Broker hits the jackpot with retail installment contracts
by Judy Arndt (edited for privacy purpose)
For many years, retail installment contracts have been touted as a lucrative market for cash flow professionals to explore, although because of the supposed complexities involved, very few brokers pursue them.
Anthony Cicone wasn’t looking for retail installment contracts. They came looking for him. It started, he explained, when someone called him to find out if he would factor such contracts. While he could not find a traditional factor interested in the project, he did find a funding source willing to fund the contracts for his client
The installments were essentially unsecured “They relate to programs that open the door to college education for prospective college students by providing an array of services for them,” Cicone explained “The company helps them to prepare for scholastic exams. It does major college searches and career searches, and it helps them with financial aid planning. It also helps them find sports and/or academic scholarships.”
The company first contacted Cicone two years ago. “I had them approved by another funding source and had everything in place and subsequent to that they acquired or merged with another company and had a new management team in place. The new managers decided not to use the funding.”
Between then and sometime later, Cicone became familiar with a funding company that has worked for several years with cash flow brokers. “I called back a few months ago,” said Cicone, “and learned that the company was once again interested in financing. I contacted the original funding source, but they said no, so I went to this other funding company. They had questions, but we eventually worked through it.”
The advantage Cicone has found in working with this particular funding company is that it does more than just purchase the installment contracts. It also services the contracts and, if necessary, “has the potential to become a three part deal as a collection agency,” Cicone said. He is paid separate commissions on each element of the deal: the purchase of the contracts, the servicing and, if necessary, the collection services. He receives a percentage of the profit on each contract and a separate percentage for servicing of the contract.
Cicone’s responsibility in developing the deals was, he says, “marketing the service. I put up a nice Web site and answered preliminary questions. This particular funding company did a good job of getting the client the money. At first the time table wasn’t working out, but the funding company got them the money when they needed it.
With the client doing about $1 million in funding each month and Cicone receiving a percentage of that amount for his first commission, he’s very pleased with the amount of money he’s making, especially after adding the commission he receives for the servicing of the contracts.
Needless to say, he is looking for additional deals like this one but acknowledges the biggest road block is that many of the companies and organizations he has called already have their own financing plan in place. Factors can be some of the best sources for referrals, Cicone said, and being able to name a referral source gives the broker credibility.
“I have a friend, and he and his dad have a business where they sell these refuse trucks. They are interested in doing some leasing, so I am looking more in that direction since I have a contact right in place. I would like to do more of these consumer contracts, however,” Cicone said. “It is a very productive market to work".
by Judy Arndt (edited for privacy purpose)
For many years, retail installment contracts have been touted as a lucrative market for cash flow professionals to explore, although because of the supposed complexities involved, very few brokers pursue them.
Anthony Cicone wasn’t looking for retail installment contracts. They came looking for him. It started, he explained, when someone called him to find out if he would factor such contracts. While he could not find a traditional factor interested in the project, he did find a funding source willing to fund the contracts for his client
The installments were essentially unsecured “They relate to programs that open the door to college education for prospective college students by providing an array of services for them,” Cicone explained “The company helps them to prepare for scholastic exams. It does major college searches and career searches, and it helps them with financial aid planning. It also helps them find sports and/or academic scholarships.”
The company first contacted Cicone two years ago. “I had them approved by another funding source and had everything in place and subsequent to that they acquired or merged with another company and had a new management team in place. The new managers decided not to use the funding.”
Between then and sometime later, Cicone became familiar with a funding company that has worked for several years with cash flow brokers. “I called back a few months ago,” said Cicone, “and learned that the company was once again interested in financing. I contacted the original funding source, but they said no, so I went to this other funding company. They had questions, but we eventually worked through it.”
The advantage Cicone has found in working with this particular funding company is that it does more than just purchase the installment contracts. It also services the contracts and, if necessary, “has the potential to become a three part deal as a collection agency,” Cicone said. He is paid separate commissions on each element of the deal: the purchase of the contracts, the servicing and, if necessary, the collection services. He receives a percentage of the profit on each contract and a separate percentage for servicing of the contract.
Cicone’s responsibility in developing the deals was, he says, “marketing the service. I put up a nice Web site and answered preliminary questions. This particular funding company did a good job of getting the client the money. At first the time table wasn’t working out, but the funding company got them the money when they needed it.
With the client doing about $1 million in funding each month and Cicone receiving a percentage of that amount for his first commission, he’s very pleased with the amount of money he’s making, especially after adding the commission he receives for the servicing of the contracts.
Needless to say, he is looking for additional deals like this one but acknowledges the biggest road block is that many of the companies and organizations he has called already have their own financing plan in place. Factors can be some of the best sources for referrals, Cicone said, and being able to name a referral source gives the broker credibility.
“I have a friend, and he and his dad have a business where they sell these refuse trucks. They are interested in doing some leasing, so I am looking more in that direction since I have a contact right in place. I would like to do more of these consumer contracts, however,” Cicone said. “It is a very productive market to work".
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