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02-05-2024, 12:19 AM #1
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PSF’s- YES OR NO?
Brokers- Be honest.
Do you PSF a majority of the time or not?
I personally am not ok with it unless it’s a specific situation. In most cases where brokers are making 10-15 points, it’s just greedy.
Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com
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02-05-2024, 09:11 AM #2
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- Nov 2013
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02-05-2024, 09:21 AM #3
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02-05-2024, 11:04 AM #4
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- Aug 2019
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Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com
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02-05-2024, 11:10 AM #5
Keeps trying to charge those PSFs on MCAs. I dont have to since a small shop and I often take deals from those who charge add fees. So yeah keep trying and good for you when you get a gullible clients that signs off on you 5%+ fee.
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02-05-2024, 11:14 AM #6
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- Nov 2019
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- 675
For brokers to charge a psf is ok as long as it is reasonable to the deal. Selling a deal making 10-15 points then charging a 10% fee on top of that is not good. You are making the money even more expensive for the merchant and making more money than the funder that is taking the risk and waiting several months to get there money back. If the deal defaults within the crawl back period and the broker does payback the commission they just lost the money they did not have if the deal was declined and keeps the 10% psf yet the funder looses there money.
Funders that charge a 10% origination fee are the chop shops of the industry that only deal with high risk files that other funders do not want and want to take advantage of merchants which is wrong. Funders that charge 2-5% depending on the risk of the file is fine. We have to cover the cost of the broker in the factor rate all the defaults that happen and the fees involved to go after defaults. We also have to cover all the credit reports and background searches for all the deals that get funded and not funded. We need to cover the cost of all operations salary the reps compensation. Every institution that provides funding charges and orgination fee to cover background cost.
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02-05-2024, 11:20 AM #7
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- Aug 2019
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- 163
Funder overhead is much more expensive then broker overhead- its not comparable
Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com
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02-05-2024, 11:56 AM #8
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- Nov 2022
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- 4
I personally do not charge a psf .If funders really wanted no psf fees they should get rid of clawbacks and no broker would ever charge a psf.
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02-05-2024, 12:41 PM #9
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- Mar 2020
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- 133
We currently don't charge PSF's, but if the funder is aware of it as well as the merchant(beforehand) then it doesn't matter how many points are offered from the funder. Putting a judgement like Greedy on it, may or may not be true. Depending on the size of the specific deal and costs of marketing. There are plenty of times on small deals that don't renew where I lose money based on CPS for that week or month which can fluctuate.
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02-05-2024, 01:38 PM #10
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02-05-2024, 02:04 PM #11
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02-05-2024, 03:57 PM #12
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- Nov 2021
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Yes.
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02-05-2024, 04:29 PM #13
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02-05-2024, 05:26 PM #14
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- Apr 2023
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- New York, NY
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Blackbridge Investment Group
Accepting New ISOs !
Book an intro call with us at a time that works for you here
Apply to be an approved ISO here
Fast underwriting, quick payouts, professional service
p: (212) 655 9604
a: 450 7th Ave, 6th Floor, New York, NY 10123
www.bbigm.com
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02-05-2024, 11:39 PM #15
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Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com
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02-05-2024, 11:45 PM #16
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I truly don’t understand the logic behind charging PSF fees. why on earth would you jeopardize countless renewals (which are the real money makers) to make a quick 5% fee? I have brokers who have literally made hundreds of thousands of dollars on one deal from renewing it over and over.
Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com
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02-06-2024, 09:33 AM #17
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02-06-2024, 09:47 AM #18
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Definitely not the case with anyone I'm aware of. My company tries charging fee's based of how much they think that specific type of paper will default overall. Meaning if its a 10% fee then they expect a larger number than normal of defaults and if its 3-5% fee then they find it will be minimal defaults. No matter whether its 3, 5, or 10 I still get paid the same over here. Actually a lot of the times I get paid less if the fee is lowered or the rate is lowered because I try to give my ISOs more commission but I never get paid more than what is agreed upon between me and my company.
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02-06-2024, 09:54 AM #19
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- Mar 2020
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- 133
The statement you just made does not logically follow. I was referring specifically to a small deal that does not renew. As an example your CPS on that deal could be $1,800 and the the commission paid to you could be $1,200. In this hypothetical example it's objectively true that charging a PSF WOULD make financial sense. Just to be clear I stated that my shop doesn't charge PSF's, but saying that it doesn't make financial sense as a black and white blanket statement is foolish.
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02-06-2024, 10:17 AM #20
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- Aug 2019
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- 163
Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com
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02-06-2024, 10:19 AM #21
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You will be surprised how many funders let their iso reps ( not the broker ) charge a fee
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02-09-2024, 03:14 PM #22
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- Nov 2013
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- 598
0 risk other then marketing costs in OPEX? Marketing costs are getting higher, can be $50 just for a click with Google ads on 1st page, just a click, that doenst mean it turns into a lead, or a submissions or even a funded deal.
Now extrapolate that with buying leads from vendors, training, payroll and software costs I would argue ISO have plenty of risk that could make or break them besides a clawback.
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02-09-2024, 03:24 PM #23
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02-09-2024, 04:21 PM #24
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02-09-2024, 05:03 PM #25
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What you are talking about isn’t risk.... it is overhead and high costs that aren’t connected to the funding of /performance of a deal. Brokers only have operational risk- Funders have performance risk as well.
I am reffering to a case of charging a PSF when you are already making your points. you are not offsetting or lowering risk by charging a PSF. Pulling a Psf as well in case of 30 days clawback is a luxury that funders don’t have…if a Deal goes bad it’s a loss no matter what.Last edited by simonwein12; 02-09-2024 at 05:05 PM.
Simon Wein
CEO- Radiance Funding
P:516.509.9788
W: Radiancefunding.com
E:Simon@radiancefunding.com