[Daily Fun]

(Complete nube here, to the forum, to the alternative-lending industry, and to finance in general. Just got set up and started mktg)

Q: Do you volunteer your commission? Wait for them to ask?

Some ISO agreements require you to disclose it. When do you do it, and what do you say?

Thanks in advance

[iawia_advanced]

(Complete nube here, to the forum, to the alternative-lending industry, and to finance in general. Just got set up and started mktg)

Q: Do you volunteer your commission? Wait for them to ask?

Some ISO agreements require you to disclose it. When do you do it, and what do you say?

Thanks in advance

I've never been basked or had to disclose commissions

[Yankeeman07]

(Complete nube here, to the forum, to the alternative-lending industry, and to finance in general. Just got set up and started mktg)

Q: Do you volunteer your commission? Wait for them to ask?

Some ISO agreements require you to disclose it. When do you do it, and what do you say?

Thanks in advance

I'm anticipating you are joking - volunteer your commission structure?

I would want to review any ISO Agreement that requires me to disclose my commissions anyone.

BTW - if my memory serves me correctly, all contracts have a Privacy-Non-Disclosure Clause"

[brokerCompany]

Commissions or closing fees?

[Gables Capital Group]

(Complete nube here, to the forum, to the alternative-lending industry, and to finance in general. Just got set up and started mktg)

Q: Do you volunteer your commission? Wait for them to ask?

Some ISO agreements require you to disclose it. When do you do it, and what do you say?

Thanks in advance

Lets see...Never and also never. FOH

[Daily Fun]

Commissions

[abfunders]

Quarterspot put them from and center on the contracts for everyone to gawk at.
There have been several deals that I did non-MCA that I was not getting paid from the lender at all, or the lender pay was extremely low, and I gave them a fee agreement UP-FRONT in order to let them know that if I succeed, I make 2%, and it's not necessarily any of their business if the lender/funder also pays me.
I just had a client ask me since he knew that the funder paid me, and I politely refused and he said, "I'll just ask them," and, of course, they probably won't reveal it.
Not that he cares, it just feels like an invasion of privacy.

[Daily Fun]

I did review an ISO Agreement from a well-known MCA provider that requires me to disclose my commissions to merchants. That's the reason for my question.

(Terms and conditions of Agreement are defined in Agreement as Confidential Information, or I would share the name of the lender):

8. ISO Representations, Warranties, and Convenants.

• ISO will disclose to merchants the compensation that the ISO will receive from the Company in connection with the Program.

[Daily Fun]

Thank you iawia

[Daily Fun]

I'm anticipating you are joking - volunteer your commission structure?

I would want to review any ISO Agreement that requires me to disclose my commissions anyone.

BTW - if my memory serves me correctly, all contracts have a Privacy-Non-Disclosure Clause"

Thanks Dave for taking the time to reply!

If I put myself in the merchant's shoes, if I were borrowing 60k @ 1.40 FR, and being informed I needed to repay 84k, I might reasonably ask "And how much of that goes to you for connecting me with the lender?"

If the guy hemmed and hawed or refused to answer, I might well conclude I'm getting stiffed, and try to get it lower elsewhere and start "shopping". (I'm the merchant in this example, it's a normal thing to try to cut costs, and that starts with knowing what they are.)

So to avoid the shopping reflex, I wanted to start off on the right foot with a good answer ready for the merchant. If someone asks this, I assume the answer isn't "None of your business," that there has to be a diplomatic way of dealing with it, even if it doesn't include revealing the number.

Cheers

[abfunders]

To be honest, I don't think a merchant has ever asked me how much my commissions are before the deal closed.

[Steven_O]

Thanks Dave for taking the time to reply!

If I put myself in the merchant's shoes, if I were borrowing 60k @ 1.40 FR, and being informed I needed to repay 84k, I might reasonably ask "And how much of that goes to you for connecting me with the lender?"

If the guy hemmed and hawed or refused to answer, I might well conclude I'm getting stiffed, and try to get it lower elsewhere and start "shopping". (I'm the merchant in this example, it's a normal thing to try to cut costs, and that starts with knowing what they are.)

So to avoid the shopping reflex, I wanted to start off on the right foot with a good answer ready for the merchant. If someone asks this, I assume the answer isn't "None of your business," that there has to be a diplomatic way of dealing with it, even if it doesn't include revealing the number.

Cheers

I like it... fresh... new... so full of positivity (and not tarnished with thick skinned MCA). LOL.

Some merchants will want to know what you're making. If you are showing them the value that you bring to the table then there should be no discussion about how much you make. That doesn't mean you shouldn't feel the need to address the question head on. That also means you should feel the burn in the face if you are ripping them off with 15 points and a 10 point psf and they ask... if you can't tell someone what you are making with a straight face - maybe you don't feel you earned it.

2%, as a success fee (what Micah said) - is reasonable to charge a business owner on financing you've helped secure, if you are making 3-7 points from the funder. Just be ready to disclose it.

On the flip side of the coin - I wouldn't open a conversation with "this is what I typically make". Especially when you've seen some of their margins!

[NoBigDeal]

You can always turn the conversation and say something along the lines of, "not as much as you will once you flip the money." On $0.40 for ever dollar they borrow, they BETTER be making at least 100%-300%

[NoBigDeal]

On the flip side of the coin - I wouldn't open a conversation with "this is what I typically make". Especially when you've seen some of their margins!

!!!

[StealMyDeal]

Thanks Dave for taking the time to reply!

If I put myself in the merchant's shoes, if I were borrowing 60k @ 1.40 FR, and being informed I needed to repay 84k, I might reasonably ask "And how much of that goes to you for connecting me with the lender?"

If the guy hemmed and hawed or refused to answer, I might well conclude I'm getting stiffed, and try to get it lower elsewhere and start "shopping". (I'm the merchant in this example, it's a normal thing to try to cut costs, and that starts with knowing what they are.)

So to avoid the shopping reflex, I wanted to start off on the right foot with a good answer ready for the merchant. If someone asks this, I assume the answer isn't "None of your business," that there has to be a diplomatic way of dealing with it, even if it doesn't include revealing the number.

Cheers

Dude you're out of your goddamn mind if you think that conversation is going to end well. You do not discuss commission with merchants. Ever. They aren't going to ask, and if they do, tell them that's not your department. Your job is to get them the best terms they qualify for for the money they need to accomplish their objectives today. Maintain control of the conversation at all times.

Also, this is a good reason to charge a modest PSF. When you charge a PSF, you can use that as the basis of your compensation. "Mr. Merchant, as you know we charge a $495 origination fee upon funding which compensates my team for our work in securing and processing this transaction for you. I don't know where you're getting your information about commission from. But let's get back to how this $80K advance is going to help you bring your employees back next week..." And then, if necessary to get the deal done, cut or waive your PSF. Presto, your commission remains untouched.

[Daily Fun]

To be honest, I don't think a merchant has ever asked me how much my commissions are before the deal closed.

Thanks Micah!

[Daily Fun]

Dude you're out of your goddamn mind if you think that conversation is going to end well. You do not discuss commission with merchants. Ever. They aren't going to ask, and if they do, tell them that's not your department. Your job is to get them the best terms they qualify for for the money they need to accomplish their objectives today. Maintain control of the conversation at all times.

Also, this is a good reason to charge a modest PSF. When you charge a PSF, you can use that as the basis of your compensation. "Mr. Merchant, as you know we charge a $495 origination fee upon funding which compensates my team for our work in securing and processing this transaction for you. I don't know where you're getting your information about commission from. But let's get back to how this $80K advance is going to help you bring your employees back next week..." And then, if necessary to get the deal done, cut or waive your PSF. Presto, your commission remains untouched.

Thanks for the suggestions. I realize I'm "out of my goddamn mind" already. Thought that was part of the job description

[Daily Fun]

I like it... fresh... new... so full of positivity (and not tarnished with thick skinned MCA). LOL.

Some merchants will want to know what you're making. If you are showing them the value that you bring to the table then there should be no discussion about how much you make. That doesn't mean you shouldn't feel the need to address the question head on. That also means you should feel the burn in the face if you are ripping them off with 15 points and a 10 point psf and they ask... if you can't tell someone what you are making with a straight face - maybe you don't feel you earned it.

2%, as a success fee (what Micah said) - is reasonable to charge a business owner on financing you've helped secure, if you are making 3-7 points from the funder. Just be ready to disclose it.

On the flip side of the coin - I wouldn't open a conversation with "this is what I typically make". Especially when you've seen some of their margins!

Thanks Steven! Really great insights. I don't believe in gouging. There's enough to go around without that.

(Oh, and the rhino hide isn't a problem, trust me. Comes from a quarter century of selling over the phone, to people who don't want to be sold, things they can't see and don't want to buy, for prices they don't want to pay, and having them do it right now :-) Maybe I can cause money to seem like an attractive enough product to make a few buckos, we'll find out

[Daily Fun]

Lets see...Never and also never. FOH

Thanks man

I'm glad it never comes up. If it did, I was going to say "I don't charge you anything. Instead the lenders pay me out of their overall corporate profits—not out of your money." Which is true: even if that merchant defaults after 2 or 3 months, I still got paid, based on the clawback provision in the ISO agreement.

Others suggest I charge a PSF on top of the commission, which is an idea I may incorporate in the future. Keeping it simple for now.

Should I ask what FOH is?

[Don Dolla]

CC your client when requesting the up-sell from the funder

[Franklin]

FOH, the way Gables worded it, means Fond of Heart, as he appreciates your thoughtfulness in looking to him and his compadres for wisdom.

[dailyfunderppt]

CC your client when requesting the up-sell from the funder

¯\_(ツ)_/¯

[Winning]

Welcome to the DF family.. I am a merchant and I always ask and try to get a clear understanding of exactly how a transaction will benefit all the various parties involved. If I feel if something doesn't add up right, or if the deal seems to go to be true, it makes me take a harder look at the numbers. But at the end of the day, it's the total cost that matters most to the merchant, not exactly who gets what.

I think shopping the deal is more important than trying to figure out exactly who is getting what.

No differance when getting multiple bids for a home renovation, multiple bids for cc processing, multiple bids for a MCA.. What's the differance?

For instance... Yesterday I had an electrician come to my house and install a new 15amp 120volt dedicated circuit for an indoor Sauna I had installed for my wife. I received quotes from electricians ranging from $1200 to $200 for the exact same job request. I may not know the hourly rate of the actual person that installed the circuit, how much franchise fees cost, how much they spend on marketing, etc.. In some cases it may not matter who is making what.. As long as the value to the customer is there..

In the example I just gave, Technically the sole proprietor owner operator electrician that quoted $200 could be making more money per hour than the w2 electrician that works for the franchise company that quoted $1200.

[abfunders]

Another thought here.... If they ask me, "What's your fee for doing this?" If I don't have a fee agreement in place beforehand, my answer would be: "The funder pays me directly directly." I've even told some of them that up front some times.

Most merchants understand that there are margins and when was the last time that they went into a supermarket and asked, "How much are they making on this pasta? I'm going to go to the manager and make them drop the price." Yes, we can drop the price, but they don't know that. They also understand we're all in this to make money, and, like was said above, their bottom line should be able to support your fees.

What I don't like is springing last minute fees or PSFs that hurt the funder and the client.

See what Winning said above, prices for financing are not different than quoting an electrician. How many people with 780 FICOs have taken an OnDeck offer when they could go to the bank and get a 0% APR business credit card? Whether they were lazy or "sold" on something doesn't mind, as long as there wasn't trickery or foolery involved.

[pcfunder]

I've only had one deal where a merchant asked about my commission. I've been funding the same merchant for two years and the last deal we did, I got him the best dollar amount/term/rate we've ever done. I didn't charge a PSF and he was happy about the deal so he wanted to make sure I was getting paid. I just told him that the funders pay me a fee for facilitating the deal. I think most merchants wont ask what you are making but I've been working with ISO's for the past few years not direct to merchant so I'm not too sure anymore.