Articles by
Dr. Anthony F. Cicone
Broker
hits the jackpot with
retail installment contracts
by Judy
Arndt 1/1/2002
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.”
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Between then and sometime later, Cicone became familiar
with Monterey, 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 Monterey. They had questions, but we
eventually worked through it.”
The advantage Cicone has
found in working with Monterey is that Monterey 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. Monterey did a good
job of getting the client the money. At first the time
table wasn’t working out, but Monterey 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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