The Benefits of Consumer Contract Financing Part 3
The first two articles on consumer contract financing (ie. financing consumer receivables, financing retail installment contracts, financing consumer notes, etc.) enumerated eight distinctive benefits which financing consumer contracts offers. There are numerous other benefits associated with consumer contract financing which will be addressed in part three of this series of articles.
~The client may leverage off their customers' credit. A company seeking to finance their consumer receivables does not necessarily need to be profitable or in business for at least two years. Likewise, if you are looking into the possibility of financing your retail installment contracts, you most likely will not be required to meet the assorted credit criteria required by banks and other traditional financing sources. The non-traditional funding source, while not completely ignoring your creditworthiness, will focus most heavily upon the creditworthiness of your customers.
~You will be provided with detailed management reports. If, for example, you are financing consumer notes and want to closely monitor your customers payment histories, the funding source can provide you with detailed management reports. This will position you to better run your business and manage your cash flow.
~Concentrate on marketing and business expansion. If you decide to sell your consumer contracts to enhance your cash flow you will soon discover that your business will benefit in more than one way. As a business owner you probably spend more than half your time searching for capital, fending off suppliers, and doing collection work, administration and bookkeeping. By selling your consumer receivables your will position yourself to free up your time to concentrate on sales, marketing , expanding your business and other directly profitable activities.
~No geographical limits. When you decide you wish to sell your consumer receivables, locating a funding source in your city or county is not an issue. You can work with an appropriate funding source anywhere in the United States. Geography is simply not an issue. Likewise your customers' consumer receivables can be purchased from anywhere in the U.S.
~Early detection of customer service problems. If you elect to sell your retail installment contracts, the funding source who purchases those retail installment contracts will keep in touch with the customer relevant to service issues the customer may have. Typically, a client may not likely discover a customer service problem until the contract goes unpaid. At this point, it may be too late to salvage the account and the client very likely will have lost a customer. Funding sources who purchase retail installment contracts make it a high priority to monitor the payments of their accounts. It is a primary component of their business. In this way, the negative scenario of losing otherwise paying customers, because of solvable servicing issues is addressed in a fashion that results in increased profitability.
~Credit Screening and Credit monitoring. When you opt to sell your consumer notes the funding source will provide credit information on new customers for you, which will position you to make more informed credit decisions. Likewise, the funding source will provide continuous credit monitoring of existing customers to make certain there is not significant diminution in their credit status.