Welcome to the ExpoCredit Broker Learning Hub! This resource is designed to provide you with comprehensive insights and knowledge on a range of topics that are essential for your success as a broker in our program.
Learn the fundamentals of factoring, its role in financing, and how it benefits clients. Explore real-life scenarios and case studies to understand the process.
Delve into the unique needs and challenges of clients seeking financing solutions. Gain insights into the industries and businesses that can benefit from factoring.
Discover how to identify and target potential clients who can benefit from factoring. Explore strategies for prospecting and building your client base.
Understand the terms, conditions, and services offered by ExpoCredit. This section covers pricing structures, contract terms, and the benefits we offer to brokers and their clients.
Get a step-by-step guide to the client onboarding process. Learn how to initiate and manage client relationships, from the initial application to funding.
Explore best practices, tips, and strategies for becoming a successful broker. Learn from the experiences of other top-performing brokers in our program.
Access additional resources, including downloadable guides, marketing materials, and contact information for our support team. We're here to help you every step of the way.
1. Factoring and How It Works
Factoring is a financial solution that plays a vital role in supporting businesses of all sizes. In this section, we'll take an in-depth look at what factoring is and how it works, providing you with a solid foundation of knowledge in this important aspect of commercial finance.
What is Factoring?
Factoring, also known as accounts receivable factoring or invoice factoring, is a financial transaction in which a business sells its outstanding invoices (accounts receivable) to a financial institution or factoring company, known as a factor. In exchange, the business receives immediate cash, typically a significant portion of the invoice's face value. Factoring serves as a source of working capital and provides businesses with the liquidity needed to cover operational expenses, invest in growth, and seize opportunities.
How Factoring Works
Invoice Submission: The business generates invoices for its clients as usual. These invoices represent the amounts owed by clients for products or services provided.
Submission to the Factor: The business submits these invoices to the factor for verification and approval. The factor assesses the creditworthiness of the clients listed on the invoices.
Advance Funding: Upon approval, the factor advances a significant portion of the invoice value to the business, typically ranging from 70% to 90%. This provides the business with immediate cash to meet its financial needs.
Client Payment: The clients listed on the invoices make payments directly to the factor, as stipulated in the agreement. The factor manages the collection process, including follow-up on outstanding payments.
Final Settlement: Once the clients have paid their invoices, the factor deducts their fees and releases the remaining balance to the business. The factor's fees are typically based on the invoice amount and the time it takes for the clients to pay.