Please post any questions you may have regarding training modules on the Forum.

How to Submit Your Deals
While many of the periodic tasks performed by industry brokers take time and careful though, the process of deal submission is not one of them.  In fact, for brokers and consultants in factoring and alternative commercial finance, submitting deals really could not be much easier.

The most accepted method of submitting a deal to a factor is through the submission of a Company Profile which is completed by the prospective client.  Upon completion, the profile should be reviewed by the broker and then submitted via fax or email to the factor.  Brokers are not required to submit any more than the Profile although "seasoned" brokers with some experience will often show their professionalism by also submitting....

•  a copy of Online Incorporation Information showing the corporate status of the entity and the correct spelling of their corporate name.  This is available from the Division of Corporations or a similar entity in the prospect's state of operation or formation.

•  an Accounts Receivable Aging Report which is provided by the prospect and will show the names of the prospects largest customers, their invoice balances, and how long the invoices have been outstanding.  The aging report will also show "Over 90s" or those invoices that have not been collected upon in 90 days.  Over 90s can evidence a problem with the prospect's product or services if they are numerous.

•  a balance sheet and income statement (for submissions of size).  This is generally much more important to asset-based lenders than factors.

Potential Deal Breakers
The Company Profile contains several areas for information that are potential deal breakers and brokers should be aware of these. 

•   No Invoices Outstanding:  It is not unusual for a "new broker" that does not understand factoring to submit a deal from a company with absolutely no invoices to sell.  This often involves a prospect that is looking for Contract Finance, a service not provided by factors.  Factors only buy invoices...not contracts based on future sales.

•   Outstanding Bank Loans:  In order to create a factoring relationship, the factor must have a senior / first position on a client's accounts receivable.  If the completed company profile shows loans outstanding that would normally be secured by a UCC filing on accounts, there are only two choices:  1) The senior lender must subordinate or give up its senior position to the factor or... 2) The senior lender must be taken out (paid off) by the funds from the factor's first advance on invoices.

•   Tax Liens:  Federal and state tax liens can be deal breakers if they are of such size that the funds from the first advance cannot pay them off and remove them.  In some cases, the IRS will subordinate their lien position to the factor due to the factor's better funds management skills so long as the factor arranges a payment to be made against the taxes owed from periodic advances.  (Marketing Note:  In some cases, companies with "small" tax liens will actually seek out a factor to finance the accounts so the IRS can be paid off.) 

Upon receipt of a Company Profile from a broker, one of the factor's first tasks will be to pull a UCC search on the prospect for UCC-1 filings (showing loans and collateral) and a tax lien search.  If the searches show loans or tax liens outstanding which weren't evidenced on the Profile, the attempt at cover up by the prospect may be enough for the factor to decline the deal.

When to Get Your Broker's Agreement
Typically, a broker will call a factor  prior to faxing the Company Profile to discuss the deal and to ascertain if the factor has an interest in that particular client or industry.  In some cases where specialized industries are involved, the broker will need to direct the deal to a "specialized factor". 

If the factor indicates an interest, now is the time to request a Broker's Agreement which will be quickly emailed to you.  There is no reason to call numerous factors to obtain Broker's Agreements prior to having a deal to submit. 

Should I Shop Factors?
NEVER!  Shopping factors (submitting the deal to multiple factors at the same time) is frowned upon in the industry and will generally be reason for a factor not to accept submissions from you in the future.  If you are turned down by the first factor, he will likely tell you why the submission was rejected and may give you the name of another factor better equipped to take the deal.  Ask for a referral or suggestion if the deal is rejected and if the deal has potential, the factor will gladly provide the reference.