{"id":2894,"date":"2024-05-19T22:17:05","date_gmt":"2024-05-19T22:17:05","guid":{"rendered":"https:\/\/iacfb.net\/?p=2894"},"modified":"2025-04-24T17:13:52","modified_gmt":"2025-04-24T17:13:52","slug":"earning-residual-commissions-as-a-referrer-agent-or-sonsored-agent","status":"publish","type":"post","link":"https:\/\/iacfb.net\/index.php\/2024\/05\/19\/earning-residual-commissions-as-a-referrer-agent-or-sonsored-agent\/","title":{"rendered":"Earning Residual Commissions as a Referrer, Agent, or Sonsored Agent"},"content":{"rendered":"<p>So you\u2019re exploring a career as a\u00a0<em>freelance factoring broker \/ consultant<\/em>\u00a0and you now want to learn more about commissions and income potential.\u00a0 Well, here it is..the good part\u2026.the MONEY!\u00a0 All about\u00a0<em>Factoring Broker Commissions<\/em>.<\/p>\n<p>Freelance brokering in commercial finance can be a very, very lucrative occupation and the commissions and referral fees paid to referrers by banks and factors can be gauged simply as extraordinary.\u00a0 And, though there are many types of commissions depending on the financial products and services you provide, here we will focus strictly on those associated with accounts receivable factoring.<\/p>\n<h2>Factoring Broker Commissions:\u00a0 Unique in the Industry<\/h2>\n<p>Commissions paid to independent factoring brokers tend to be relatively unique in the commercial finance industry.\u00a0 This is because they are:<\/p>\n<ul>\n<li><b>RESIDUAL COMMISSIONS:\u00a0<\/b>This means they are paid on a continuing and recurring basis each month based on the factor\u2019s collections upon financed invoices<\/li>\n<li><b>LIFE-OF-ACCOUNT COMMISSIONS:\u00a0<\/b>This means you will receive such residual commission payments for as long as your referred client continues to use the factor\u2019s services<\/li>\n<\/ul>\n<p>This commission style is also common for purchase order finance referrals but most other industry product areas pay a one-time fee in \u201cpoints\u201d (a percentage of the loan amount) much like a typical real estate loan.<\/p>\n<p>Referral commission fees paid to freelance factoring brokers \/ consultants on factoring transactions are most often somewhere between 10%-15% of the fees earned by the factor.\u00a0 This range depends on the:<\/p>\n<ul>\n<li>factor\u2019s commission policy<\/li>\n<li>amount of invoices purchased each month (client size)<\/li>\n<li>the factoring arrangement\u2019s fee structure<\/li>\n<li>amount of continuous business you, as an independent broker, send to a particular factor<\/li>\n<\/ul>\n<p>Factors will also run periodic bonus programs and\/or sales contests where commissions can occasionally be as high as 20% of the factoring fees earned.\u00a0 This is one reason why it is important to sign up for newsletters at as many factors as possible.\u00a0 You can also often find out about sales contests and promotions on the IACFB website at\u00a0<a href=\"http:\/\/www.iacfb.com\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.iacfb.com\u00a0<\/a><\/p>\n<p>Broker commissions are paid monthly and you will usually receive a check during the first or second week of the calendar month for commissions \/ fees generated the previous month.\u00a0 When first submitting a deal for financing, it will often take two (2) months or more before you receive your first commission check.\u00a0 This is because your fees are based on the factoring fees which, in turn, are a function of collections.\u00a0 Factors must purchase and then be paid on invoices before service fees can be tallied and broker commissions paid.<\/p>\n<h2>Earning Additional Consultant\u2019s Fees from the Client<\/h2>\n<p>In most cases, brokers will simply earn referral commissions paid by the lender when the deal is placed.\u00a0 As an active industry consultant, however, you may find situations where you will also earn a<em>\u00a0\u201cplacement fee\u201d<\/em>\u00a0paid by the client.\u00a0 This \u201cdouble payment\u201d usually occurs when a consultant is uncertain as to what type of financing will be available to remedy a particular client\u2019s problems or if financing will be available at all.\u00a0 When sourcing an asset-based loan for a client or similar non-factoring solution, most consultants will earn a contractual\u00a0<em>placement fee<\/em>\u00a0paid by the client prior to or at loan closing.\u00a0 On occasion, when such an agreement is in place and factoring turns out to be the only accessible or realistic solution to the problem, a broker may be the recipient of both a factoring commission paid by the factor and a placement fee paid by the client.\u00a0\u00a0<em>Placement fees<\/em>\u00a0are typically based on performance and brokers should strictly avoid charging \u201cup-front\u201d\u00a0<em>placement fees<\/em>\u00a0when the likelihood of successful financing is remote.<\/p>\n<h2>Monthly Factoring Broker Commission Reports<\/h2>\n<p>Factors generate a\u00a0<em>commission report<\/em>\u00a0for each of their referring brokers having active clients.\u00a0 The commission report is based on the total collections received during the month for all of a broker\u2019s referred clients.\u00a0 Most factors provide broker commissions monthly with the start date\u00a0being the first of the month and the end date being the end of the month.\u00a0 The commission report itself is based on the sum of the various client collection reports generated during the period.<\/p>\n<p>There are several standard formats used by factors for their\u00a0brokers\u2019 reports, but most will display both total purchases and total collections for the monthly period.\u00a0 The\u00a0<i>collections<\/i>\u00a0will show the factor\u2019s fees earned and then multiply that amount by the broker commission rate.\u00a0 The\u00a0<i>purchases<\/i>\u00a0made during the month will provide the broker with a snapshot of what fees will be earned in the near future.<\/p>\n<h2>Estimating Your Income and Setting Some Goals<\/h2>\n<p>If you are a \u201cgoal setter\u201d (and you should be) and are interested in knowing how much business you need to generate to earn \u201cx\u201d number of dollars per year, here is a simple example;<\/p>\n<p>Let\u2019s say you submit a mid-size service sector client such as a janitorial service to a factor for financing.\u00a0 And for sake of this example, let\u2019s say the janitorial service factors $150,000 in invoices each month.\u00a0 The invoices are paid the the janitorial service\u2019s customers on average in 30 days and the factor\u2019s fee rate (discount rate) is 2.5% for 30 days.<\/p>\n<p>Based on the fee rate, the factor\u2019s total fees will be $3,750 per month (2.5% x $150,000).\u00a0 If the factor\u2019s broker commission rate is 10% of fees earned, you will receive $375.00 per month or $4,500 per year for that single referral as the\u00a0<em>broker of record<\/em>.\u00a0 If your goal is to earn $50,000\u00a0 per year as a freelance broker, you will need about 11 similar accounts on the books to meet your goal.\u00a0 If your goal is to earn $100,000 per year, you will need to develop about 22 such accounts.\u00a0 Also note, a broker consistently submitting quality clients to a factor is likely o earn a higher rate than the industry standard 10%.\u00a0 Typically, you will find that a successful freelance broker will be earning a lucrative 6-figure income, when the sum of his client financings (invoices purchased monthly), range between $2.5 and $3 million.<\/p>\n<h2>Want to Comment on This Article About Factoring Broker Commissions?<\/h2>\n<p>If you have questions or comments regarding this article about factoring broker commissions, post them at\u00a0<a href=\"https:\/\/www.linkedin.com\/groups\/9075224\/\" target=\"_blank\" rel=\"noopener\">LinkedIn at the IACFB Group<\/a>.\u00a0 If you are not yet a Forum\u2019s Community Member, you can join the community by simply registering at our <a href=\"https:\/\/www.linkedin.com\/groups\/9075224\/\" target=\"_blank\" rel=\"noopener\">broker&#8217;s group at LinkedIn<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>So you\u2019re exploring a career as a\u00a0freelance factoring broker \/ consultant\u00a0and you now want to learn more about commissions and income potential.\u00a0 Well, here it is..the good part\u2026.the MONEY!\u00a0 All about\u00a0Factoring Broker Commissions. Freelance brokering in commercial finance can be a very, very lucrative occupation and the commissions and referral fees paid to referrers by [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2895,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[5],"tags":[],"class_list":["post-2894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commission"],"_links":{"self":[{"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/posts\/2894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/comments?post=2894"}],"version-history":[{"count":3,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/posts\/2894\/revisions"}],"predecessor-version":[{"id":5387,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/posts\/2894\/revisions\/5387"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/media\/2895"}],"wp:attachment":[{"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/media?parent=2894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/categories?post=2894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/iacfb.net\/index.php\/wp-json\/wp\/v2\/tags?post=2894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}