Consumer Contracts Funding Program: Direct Response Financing
Anthony Cicone
October 31, 2008
As long as the consumer has authorized payments on his/her credit card, no credit check is necessary and no formal contract is required. The receivable may be purchased after the product has been shipped and usually after the thirty day money back guarantee has expired. In this way the returned accounts are filtered out before the receivable is actually sold. If, for example, you offer a five payment credit card transaction , and the first payment is taken with the initial order, you could sell the receivable after the second payment is taken thirty days later, and the remaining three payments would then be bought. If, on the other hand, you only charge shipping and handling up front and then take the first payment thirty days later, then the remaining four payments would be bought.
Rates may vary somewhat relevant to the product and the associated risk involved. At the same time, upon selling your receivables, your company will no longer incur the costs associated with credit card merchant fees, statements and collection calls.
A reserve account, usually 15%, is set aside to offset delinquent accounts. However, if a delinquency report can be provided by the client, consideration will usually be given to reduce the reserve account. The reserve account is usually held for 90-150 days after the month of the first purchase. At this point the client will be eligible for a reserve rebate. Every month after the initial hold back, the reserve is reviewed, and eligible refunds are distributed at those times. Each month´s placement is treated as its own reserve pool. Although delinquent accounts are taken against the reserve, clients should expect to receive most of the reserve back over time, assuming of course, that a reputable product is being sold.
Since there are no actual credit statements or contracts, generated data is transferred electronically. How the data will be sent and what information will need to book in the accounts will be done so as to meet the client´s needs.
Delinquent debt collection services are also available for defaulted accounts. This delinquent debt collection service is a no-risk program in the sense that there are no up front costs. The delinquent accounts are booked in, collection letters are sent and phone calls are made to the delinquent accounts. The charge for this collection work is typically one third of the payment collected. If no collections are able to be made, you would owe nothing. Collection work will start within days of your file transfer and funds will typically be disbursed at the end of the month.
In addition to consumer financing and delinquent debt collection, loan servicing of current accounts is another service available to the clients.
For more information about this vital service, please go to: www.accessfundingcenter.com
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