, accounting professionals, etc. Direct Marketing, Lead Generation, & Prospecting Most CFCs will utilize a significant amount of direct marketing for lead generation. This will include: direct mail with telephone follow-up. classified advertisements cold calling attending trade shows and exhibitions internet and e-marketing holding business seminars and workshops Successful consultants know that direct marketing is the key to "lead generation" and set aside time to market for new leads each and every day. A great deal of telephone time is necessary for lead generation and prospecting. Those that have an aversion to cold calling must overcome such inhibitions early on. All modern direct marketing requires the use of some form of contact management software. Unlike many other industries, locating the names of prospective clients for factoring and alternative commercial finance is a relatively simple task. In fact, you will quickly amass thousands of names for marketing. Attempting to keep track of your marketing efforts that involve so many prospects is impossible without a quality contact management software. 7 USING CONTACT MANAGEMENT SOFTWARE A suitable computerbased contact manager is essential for effective direct marketing. Software such as ACT, Goldmine, or Sales Force, are all suitable for a career as an industry CFC. The FactorMax Guerrilla Business Development System was specifically designed for brokers in alternative commercial finance and additionally includes the names of over 500 lenders in its useful Directory of American Factors and Lenders.

8 Recognizing Prospective Clients As a new CFC in factoring and alternative commercial finance, you will certainly encounter several challenges on your path to success. Fortunately, recognizing the characteristics of prospective financing clients for building your marketing lists need not be one of them. Unlike marketing for financial products associated with the consumers where salespeople must be alert to a myriad of consumer protection devices such as the notorious "Do Not Call Lists" and other regulations, uncovering prospects for commercial finance actually couldn't be easier. First, all businesses, large and small, have periodic needs for additional working capital, funds for normal business growth or to purchase inventory, equipment or machinery. Though a certain percentage of such requirements can be met locally by commercial and community banks, the vast majority of business loan applications (about 75%) are routinely turned down by these traditional lenders. With today's impaired banking system, the market for financing alternatives such as factoring and asset-based lending is boundless. Second, as opposed to individuals which must be searched out for consumer lending products, commercial entities are exceptionally easy to locate. They advertise in print and other media, place their name in telephone directories, publish elaborate web sites, write their names and contact information on commercial vehicles, and hang signs in front of their offices and places of business. Realistically, in the course of any business day you probably already encounter a dozen or more businesses that could potentially use your services. If you perceive a problem locating prospects for factoring, purchase order funding, inventory lending, and other areas of alternative commercial finance, you will simply need to open your eyes. Realistically, in the course of any business day you probably encounter a dozen or more businesses that could potentially use your services. General Business Categories Businesses can generally be broken down into three major categories depending on their customer base. business to consumer...retail sales to consumers for goods or services.--most often cash or credit card sales. business to business...retail or wholesale sales to businesses or government entities. Often sales are invoiced and payment terms are granted. hybrids...companies that sell on both a consumer retail and distributor /wholesale basis. 8

9 Business-to-Consumer Prospects Business-to-consumer enterprises include such entities as retail shops, remodeling contractors, health clubs, restaurants, auto repair shops, food stores, lawn services, etc. The list of such business operating with direct sales to consumers is almost endless. In general, most have one thing in common...payment for goods and services is usually tendered at the time it is performed or purchased, either by cash, check, or credit card. Such businesses have no need for factoring although many can utilize financial products such as MCAs (Merchant Cash Advances). Business-to-Business Prospects Business-to business enterprises include certain service companies such as commercial janitorial, staff leasing, guard services, etc. and virtually all distributors and manufacturers. Again, the list of categories and types of businesses that operate on a business-to-business basis is almost endless. These companies also have one thing in common. As a standard practice, they all invoice for their products and services and usually grant credit (terms of payment) to their customers. The most standard term offered is net 30 (which grants the customer 30 days to pay their bill before any interest for late payment is applied) but many customers choose to "age" their payment slightly more and pay in 45 days or even longer, causing significant cash flow problems. Hybrids Hybrids are those businesses that are primarily manufacturers or wholesale distributors in nature but which also operate retail sales operations. The retail operations generally focus on geographic areas where the manufacturer or distributor has no retail stores representing its product line. Business-to business enterprises include certain service companies such as commercial janitorial, staff leasing, guard services, etc. and virtually all distributors and manufacturers. Matching Prospects and Funding Types A primary task of a seasoned consultant in factoring and alternative commercial finance is to recognize the most appropriate type of financial product needed to provide a solution to a particular financing problem. As previously mentioned, you do not need to be an expert in every type or method of alternative commercial finance to begin your brokering career. Having a simple working knowledge and knowing, for example, the difference between factoring, assetbased lending, purchase order finance, etc. will suffice. Additional knowledge and more expertise will come over time. You will also tend to become much more motivated if you have several checks arriving each month in the mail from deals submitted for funding during the previous months. Also, bear in mind that this is a career, not a race. Set realistic goals for yourself and adhere to them. 9

10 Marketing in Manufacturing and Distribution Sectors As discussed, the list of types or categories of companies that qualify as prospects for some form of alternative commercial is virtually endless. Manufacturing companies and the distributors of their products are significantly different from service companies in that many will often have equipment, inventory, real estate, and other hard assets that can be pledged as collateral. This makes such companies much more attractive to banks and other conventional lenders and, as opposed to service sector companies that may remain faithful clients for long periods, manufacturing and distribution companies will often progress to the point of becoming bankable. When building your compiled lists of manufacturers and distributors to market to, focus on: forestry and logging, fishing and hunting, crop production, crop support products (pumps, fertilizer, etc), oil and gas producers, oil and gas support products, coal and mineral mining and support products, metal ore mining, commercial construction, highway street and bridge construction, civil engineering construction, specialty trade contractors, plumbing and electrical contractors, building finishing contractors, food (animal, seafood, grain sugar, dairy, bakeries, beverage, tobacco, etc), textiles, leathers, footwear, wood products, chemical products, resins, adhesives, rubber products, medicines and pharmaceuticals, paints and coatings, soaps and cleaners, plastics products, clay products, glass products, non-metal mineral products, metal products, machinery, computer and electronics products, electrical equipment, transportation equipment, furniture, medical equipment, durable goods, automotive and accessory products, home furnishing products, construction materials, commercial equipment, metal products, hardware and plumbing supplies, machinery and equipment, sporting and recreational equipment, toy, hobby, crafts goods, jewelry (watch, precious stones, etc.), drug wholesalers, apparel and notions, food / grocery products, chemical and allied products, petroleum products, beer and wine, farm supplies, books and periodicals, flowers and nursery stock, tobacco products, paint and varnishes, electronics, motorcycles and motorcycle accessories, other vehicles (ATV, jet-ski, etc,) and support products, gourmet food products, lawn and garden equipment and supplies, locks and accessories, fishing and hunting equipment, newspapers and magazines, medical equipment, book distributors, business to business electronics products, farm products. 10

11 Marketing in the Service Sector For many CFCs and independent consultants, businesses operating in the service sector will offer some of the most fertile ground for your initial marketing efforts. This is primarily due to the fact that many small service sector businesses such as guard services, staffing companies, janitorial and maintenance companies, etc. have very few assets upon which a more conventional lender, such as a bank, can utilize as collateral. Service sector companies, therefore, have a much more difficult time securing typical commercial loans although they may require substantial amounts of ready working capital when granting terms of payment to their customers. Areas to direct your marketing efforts include: air transportation, freight and trucking, transit and ground passenger transportation, urban transit, water transportation, taxi and limousine services, charter / scenic bus services, warehouse / storage service, broadcasting services, internet services, telecommunications solutions, sound recording services, data processing services, real estate brokerage, property management, automotive equipment rental and leasing services, scientific services (environmental assessment, etc), accounting / bookkeeping services, architectural engineering services, landscaping / lawn care services, engineering services, drafting services, building inspection services, mapping and surveying services, laboratory testing, computer system design, scientific and technical consulting, advertising services, marketing research, photographic services, translation and interpretation services, veterinary services, office administration services, employment services, document preparation services, telephone call centers, business service centers, pest control and extermination services, janitorial services, carpet and upholstery cleaning services, general commercial building services and maintenance, waste management and remediation services, educational and training services, ambulatory health care services, physician and mental health care, chiropractic services, dentistry, optical services (optometrists, glasses, etc), occupational and speech therapy, podiatry, physical therapy, outpatient care services, medical and diagnostic testing, home healthcare services, vocational rehabilitation, child care, promoters and spectator sports services, food / catering services, automotive repair and bodywork, electronics repair, equipment and machinery repair, funeral services, commercial dry cleaning and laundry services, linens and uniform services, photofinishing services, parking lot / garage maintenance, staffing, temp agency and guard services, market research services, specialized design services, building inspections. The service sector represents one of the most productive marketing areas for CFCs. Service companies generally have little collateral which can be pledged for bank loans. Such companies are completely dependent on factoring and alternative finance products for growth capital. 11

12 Working With Pre-Designed Marketing Materials Available Through the IACFB For those seeking to get started quickly, designing the various marketing materials needed to jump start their business is simply tedious and time consuming. In addition, hastily created mailers and brochures can be ineffective and waste considerable amounts of time and money. To assist its membership of independent brokers, the IACFB maintains a ready supply of lead-generating mailers, flyers, cover letters, telephone follow-up scripts and educational materials to help you get up and running quickly and effectively. As part of the FactorMax System of prospect origination, such marketing materials will help to get you started the "right way". "SILO" Style Mail Stuffers One of our most productive direct mail marketing stuffers, "SILO" mailers are a foundational marketing piece for all new brokers and consultants wishing to utilize direct mail as a primary marketing method. This standard 6x9 mailer has a proven rate of effectiveness when accompanied by a formatted cover letter. "SILO" mailers, brochures, and flyers can provide a great method of getting your CFC consultancy business launched quickly. SILO Mailers are one of our most proven systems of lead generation. These mailers are inserted in a standard 6x9 envelope along with one of several cover letters provided in the CFC Support Area of the FactorMax web site. As a CFC, you should make certain that you hand address at least 100 such prospecting mailers out each and every week. The Member's Area of the IACFB contains dozens of marketing support items such as mail stuffers, brochures, and flyers which can be purchased through the organization's print shop. Additionally, telephone scripts and samples of marketing cover letters are all available from within the Member's Area. Additional information can be found at the organization's website at 12

13 Networking One of the primary methods of generating leads and new business for all commercial finance consultants is networking. In fact, many part-time consultants utilize networking exclusively for lead generation. Networking is a particularly powerful method of business development in factoring and alternative commercial finance. As a successful CFC, you will focus on networking opportunities with... banks and bank lending officers business brokers accounts payable managers staff of organizations such as.. - S.C.O.R.E. - Small Business Incubators - SBA Joining Networking Organizations Joining business networking organizations will expose you, your company, and your services to hundreds of people that are in a position to send business your way. All CFCs will be active members of their local Chambers of Commerce, for example. Through the Chamber you will meet hundreds of sources of referral such as bank lending officers as well as many prospective clients. Community fraternal and service organizations are also a source a significant business referral. Many do not realize that membership in such organizations is limited due to the emphasis on networking and supporting the businesses of other members. Many such organizations limit their membership to only one active member from a particular vocation. Professional CFCs will seek to join such organizations such as... Every community offers both formal and informal networking opportunities. Formal networking often involves a national group or organization. Informal networking can occur just about anywhere. As a CFC, networking is a critical component of your lead generation efforts. Rotary International Kiwanis Lion's Clubs Optimists Jaycees Elks Building relationships with others that can refer business your way is the goal of networking. It is also a recognized benefit of the consultancy business, however. Though business generation is important, becoming active in such community organizations will also increase your self worth and provide a sense of community. 13

14 Earning Fees and Commissions: Factoring One of the more attractive characteristics about becoming a CFC in the factoring and alternative commercial finance industries is the substantial commission income that can be earned for simply generating leads to industry lenders. There are several methods used to compensate those CFCs that have referred a client. FACTORING FEE PERCENTAGE...by far the most widely used by small business factors where a service charge or factoring fee is charged to the client in periodic intervals such as 10 or 15 days, the broker earns a percentage of the fee charged to the client for each period. The industry standard for CFC compensation is 10% of the factoring fees earned. LIFE OF ACCOUNT PAYMENTS...for those CFCs that are more than just periodic suppliers of leads, most will enjoy monthly commission payments for the Life of Account. This means that the CFC will continue to earn his/her fee for as long as the factoring arrangement is in existence. How Factoring Commissions are Paid Factoring commissions are paid to brokers of record each month. If, for example, a client submitted by a broker submits $100,000 in invoices for purchase each month resulting in a $3,500 factoring fee, the referring broker will earn 10% of that fee or $350. Such a fee will be earned each month or roughly $4,000 per year. That is for a single referred client. With such enormous income potential, it is easy to understand why even in today's challenging economy, YAHOO HOT JOBS rated a career in factoring as one the TOP 10 HOT Professions for It is an industry where today's credit-crunch economy actually works for you, rather than against you. Whether operating on a part-time basis or with a true full time career in mind, few industries offer the potential for compensation as that found in factoring and the alternative commercial finance brokering industry. Most industry brokers focus their marketing efforts heavily in the area of factoring and international factoring due to the residual nature and life of account status of the commissions earned. Such commissions are also available in purchase order finance and allow the CFC to build "books" of business that insure an attractive monthly income which can be planned upon. Asset-based lending, equipment leasing, term lending, and most other areas of alternative commercial finance pay standard "points" at the closing of the transaction. Such transactions will add to the "base income" provided by factoring providing exceptional overall income potential for those that succeed in this high-profile profession. 14

15 Earning Fees and Commissions: ABL Asset-Based Lending (ABL) commissions are generally earned and paid differently than factoring. Because asset-based lending is a true loan and often provides as a "revolving line of credit, CFCs will earn a percentage of the "points" charged to the borrower at closing. POINTS...are typically charged for closing an asset-based line of credit. The referring CFC of such a client usually earns a percentage of the points charged. A normal assetbased line of $5,000,000 to a manufacturer or distributor, for example, will typically pay 1/2% to the referrer or approximately $25,000. Unlike factoring with its residual commission structure, ABL is most often a one-time only payment. Earning Fees and Commissions: Purchase Order Finance Much like factoring, purchase order finance providers will most often pay a percentage of the financing fees earned to the referring CFC. Such fees tend to be slightly higher than factoring but obviously charged on a smaller amount. PURCHASE ORDER FEE PERCENTAGE...the most widely used by purchase order financiers, where a service charge or financing fee is charged to the client in periodic intervals such as 10 or 15 days, the CFC earns a percentage of the fee charged to the client for each period. The industry standard for CFC compensation is 10% of the purchase order fees earned. Though most CFCs will focus their business efforts heavily in the areas of factoring, assetbased lending, and purchase order finance., dozens of additional areas of opportunity also exist for the true industry professional. DOUBLE COMMISSIONS...one of the most lucrative characteristics of purchase order finance. When the goods a re delivered to the customer, it is generally the job of a factor to "take out" the purchase order finance company. In addition to the commission earned on the purchase order, the referring broker will subsequently earn a commission on the factoring. LIFE OF ACCOUNT PAYMENTS...like factoring. This means that the CFC will continue to earn his/her fee for as long as the purchase order financing arrangement is in place in most cases. 15

16 Career Pros, Cons and Challenges With its recent endorsement by YAHOO HOT JOBS, a career in factoring and alternative commercial finance might seem too good to be true, especially in today's job market. Here are some things to consider before taking the leap. TRAINING: There is no college education that will prepare you for this vocation. Fortunately, inexpensive training is available from the IACFB as well as a certain amount of training available through DMS / FactorMax. EARNINGS POTENTIAL: Realistically, unlimited. PART-TIME OPPORTUNITY: Those that have a current career they are wishing to supplement will find that brokering factoring and commercial finance transactions offers an exceptional opportunity for part-time income. DIFFICULTY: Locating prospective businesses for purposes of marketing is relatively easy. Prospecting them as for development as clients is not. To succeed in the career will require a significant amount of hard work. This is truly a career path, not a get rich quick "business opportunity". COSTS: Business setup expense is relatively modest. To operate the business requires funds for marketing which can be significant. Those that are operating on a part-time basis in conjunction with being an accountant or insurance agent, for example, will find the additional expense to be fairly negligible. Operating full time without carry-over benefits from another vocation is slightly more expensive. PERSONAL STOCK: The industry is very much a suit and tie business. No past education will prepare you for it. To succeed, you will need crisp communication skills and some marketing expertise. These can both be developed over time with some persistence. With its minimal startup and modest operational costs, the business is an surely an entrepreneur's delight. Do not underestimate to need to have or to develop excellent business development skills, however. Referring business to factors and other members of the alternative commercial finance industry can provide an excellent supplemental income or lead to a full time career in small business consulting with unlimited opportunities and potential for income. GOALS: Those that enter the industry should set obtainable goals. To succeed, they should have the financial ability to stick with those goals. Set realistic income benchmarks for six months, a year, eighteen months, and two years. If you find yourself worried about, "How much will I be making in six months", the career path is likely not for you. 16

17 Where to Obtain Training for a CFC Career For many years, there was little formalized training available for a career as an independent commercial finance consultant. With the recent formation of the IACFB, International Association of Commercial Finance Brokers, this is no longer the case. IACFB IACFB was created to bring the community of factors and lenders together with sources of referral and intermediaries in a formalized setting. IACFB provides... Monthly tele-conferences featuring lenders from all areas of the alternative commercial finance community. An archive of past tele-conferences for continuing education. Professionally designed marketing and business development materials to assist new industry entrants. An interactive FORUM where intermediaries can learn and interact with other industry professionals. FactorMax Guerrilla Business Development System FactorMax Guerrilla is the industry's only dedicated contact management software and business development system. Its nearly 400 page instruction manual serves as an excellent source of industry knowledge. FactorMax Source Manager (included) houses the Directory of American Factors and Lenders, a ready source of contact information for "broker friendly" lenders throughout the country. Also publishes the Broker's Guide to Factoring. The Directory of American Factors & Lenders Included with FactorMax Guerrilla, the directory provides an massive source of broker friendly lenders and factors in all categories of alternative commercial finance. Datamax Marketing Systems Datamax (DMS) is the industry source for packaged broker web sites and hosting. DMS offers professionally designed sites for independents as well as providing specialized sites for members of the IACFB. 17