The Jewel of the Note Business
Published: Tue, 04/16/13
April 18, 2013
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In this issue: The Jewel Of The Note Business
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The replay of the "Web Marketing For Cash Flow Note Investors &
Brokers" teleseminar with Simon White is now posted. Go to
www.PaperSourceSeminars.com and scroll down to his bio.
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Hi ,
I hope you survived tax day! There's another "taxing" day
TODAY -- it's Tax Freedom Day, the day of the year Americans have
worked enough to pay all of their federal and state taxes for 2013.
That's five days later than in 2012, which is not good.
April 18 is 29.4% of the calendar year. That means the average
American works 29.4% of the year for the government.
Whoops! That's not the "average" American. Almost half of all
Americans pay no income tax at all, and many of them get PAID for
various "credits" such as earned income and child credits.
For example, a married couple filing jointly with three children
and $40,000 in income can take a $9,700 standard deduction,
$15,500 in personal exemptions and $3,000 in child credits.
They would not only owe nothing, but they would get a $1,495
"refund."
The wealthiest 1 percent of the population earn 19 percent of the
income but pay 37 percent of all income taxes.
The top 10 percent of earners pay 68 percent of all income taxes.
Meanwhile, the bottom 50 percent earn 13 percent of the income
but pay -- those who pay any tax at all -- just 3 percent of the
income taxes. (source: American Enterprise Institute:
http://snipurl.com/26uknxr)
I find it ironic to hear the demands for the "rich" to "pay their
fair share" coming from people who pay no income tax at all.
Cheers,
Bill
W. J. Mencarow
www.PaperSourceOnline.com
www.PaperSourceSeminars.com
www.PaperSourceUniversity.com
www.cashflows.org
P.S. The author of the following article, Robert McMahon, will
be teaching a class on "Creating Multiple Streams of Income" at the
Paper Source Note Symposium next week in Las Vegas. He's one of our
14 experts who will be sharing their knowledge and experience. If
you plan to come, I look forward to meeting you.
www.PaperSourceSeminars.com
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THE JEWEL OF THE NOTE BUSINESS
by Robert McMahon, President, Aegis Factors
www.aegisfactors.com
With the banking industry still solidly credit-impaired and
business loan availability at a trickle, commercial finance
alternatives are playing a greater role than ever as a ready source
of capital for small business owners. In particular, America's
factors are seeing a steady rise in demand as customers take longer
to pay invoiced obligations. For those cash flow consultants that
have tuned in to this unique area of business, 2013 may turn into
another banner year.
While asset-based lending provides loans for accounts,
inventory, and equipment, factoring's focus is strictly in the
area of invoices and addresses the cash flow problems associated
with granting terms of payment to customers. Allowing customers
30, 45, or even 60 days to pay an invoice is an excellent tool to
attract new business. Unfortunately, waiting for payment on such
sales can cause crippling cash flow problems due to weekly payroll
requirements or the need to pay key suppliers promptly.
Much like buying an owner carry-back mortgage note,
factoring is a "discount" transaction. Just as a note seller
elects to sell a mortgage note because he wants immediate cash
now and no longer wants to wait for payments, factors purchase
invoices due in 30-60 days because the business owner doesn't
want to wait and needs cash now.
Each week when a client submits invoices for cash purchase,
the factor will advance a percentage of the face value of the
invoices (usually 80-85%) giving the seller the needed "immediate"
cash. The factor then waits for payment from the customer. Upon the
ultimate payment of the invoice by the client's customer, the factor
"rebates" the additional 15-20% of the invoice face amount not
initially advanced but first extracts the "factoring fee."€
Typically, for invoices paid within 30 days the total fees for
service will be 3% or less, actually about the same as if the
customer paid with a credit card.
The Jewel of the Industry for Brokers
For brokers active in the commercial side of the cash flow
industry, factoring is well-known for its lucrative compensation
schedules and "life of account" payments. By simply referring
clients to factors, brokers can earn residual monthly commissions
that will continue for as long as the factor continues to purchase
invoices and service the client. In some instances, this can be
for very extended periods of time, even ten years or longer. With
such attractive compensation arrangements (brokers usually earn
10-15% of what the factor earns), savvy industry brokers can build
"books" of business and collect monthly residual checks with no
servicing required other than the initial referral.
To succeed in this exceptionally lucrative commercial side of the
cash flow industry, brokers must have a slightly different mindset
or at least more of a career-oriented outlook. It is not uncommon
to see unprepared "business opportunity" seekers take a brief run
at factoring only to fail miserably when they discover the actual
work involved. Becoming a factoring and commercial finance broker
takes dedication and more than a little training.
In addition to the factoring product, most brokers will focus on
asset-based lending and purchase order finance. Some will venture
further and add the well-known area of equipment leasing. Those
with the stoutest hearts will delve into the world of import-export
trade finance and loan guarantees (SBA & Ex-Im Bank). No matter
how a broker structures his business, however, the opportunities
abound for those with the dedication and focus to go the distance
and seek success.
I will teach a class on "Creating Multiple Streams of
Income" at the Paper Source Note Symposium April 26-27 in Las
Vegas. I look forward to meeting you there and answering
all your questions about this highly profitable area of commercial
finance.
FOR MORE INFORMATION ON FACTORING AND OTHER LITTLE-KNOWN PROFIT
OPPORTUNITIES, LISTEN TO ROBERT MCMAHON'S TELESEMINAR AT
WWW.PAPERSOURCESEMINARS.COM Scroll down to his bio.
Robert McMahon is President of Aegis Factors, Inc.
www.aegisfactors.com