The Benefits of Consumer Contract Financing Part 4
by Dr. Anthony F. Cicone, CFS  2/2/10

The numerous benefits of consumer contract factoring (consumer contract financing, consumer receivable financing etc.) have been enumerated in the previous three articles. However, as a business owner, CEO or CFO you may have concerns that your customers may be somewhat perplexed when they discover they will be paying a third party. If you do happen to have a few customers who question what you are doing, relevant to consumer contract factoring, it may be helpful to compare the factor/customer relationship to that of the mortgage company/homeowner relationship.

For example, many people are quite familiar with the manner in which mortgages are bought and sold. Most everyone is comfortable with the fact that it does not affect the homeowner when a mortgage is sold. The homeowner knows they simply send their check to someone else. Factoring consumer receivables (factoring retail installment contracts, factoring consumer notes etc.) is based on the same principle. Just as homeowners understand that when their mortgage is sold they need to send their check to someone else, customers can be educated to understand that their consumer contract has been sold to someone else whom they must be responsible to pay in a timely fashion.

Most people today understand and respect the concept of outsourcing. In a broad sense, when a business sells their consumer contracts to enhance their cash flow, they are engaged in a type of outsourcing. Likewise, it should be noted that some of the largest companies in America routinely engage in factoring because it's just plain good business to do so.