Who would I sell factoring (accounts receivable selling) leads to?
If business owners filled out a form on my website indicating they would like to talk to someone about factoring and they have given me the permission to relay this information to interested parties how would I find companies willing to pay for this?
I know there were companies that would buy, for instance, mortgage re-finance leads. I'm wondering if there are similar companies in the business financing area?
See factoring:
http://en.wikipedia.org/wiki/Factoring_%28finance%29
2 Answers
Do you add any value or qualification to the "leads"? You might be able to sell it better with some initial level of "due diligence".
I think if I were an investor I would be leery of this kind of thing coming through a middleman - it would make me wonder why the business wasn't able to get a loan or money from their local bank.
You can probably look at the other sources of discounted revenue streams for possibilities - specifically these come to mind:
- lottery payments
- privately held mortgage notes
- tax liens
- insurance commission residuals
- copyright residuals (songs, book printings, etc)
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Hey Tim, Thanks for taking time to answer me. The thing with factoring is that the business seeking this service obviously aren't pursuing a bank loan for some reason. Likely because there biggest asset is their accounts receivable, not hard assets. This would be true regardless of how you heard about their need. – Dog On 15 years ago
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Thanks for the list of discounted revenue streams as well! – Dog On 15 years ago
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@DogOn - it is pretty common for banks to give loans based on AR. That is why I mentioned it. Selling the AR at a discount gives it an air of desperation - almost like the collections discounting. – Tim J 15 years ago
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Shows what I know, thanks tim ... – Dog On 15 years ago
All of the factors I'm familiar with are small, local operations; the larger operations tend to work up the food chain, financing less risky A/R. That said, they're all happy to offer me a commission every time I speak to them. So, I'm sure that the answer is, "yes, factors would pay you a commission on leads." If the leads are somehow pre-qualified you might even get 2%. I'd start by looking for factors in your area on Google, you'll find a bunch. Just call them, they're all born salesmen and will be happy to talk.
The problem is: how do you scale past one-on-one connections? Since we're talking about small, local operations, that's probably very difficult. Look for conferences, newsletters, and things like that, then advertise there. If you actually deliver useful leads, I'm confident you'll get a lot of referral business. But be prepared to deal with a lot of one-off relationships. Managing those may or may not be profitable.
(Now, if you built the software the factors used to manage their own business, then you could automatically suck in the data you need to manage your relationships...)
