You forgot to mention how companies like Finstro would also be bound by Responsible Lending laws.
Actually not correct.
As these loans are 100% "uncoded" they are not applicable to NCCP so there are no governing laws per se for business/cashflow loans.
You could also mention that in the original Finstro announcement in 2015 it says finance will be made available to selected customers (not all).
The qualification can simply be must be over 18, have an ABN and maybe X cash flow on bank statements per month, the last point can be well distorted.
It has nothing 0% to do with profitability of the underlying business.
One could suggest they only care about the underlying value of BIG, as this is where they are receiving compensation?
Furthermore, I think we need to dissect the sales process to understand what is really happening here.
BIG approach small businesses via their call centre, selling their video tech, SB (small business) says yes Im interested in the $5000 package, BIG says great that will be $5000 upfront or you can take interest free for 12 months, SB takes 12 monthly payments option, BIG then simply sends FC the invoice between BIG and the new client, FC advances BIG 80% of the ticket (invoice), FC takes over the collection of debt for the 12 months for their 20%, FC are advancing BIG on invoices BIG receives, this is how factoring works, which is what this is.
The reason I do wonder is normally the 20% cut or some other cut is enough for an FC, so I wonder why the issue of shares to FC? Yes they helped with services so its compensation yadda yadda, don't believe it sorry, and if I were to believe it was for services early on... then it strengthens my argument that FC lent and lend on the BIG invoices, with no care for the payer. The risk for FC at the beginning was lending on the risk of BIG, not the customer.
My best guess is I think FC is advancing on any invoice BIG producers without any thought for the underlying business on the invoice. They are not really that reliant on payment from SB as the shares being sent back more than compensate.
It certainly could look this way IMO, its a way of getting the BIG sales numbers Up very quickly without having any real thought for the purchaser of the video.
For mine FC will now change its "advance" attitude as they are allegedly no longer to get any shares.
Anyone else thinking along the same lines or am I just being a pessimistic twat?
Sorry if it comes across this way, I do tend to over dissect companies, and sometimes end up stumbling across things others do not.
What percentage of customers are using the financing option, anyone know?
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