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      12-10-2012, 09:58 PM   #1
08rookie
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any business owners extend credit to customers?

i am in a service based industry. i do sell some products but mainly my family provides a service. i have been approached by some companies that provide a concept ive been looking for. if a client does not have sufficient funds to pay my firm for our services, i now have the option to turn them on to a third party funding company. these two funding companies claim there is no recourse to my firm if we sign a client up with them. scenario plays as such. my services cost 3500. my client provides 1000k down and signs up with third party funding company. if accepted based on credit bla bla and approved, the third party pays my firm directly the balance (2500) and then bills my client over the next 18 months or whatever the installment agreement details.

its a win win win? i provide services to a client in need. a client gets services he desires. a lender provides the funds and collects interest. all parties fully disclose the agreements.

the lender specializes in at need financing to consumers via merchants (myself). lender approved or denies customer of mine and upon approval lender wires funds in my account and bills client with no recourse to my firm in the event the client defaults....

anybody use a service like this in their business? im not talking about accepting visa or mastercard. im talking about if you are a business owner and there is specific lenders in your industry that fills a void in your market....
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      12-10-2012, 10:38 PM   #2
Mr Tonka
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They either charge you a flat percentage of the financed amount or they are charging the client some type of APR for their financed amount. They don't do it for free.

This typically works by charging you a flat rate on the financed amount. They take this out of the balance they pay you. This way their exposure is somewhat mitigated should the end user default.
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      12-10-2012, 10:41 PM   #3
08rookie
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yes im aware of the logistics. im guess im curious to see if any business owners on this board use financing companies for their customers...and if so can they vouch for their business practices? are the lenders glorified loan sharks? do they have aggressive collection approach? is the merchant ever liable for the balance? stuff like that lol
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      12-10-2012, 10:53 PM   #4
Mr Tonka
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I use GE Money. Hardly a loan shark i guess. It's pretty straight forward, there are plenty of companies that do this. We used Bluetarp financial for our commercial customers but that wasn't as attractive to the customer as the residential offer. But then it was much cheaper for us as well.

With GE money or when we were with Citi Group, if an enduser doesn't pay by the agreed upon time frame all accrued interest was charged to the end user. If the end user didn't pay, GE Money is 100% liable for collection. We keep they money they paid us. The only liability we would have is if the end user claimed we didn't provide was was agreed upon. But a satisfaction sign off by the end user guards against that scenario.
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      12-11-2012, 01:56 AM   #5
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I do it - care credit. BUT, will no longer be doing it because of their extremely high "middle" man fees. For a 6 months deal, it's like minimal cost to us but once they do a 1-2 year or more deal, it costs us 20%. (I'm probably off on the figures). Best case scenario. Pay up. No money? Go borrow it and pay up. But I'm not the bank.

I used to be generous, giving, considerate but when your accounts receivables start looking into the hundreds of thousands, it just starts to eat you up.

Also, people who don't have the money or credit won't be approved by them anyways.
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      12-11-2012, 02:09 AM   #6
JMX328
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I own several thousand shares of the bank in which I work for... and technically partially own... which extends credit to its customers.

Does that count? Sorry, had to be a smart ass... >.>
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      12-11-2012, 10:02 AM   #7
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This occurs in the insurance industry. People or business's finance their insurance premium's and pay the finance company installments. However; the finance company retains the right to cancel the insurance policy if you default so that they can recoup their money.
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