Anthony Cicone asked:


If advertising and media expenses are hampering your growth, why not consider infomercial financing? Infomercial financing is really nothing more than a kind of consumer financing whereby you may elect to cash out your multi-pay receivables up front so as to enhance your cash flow. Cashing out receivables will empower you to obtain capital without creating debt or compromising your equity.

As long as the consumer has authorized payments on his/her credit card, no credit check is necessary and no formal contract is required. The receivable may be purchased after the product has been shipped and usually after the thirty day money back guarantee has expired. In this way the returned accounts are filtered out before the receivable is actually sold. If, for example, you offer a five payment credit card transaction , and the first payment is taken with the initial order, you could sell the receivable after the second payment is taken thirty days later, and the remaining three payments would then be bought. If, on the other hand, you only charge shipping and handling up front and then take the first payment thirty days later, then the remaining four payments would be bought.

Rates may vary somewhat relevant to the product and the associated risk involved. At the same time, upon selling your receivables, your company will no longer incur the costs associated with credit card merchant fees, statements and collection calls.

A reserve account, usually 15%, is set aside to offset delinquent accounts. However, if a delinquency report can be provided by the client, consideration will usually be given to reduce the reserve account. The reserve account is usually held for 90-150 days after the month of the first purchase. At this point the client will be eligible for a reserve rebate. Every month after the initial hold back, the reserve is reviewed, and eligible refunds are distributed at those times. Each month’s placement is treated as its own reserve pool. Although delinquent accounts are taken against the reserve, clients should expect to receive most of the reserve back over time, assuming of course, that a reputable product is being sold.

Since there are no actual credit statements or contracts, generated data is transferred electronically. How the data will be sent and what information will need to book in the accounts will be done so as to meet the client’s needs.

Delinquent debt collection services are also available for defaulted accounts. This delinquent debt collection service is a no-risk program in the sense that there are no up front costs. The delinquent accounts are booked in, collection letters are sent and phone calls are made to the delinquent accounts. The charge for this collection work is typically one third of the payment collected. If no collections are able to be made, you would owe nothing. Collection work will start within days of your file transfer and funds will typically be disbursed at the end of the month.

In addition to consumer financing and delinquent debt collection, loan servicing of current accounts is another service available to our clients.

 

To find out more information about this program, please contact Access Funding Center, Inc.



Roy

Joel Marica asked:


The concept of Buy Here Pay Here (BHPH) financing at auto dealerships is simple.  Generally, sales and collections both take place at the same facility.  The dealer and buyer first arrange a loan in-house at the dealership.  It is common to explore financing before even looking at cars, then going to look at cars with a monthly payment range in mind.  After the buyer purchases the automobile (buy here), he or she then returns to the dealership to make weekly or bi-weekly payments (pay here), usually by cash or check.  Some dealerships offer BHPH financing as an option, while others require it exclusively. 

BHPH financing is becoming increasingly common in the auto sales industry and there are several reasons why.  An auto dealership that chooses to offer BHPH financing can suddenly reach out to a brand new pool of potential auto purchasers.  BHPH financing allows dealerships to sell cars to individuals with poor credit history who would not otherwise be able to purchase a vehicle.  The number of consumers with poor credit has recently increased, especially with the current state of the economy and in the wake of the subprime mortgage crisis. 

BHPH financing provides these consumers with several incentives to purchase vehicles.  First, dealerships can report positive buyer behavior to credit reporting agencies, which is appealing to buyers with poor credit history.  Such a practice also motivates purchasers to make timely payments.  Second, BHPH dealerships tend to be more flexible with accepting trade-ins because it is easier to find buyers for those cars.  Accepting a trade-in vehicle that other dealers might not can be a great selling point.  In sum, dealerships that offer BHPH financing can gain an edge over competitors that do not

Perhaps the best aspect of BHPH financing is that it offers a great deal of flexibility – not just in payment options but also in overall management style and decisions.  Because of that, a dealership can smoothly make the transition to BHPH financing.  There are many resources that provide detailed information about how to set up a BHPH dealership effectively.  Jim Rhoads, the president of a consulting firm that specializes in start-ups in the BHPH field, highlights some of the steps to starting and managing a successful BHPH operation.  Topics include everything from understanding the business, to choosing the right BHPH software, to collection efficiency. 

Once you decide to offer BHPH financing, it is important to use marketing and advertising to your advantage.  BHPH financing’s best selling point is that it is easy to buy even with poor credit history.  Signs that emphasize that benefit are a must have for BHPH dealerships.  These signs are especially important because many people do not know what BHPH financing is.  A sign as simple as one that says “WE FINANCE” may encourage buyers who have previously been turned down because of credit problems.  Effective advertising allows a BHPH dealer to maximize its potential.



Jessie