What is meant by Delinquent Commercial Debt?
Commercial debt involves business-to-business transactions. The party that owes the debt must be a business. A delinquent receivable usually means the invoice is over 90 days old. At this point, the account is considered "non-performing" and eligible for sale under this program.
What if the Debtor is an individual?
If the party that owes the money is an individual acting on his/her own behalf, not on behalf of a business, this is classified as consumer debt. Consumer debt is not eligible for sale under this program. The funding specialists at Diversified Alliance Funding can direct you to other programs if consumer debt is involved.
What is the difference between selling Delinquent Commercial Receivables and Factoring?
Factors do not buy delinquent receivables. They specialize in buying current receivables with the anticipation they will receive payment as per the terms of the invoice. On the other hand, this innovative company only purchases delinquent receivables (over 90 days).
Are there certain types of Delinquent Receivables you cannot sell to this company?
Yes, medical and construction-related receivables. These receivables are highly specialized and must be handled through other sources available to Diversified Alliance Funding.
How do I know if my receivables qualify?
There are five criteria which must be met.
- The debt is commercial and over 90 days old.
- The debtor company is a viable, operating business.
- The debt is valid without contingencies.
- The receivables are within the statue of limitations for your state.
- The supporting documentation for the debt can be provided. This includes copies of invoices, information on the debtor and any relevant correspondence or collection notes.
How large does the invoice need to be to sell it?
To initially sell non-performing receivables, the portfolio of accounts should be at least $30,000 with an average account of $3,000. (This $3,000 account figure can be made up of many individual invoices to the same company). Once the relationship is established, you can then sell on an account-by-account basis going forward.
Are "charged-off" receivables OK?
Yes, your company's accounting policies are not relevant to the firm's ability to collect the funds.
Can I sell a Court Awarded Judgement?
Absolutely, this is a debt that needs to be converted to cash. It is important that the judgment is still within the statue of limitations for your state.
What does the company mean when they guarantee resolution of the account within 60 days?
"Specifically, resolution is achieved when an account reaches financial satisfaction, litigation or a decision not to proceed further."
What is the "to-date" performance of this innovative firm?
Money is collected in over 80% of the purchased accounts. Of these accounts, they collected 100% of the receivable in over 67% of the time! This translates into an increased rate of return on delinquent receivables.
Why do investors buy these "bad" accounts?
Portfolios of debt are sellable because the buyer's risk is spread over many accounts and the chance of his collecting a good percentage of those accounts increases dramatically.
How do investors define "delinquent debt"?
It is "money that is owed, past the traditional 30-day period by one party (the debtor) to another party, for goods or services rendered.
What is the oldest debt an investor will buy?
The older the debt, the lower the price yet buyers will buy debt that is years old provided it is still within the legal statue of limitation for collection.
What is the minimum size portfolio that would be considered for purchase?
Funding sources will normally not even consider portfolios under $1,000,000 with an average account balance of $1,000. There is no maximum size. The bigger the better!
Do all accounts in a portfolio need to have the same aging?
No, a portfolio of debt can be what we call "blended" meaning a mixture of aged accounts and still be very attractive to an investor.
What is the most valuable type of Delinquent Consumer Debt?
Investors love credit card debt yet many factors must be considered to determine the value. Some of these factors include, size of portfolio, aging, type of debt, classification (regular, gold, platinum, collateral) annual interest rate and how many parties have attempted to collect it and whether it has a full warranty from the seller or being sold "as is" without any warranties.
What is meant by a full warranty on a Debt Portfolio?
This guarantees that all the accounts are 100% collectable. They are warranted for the following:
How much do buyers pay for a $1,000,000 portfolio of Delinquent Consumer Debt?
- No bankruptcies have taken place on the individual who is responsible for the payment of the account.
- All debtors are alive.
- There has been no fraud involved on the account.
- There is no pre-settlement in place.
- All accounts are within Statute of Limitations.
There is no standard price, it is always pennies on the dollar. That may not sound like much but when you deal in the millions, it can become a significant amount of money. What company would turn down the opportunity for added cash after the account had been "charged off" for tax purposes?
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