Using a Factor Locator

What is a Factor Locator?

A factor locator or broker will help you determine if factoring is appropriate for your company. Locators (brokers) will identify the factor that is best suited to serve you, and will help to present your company to a factor.

What are the advantages of working with a factor locator?

Locators can provide the client with a description of various factoring programs, based on a factor’s financing offerings. The actual negotiation of fees and a factoring agreement, however, is done solely between the client and the factor. The final cost may be higher or lower than estimated, and is determined by the factoring company after the requisite customer and invoice evaluation is completed.

Can the locator with whom I am dealing give me specific details about my financing options?

The locator is generally not an “agent” for the Factor and can only speak to issues concerning discount fees and advance rates based on what the Factor advertises. Discount rates and advance fees are generally determined by several criteria. (Please refer to Factoring Discount Rates and Fees for more information.)

Confidentiality and business information provided to factor locators.

Factor locators neither request nor collect any confidential business information. Some of the questions that that a client may be asked by Grayco Factor Locators would be: name of business, contact information: the purpose for the additional capital, when the cash is needed, average monthly sales, average monthly amount of invoices to be factored, if tax liens are in place, total outstanding receivables, etc. These questions are solely to establish whether factoring would be a good fit for the client’s company.

How are factor locators compensated?

Most factor locators are compensated through a finder’s fee paid by the factoring company, and is calculated as a percentage of those fees ordinarily charged by factoring companies. Grayco factor locators charges no additional fees to businesses for its locator services.