A story is told about a man who walks into a Radio Shack store at his local mall. He saw on the shelf behind the counter a small TV with a price of $750 on it. He called over the salesman and asked if that was the best price that Radio Shack could offer. The salesman responded by saying that the price listed was the best he could do and also inquired as to why the customer was questioning it. The customer replied that he had just seen the same TV in Macy’s for $500. The salesman responded with an inquiry as to why he did not buy it from Macy’s at that seemingly low price. The customer replied that Macy’s had no more left in inventory to sell. The salesman then perked up and said, “oh,….when we no longer have this TV in inventory we sell it at $400!”
So what is point of the story? Many clients shop around for quotes from lenders. However, these prospects do not; a) complete an application b) provide and accounts receivable aging c) give any information as to the creditworthiness of their debtors d) indicate how many invoice they will submit on a monthly basis or e) give any financial information as to their own company’s viability. Yet many lenders will shoot out a baseless quote just to lure in the applicant. Very often we have a prospect call us and say that they just want a quote on our fees and advance rate. We frown on providing that! The reason being, we have no basis to build such a quote and using superficial information to do so is inaccurate at best and more leaning toward misleading. If we desired to actually give a quote we certainly can be like the TV salesman at Radio Shack and quote a ridiculously low fee knowing that we have no information to base it on and also knowing that anything we say is meaningless since we’ve done no underwriting.
Rather than misrepresenting ourselves or to even acknowledge that we can quote a price without basic underwriting information, we just respectfully ask for an application and supporting documents so our quote can be one based on reality and not one derived from “air.” Without any information on the transaction, we can quote a meaningless price structure the will be better than anyone else’s meaningless price quote. As the salesman in the above example would say, “with no information about this transaction at all, we can quote you a 1% discount for 60 days and an advance rate of 99%.” The “take-away” from this story… never give a quote or a pricing structure without all of the facts concerning the transaction.
