Still a lot of questions being asked after a thorough review from
@Ryzie and
@Thanky and others. Which is not a bad thing as it helps us all understand certain concepts better.
My views are listed below as I tried to improve my own understanding.
Based on $12000 minimum CL and $4000 package for one customer.
Breakdown:
FCC = $960 (24%)
BIG = $1800 (35%)
SEC Deposit = $1640 (41%)
Total = $4000
Reconciled at settlement if customer accepts.
1. Customer
a) customer pays $1000/mth as per initial agreement for line of credit.
b) $8000 remaining credit for business use.
2. FCC
a) receives commission from BIG of $960.
b) receives payments from client of $1000/mth.
Total received at settlement = $12960
3. BIG
a) FCC transfer working capital of $1800
b) FCC transfer $1640 from security deposit.
Total received = $3440
c) video added to library
If customer declines and BIG does not find replacement.
1. BIG - pays cancellation fee of $960 (24% of package amount).
2. FCC
a) receives that $960 (24%) cancellation fee.
b) keeps the initial commission of $960 (24%) as well. This is purely my own assumption.
Total received from BIG would be $1920.
c) security amount of $1640 moved back into FCC operating accounts.
3. Customer walks away from BIG agreement, but may continue to pursue business with FCC.
Note: I did not include the 35% initial working capital, reason being that IMO this may be a non-refundable component required to produce a product that if successful and accepted by the customer, is beneficial to both BIG and FCC.....I stress that this is IMHO only.
Potential RISKS to BIG.
1. BIG
a) incurring 24% cancellation fees, compounded with time spent on unsuccessful video product.
b) time spent on production not monetized.
c) cycling through non accepting customers. Remember they're tied to the initial 35% working capital, if used up in earlier unsuccessful production then they will be incurring out of pocket expenses.
d) sponsorship pool exhausted and number non accepting customers increase, bottleneck is waiting time to fill the space and free up the pool.
Some of the risks can be mitigated through the number of potential customers that are in the pipeline, as mentioned in previous announcement, in the order of thousands.
My views on the ARPU figures have been posted earlier.
https://hotcopper.com.au/threads/how-fc-financing-works-for-big.4040602/#post-31321645
All civil opinions are welcome.
Sorry about the formatting, used my phone.
