A commission advance is a factoring transaction where an agent sells a pending commission at a discount and receives advance payment of their money within 24 hours. Opponents of the service site the possibility of the sale falling through as a reason to fear getting the advance. But is this fear reasonable or irrational? Before we discuss the matter as it relates to commission advance, I think it’s worthwhile to look at the bigger picture of fear in our society.
Irrational Fear
According to Canadian author Dan Gardner, we humans, especially those in the western world, have never been healthier or freer from risk. So why does he also contend that we are in the midst of an epidemic of irrational fear?
The national news media is often to blame. How often have we watched CNN for example, and been teased with warnings of possible terrorist threats, national disasters, previously unknown health risks, shark attacks, child abductions and so on? These days, it isn’t enough just to listen to the broadcast, as most news channels also scroll unrelated scary messages across the bottom of your screen. Too tired to read the scroll or listen? Check out the TV monitors that often serve as the backdrop for the newsroom, randomly displaying images of plan crashes, incredible rescues and police chases.
We have an amazing ability in this day and age to receive our information instantly and repeatedly. For example, right now the real estate foreclosure “epidemic” is big news. We see stories of families losing their homes and neighborhoods filled with for sale signs. I want to be careful not to minimize the impact of this reality. It is indeed happening to many people, but by watching the incessant news coverage, our minds are becoming programmed to be acutely aware of the risks associated with real estate and the potential disasters that lay ahead if we are not extraordinarily careful. The result has become a growth of unreasoning fear which is causing people to make foolish decisions when determining what is and isn’t considered a normal risk. So what happens? Buyers don’t buy. Investors don’t invest. Banks don’t lend. This age of mass communication is not only contributing to the problem, in certain respects, it creates it.
Commissioned Sales People
In most cases, cash flow problems for commissioned sales people occur as a result of bad timing and closing delays. If you find yourself in this situation and believe advancing the commission from one of your pending sales is something to fear, then you are buying into the notion that a future unknown event makes more sense than acting on an immediate need to improve your cash flow. Don’t advance a commission, and pay your bills late. Those who are weighing the options and decide not to advance conclude that paying late is better. But what they don’t appreciate is the prolonged impact that late payments have on their credit history, effectively lowering their fico score, increasing their cost of borrowing and reducing their access to future credit.
Common Truths
My business is commission advance. My clients are real estate professionals. eCommission has advanced $325 million commissions since relocating the business to Austin, TX in 2000. 91% of transactions approved for our service close and repay as scheduled. 9% fall through. Of those, 7% are subsequently replaced with a different pending sale. 2% are uncollectible. So what’s the bottom line? You have a 98% chance that a commission advance will work out well for you…leaving very little to fear.
For more information about eCommission, please visit www.ecommission.com or call toll free at 877-882-4368 to speak with one of our customer service professionals.
