Chapter 5 - Cost of credit

Question 1

What are the 7 variables I need to know to run a customers cost of credit?

Answer 1

1. In house sales
2. DSO
3. APR
4. Bad Debt $ Amount
5. How many FTE’s does the company have
6. What are the yearly legal costs
7. How much is the dealer spending on billing?

Question 2

Cost of credit is typically in the range of _____% ?

Answer 2

3% - 5%

Question 3

Is peace of mind a variable worth considering when speaking with a potential customer (dealer)?

Answer 3

Absolutely - there is value knowing owners/company leaders can have peace of mind.

Question 4

How much does the BT program typically cost?

Answer 4

2%-3%

Question 5

How many banks are there in the USA?

Answer 5

7000

Question 6

Of the 7000 banks in the USA how many will loan more than $500M?

Answer 6

20%

Question 7

How many banks lend money to companies needing a $2M credit line?

Answer 7

200

Question 8

True or False: Dealers in size between $5M - $50M are considered fairway targets.

Answer 8

True - This range is where dealers have a hard time getting funded which is why BT is a great solution.

Question 9

What are 3 objections customers will have when introduced to BT?

Answer 9

1. Worried about their customers experience.
2. Concerned about cost of the program.
3. What will their bank say?

Question 10

True or False: Larger companies ($51M - $1B) typically have major problems with Cash Flow and Risk.

Answer 10

False; Larger companies typically have a tight control of both cash flow and covering risk which is why it is more difficult to close a deal with them.