[abfunders]

Micah,

You keep bring that up and I tell you the same thing over and over again. You are obviously working with the wrong factors or you would rather make a smaller amount of fast money. All of my referral sources have no issues what so ever on the amount of commissions they are making on deals with us and certainly not the longevity of the client relationships. Case in point: A broker from this forum just renewed again on a deal that we did 4 years ago. He made more money the first year with us than he would have if he had gone for the quick buck. He has enjoyed the commissions on the deal now going on 4 years. The client is happy and so is he.

A $350,000 advance that pays $35,000

If the same client gets funded $500,000 monthly from the factor, advance rate of 1.5% per 30 days, and the factor pays 15% profit share (let's hope their cost of capital is 2%), then they make 13% of the 1.5% / month of $500,000.

500,000 * 0.015 = $7500 * 0.13 = $975 monthly
Even if they went out 60 days on all contracts, that's double the amount per month at $1950 monthly
It would take 18 months to make up that 10 points
Of course not all 1st positions pay 10 points, they pay 8, so that's $28,000, which means it takes 14 months.

And keep in mind, lots of brokers have to figure out funny ways to pay their agents and keep them happy with residuals. Cash advances are much easier to deal with. Yes, there ARE creative ways to pay agents on residuals, but not all agents are happy about it.

Where did I go wrong?

Again Kevin, I'm ALL for factoring, just want to know where my math went wrong and I'll delete these posts.

[Kevin Henry-Seacoast]

A $350,000 advance that pays $35,000

If the same client gets funded $500,000 monthly from the factor, advance rate of 1.5% per 30 days, and the factor pays 15% profit share (let's hope their cost of capital is 2%), then they make 13% of the 1.5% / month of $500,000.

500,000 * 0.015 = $7500 * 0.13 = $975 monthly
Even if they went out 60 days on all contracts, that's double the amount per month at $1950 monthly
It would take 18 months to make up that 10 points
Of course not all 1st positions pay 10 points, they pay 8, so that's $28,000, which means it takes 14 months.

And keep in mind, lots of brokers have to figure out funny ways to pay their agents and keep them happy with residuals. Cash advances are much easier to deal with. Yes, there ARE creative ways to pay agents on residuals, but not all agents are happy about it.

Where did I go wrong?

Again Kevin, I'm ALL for factoring, just want to know where my math went wrong and I'll delete these posts.

Micah,

Just keep doing the cash advances. You have it all figured out.