Third-Party Risk Management for a Factoring Partner: What Examiners Will Ask
Third-party risk management quietly stalls good bank partnerships. The product makes sense. The economics make sense. Then the facility books on your balance sheet, which pulls the partner straight into your third-party risk program, and one question decides the timeline. Does the diligence file exist. Most partners show up without it, and the deal stalls for months while someone builds it.
The June 2023 interagency guidance on third-party relationships sets the standard. A bank owns the risk across the full life of a third-party relationship. Planning. Due diligence and selection. Contract terms. Ongoing monitoring. Documentation your board and your examiners can read.
For a factoring partner, that means real paper. Financials. Org chart. Written policies on underwriting, verification and collections. Business continuity. Security documentation on the software. Insurance. Sample legal documents. Litigation history. References.
Third-Party Risk Management Moves Faster When the Partner Brings the File
A 30 day onboarding and a 6 month one differ on one thing. Whether your partner has done this before.
A partner built for bank participation arrives with the diligence package assembled. That buys you two things. It clears the slowest step in the process, and it tells your examiners the partner understands what a regulated institution requires.
Operator background carries this. A team that built and ran factoring divisions inside banks for more than a decade knows what a credit committee asks, because they sat on that side of the table and answered it. They write policies the way a bank expects to read them.
The facility books in your name, on your books. You own the relationship and the asset. The partner runs the underwriting, documentation, verification and servicing behind it. A true 50/50 partnership, built to pass examination because the people who designed it sat on the bank side first.
Ask to see the third-party risk file before you commit to anything, and we will walk you through exactly what your examiners receive.