9.1 Typical Purchase Transaction
In the example below, we demonstrate invoice purchases totaling $100,000
The Discount Fee to the Client for this invoice purchase is a 3% Initial Discount Fee. An additional fee of .12% per day will be charged each day the invoice is outstanding over a 25 day period. This additional fee is called a Subsequent Discount Fee.
Both the Initial Discount Fee and the Subsequent Discount Fee are charged on the face value of invoices.
To round out the fee structure, we will use an 80% Advance Rate and a 20% Reserve . Because the Initial Discount Fee is deducted from the Advance Rate at the time of purchase, the effective Advance Rate will be 77%.
The remaining 20% is credited to the Client’s Reserve.
The 20% reserve balance is not available to the client under any circumstances. This is the amount ANAPLANS holds for protection against any possible charge-backs.
Once invoices pay, ANAPLANS will refund the 20% less the Subsequent Discount Fee to Client. The Subsequent Discount Fees are then earned by ANAPLANS.
The 3% Initial Discount Fee is earned by ANAPLANS no matter how long the invoices are outstanding. Even if an invoice pays at 20 days, no fee refund is given to the client.
If the invoices are open a total of 40 days that means there will be 15 days of the Daily Discount Fee charged.
Using this scenario (a $100,000 invoice purchase), ANAPLANS will earn Gross Revenues of $4,800
9.2 The Reserve
When ANAPLANS purchases invoices from a client, an advance is made. The difference between the two numbers is the escrowed reserve. This reserve is held by ANAPLANS to account for any potential short-payments and to charge Discount fees against.
Once the invoice pays, the escrowed reserves, less any short-payments and less Discount fees are funds available to the client. It is standard operating procedure for ANAPLANS to periodically advance these reserves to their client.
On a periodic basis ANAPLANS will review the clients aging to determine if any potential problem accounts exist. It is customary for ANAPLANS to withhold reserve payments in the event it appears that an invoice may not pay within the appropriate recourse period. In other words, if the aging reflects an invoice has aged to 85 days from the invoice date, and the recourse period is 90 days and the collector has been unable to get the customer to commit to payment for whatever reason, then ANAPLANS may withhold the invoice amount from and available reserves.
An example of available reserves would be:
| Invoice Purchase | 100,000.00 |
| Amount Advanced | 77,000.00 |
| Escrowed Reserves | 23,000.00 |
| Payment Rec’d of | 100,000.00 |
| Less Amount Advanced | -77,000.00 |
| Less Fees Charged | -4,800.00 |
| Available Client Reserves | 18,200.00* |
*Amount due to the client.
9.3 BACK-OFFICE’s Ongoing Role:
The ANAPLANS back-office performs the following services after the prospect becomes a client:
- Performing Public Records Searches
- Accounts Receivable Management which includes
– Ledgering Schedules of Accounts
– Posting Verification Notes to the database
– Performing Collection Calls
– Posting payments from customers
– Providing Portfolio Reports to Clients