One of the biggest challenges an independent contractor has is maintaining control of his/her finances between commissions. Although the concept isn't new, there is a tried-and-true method of getting advances on your commission without going into credit card debt to do so.

The financing method is called factoring, and it has come to the Internet. Factoring is not a loan - it is the purchase of a receivable - your commission on next upcoming transaction. In order for you to have a receivable to sell, you must have a valid contract for the closing of a property, which meets the capitalization guidelines of eCommission. What you are financing is the spread between the time you wrote the contract until you think it will close.

Why not just get an advance on a credit card? With a credit card, you pay varying degrees of interest, and you can add more purchases onto the card. With factoring the transaction never exceeds about eight percent and it is over at closing when the borrowed amount is repaid to eCommission. Factoring is not supposed to be an ongoing debt like interest-bearing credit cards, so for the short term, they can save you money. They are also only meant to be used a few times a year, otherwise the costs would definitely exceed what you would pay in interest for credit card debits.

"Our business involves making funds available now," says Bearden. "We are relationship-driven, so we want to make it attractive enough for agents to become repeat customers.

How it works is that eCommission offers commission payments in 24 hours or less, rather than at the end of standard escrow periods, based on the agent's side of the upcoming contract. eCommission provides professional real estate agents up to 80 percent of their commission, to a maximum of $7,500 per transaction, up to 120 days before closing. The cost to receive an eCommission is determined by the amount of commission requested and the length of time until the sale closes. Agents pay only $1 per day, per thousand dollars and a $99 transaction fee. For example, a commission of $3,000 received 45 days before closing would cost $234.00.

Agents complete an application online and receive notification of approval within one hour, and they can access their accounts 24 hours a day, 7 days a week.

"This means agents can immediately put their profits to work expanding their business or enjoying their personal lives," says John Bearden, CEO of eCommission.com. "Technology has transformed the industry, helping brokers and agents better manage their business, leaving more time for agents to spend with their customers."

Brokers can benefit from eCommission, too. Because agents are typically independent contractors, it can be embarrassing to the broker to be asked by an agent to pay advances until a contract closes. If the broker has a relationship with a company like eCommission, s/he can point the agent to the company that is better set up to handle such requests. The broker not only saves face, but the liabilities of extending credit themselves. And the broker can point out an additional benefit to using eCommission that they wouldn't be able to do themselves - the cost to receive eCommission's service is also tax deductible for agents when the commission proceeds are used for business purposes.

Although the name sounds new, eCommission.com, is an affinity partner of Agent Equity, Inc., the original commission financier out of Canada. eCommission Systems, according to the company, combines the management and software resources of Agent's Equity, Inc. with the financial resources of Koch Ventures Inc., the venture capital division of Koch Industries Inc.

In its debut, the company is also announcing exclusive marketing agreements with four of the major real estate franchises in the United States, including all three Cendant brands (CENTURY 21, COLDWELL BANKER and ERA) and Prudential Real Estate, with a total access to over 300,000 agents. In addition the company also plans to market through brokers with special discount programs.

Published: April 18, 2000

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