Building Synergy Referral Relationships

At the risk of giving away one of my trade secrets, I'm about to reveal one of the best reciprocal referral relationships of this profession. If you happen to be a competitor, please avert your eyes...

There exists a specialized area of alternative commercial finance known as FACTORING. Basically, the companies that work this business will issue "loans" against accounts receivable from a small business, collect on them and keep a small percentage of whatever they collect. The money they "loan" is not typically considered as debt since they are really buying the accounts receivable. As you might imagine, this helps the small business in many ways . These Factoring Companies provide an indispensable service for their small business clients:

1. They can help reduce bad debt loss.
2. Make cash quickly available for any use.
3. Provide a professional collection & credit service.
4. Give constant detailed reporting of progress.
5. They get paid from proceeds of their collections.

Most factoring companies are very flexible and will custom fit their service for each individual client depending on their needs. Some or even all of the cash your client receives for their accounts receivable from the factoring company can be used to make payment on the debts you settle (making your job much easier).

Now, here's the BONUS part for YOU, the factoring company will pay you a referral fee for any business you send their way that becomes a fee generating client. The standard rate is 10% of whatever fees they receive... for as long as they receive fees... and this can easily translate into thousands of dollars for you and continue for months or even years.

Most of your clients will be businesses experiencing cash flow problems and could qualify for factoring if they have enough and the right kind of accounts receivable. You will not only be doing a favor for your client by suggesting this alternative financing but you could earn yourself a substantial ongoing referral fee.

Also & importantly, if you build a relationship with several of these companies, they will send business to YOU! Face it, their clients are probably having cash flow problems or they would not have approached them in the first place. If you can offer to negotiate discounted settlements on their clients' problem debts, that leaves more money available for their other pressing needs.

Do a little Internet search for "factoring" or "accounts receivable financing" companies in your area and send them a letter about your business. As always, follow-up with a phone call and you will be on your way to building some of the best referral relationships for your business you can find. But keep this under your hat... I would hate for my competition to find out about this idea!

Scott F. Soape