Posted by Ben on April 29, 1999 at 07:31:56:
Accounts Receivable Notes - Posted by DanK
Posted by DanK on April 28, 1999 at 23:51:14:
Can you tell me what is the normal discount and how to sell accounts receiables from D&B top companies. Is it possible? Where can I go to sell these notes.
Normal Payment Terms - Posted by Sean
Posted by Sean on May 02, 1999 at 12:39:08:
Just call up a few companies in that industry and ask them what their payment and discount terms are. Many companies run on terms such as 1 percent 10, net 30. That means they expect to be paid in full in 30 days and if you pay in 10 days they’ll give you 1 percent off.
In theory this means the person would be willing to sell his obligation at a discount. You could always contact companies offering to buy receivables that are 10 days old for 99% of the face value. That’s a little over an 18% yield if you get paid in 20 days.
In all likelihood you wouldn’t get paid in 20 days, though. Many businesses are supposed to pay in 30 days but end up paying around 45. That’s only about a 10.4 percent yield, so maybe some fine-tuning might be in order.
I’d say start by buying the receivables at 98% of face value and if you find out later you can be more competitive, go for it.