Trailing Commissions - Should I Give Back to Customer??

[charlieandkath]

I am a farmer and a barista but also have recently added selling equipment to my resume. Was speaking to a bank and they said if I can get customers to borrow the money through the bank to buy my equipment then I would get a trailling commission. Firstly does any one know what percentage trailling commission I should be negotiating and then should I be giving this back to the customer??? Maybe as a bonus. Could lead to further sales??? Any thoughts?

Thankyou Somersofters - you are awesome,

Charlie

 

[Mr. Fabulous]

I wouldn't. You earned the sale, it's your income.

 

[charlieandkath]

I wouldn't. You earned the sale, it's your income.

Trouble is Mark I only have to introduce my client to the bank so there is less than 5 minutes work for me. I would sort of feel guilty if it were more than say$50 per year.

Any ideas on what percentage they would pay? I realise this is a general question open to variables but are trailling commissions say one tenth of a percent or 5 tenths of a per cent.

Cheers

 

[Mr. Fabulous]

I've no idea. Why would you feel guilty about receiving a passive income stream?

 

[charlieandkath]

I've no idea. Why would you feel guilty about receiving a passive income stream?

Always have been of the belief that you should only be paid for the time spent on a job. Of course there are differnt levels of expertise that you pay for per hour in $ terms but for me just spending 5 minutes passing on details, can that seriously be worth money?

I am all for passive income as that is what I have been working towards for the last 6 years but I had never thought of this before only because I guess the opportunity was not there before.

I can understand Mortgage Brokers getting trailling commissions as they actually do some hard yards to earn this but for just passing on a few details are you serious. No wonder things ending up costing a lot more. I knew there was always middlemen but I did not realise there was middlemen middlemen.

I was thinking if you gave it back to your client as a bonus then word would get out and then more people would buy the product I am selling as it would become cheaper to them. This may increase my sales.

 

[Mr. Fabulous]

Your clients are going to get charged the same interest rate whether you take the commission or not. If you don't want the money, send it my way, I will give it a good home.

 

[Peter_Tersteeg]

Speak with the lender about what is 'normal' in this situation. I'd also ask them what your 'credit licensing' requirements are in this situation.

If you're giving the customer 'credit advice' you are required to be licensed at this point. Keep in mind a simple referral does not require a license, but you need to understand what the boundaries are.

 

[charlieandkath]

Speak with the lender about what is 'normal' in this situation. I'd also ask them what your 'credit licensing' requirements are in this situation.

If you're giving the customer 'credit advice' you are required to be licensed at this point. Keep in mind a simple referral does not require a license, but you need to understand what the boundaries are.

Thanks PT Bear. That is great information and will definately be asking these questions. Appreciate the response. Thanks again.

 

[Macca]

Hi,

Subject to it being all legal and OK, why not accept it as reward for your knowledge and then donate it to your favourite local charity or junior sport team etc.

If you don't accept it then the bank just adds it to their billion $$ profit that year, better to give it to someone who will do some public good with it

 

[charlieandkath]

Hi,

Subject to it being all legal and OK, why not accept it as reward for your knowledge and then donate it to your favourite local charity or junior sport team etc.

If you don't accept it then the bank just adds it to their billion $$ profit that year, better to give it to someone who will do some public good with it

That is a great idea re the charity/sports team. I was thinking of giving it back to customer though. Definately would not give it back to the bank.

Cheers and thanks

 

[Blacky]

Its very common. Most car yards get paid for this service.

0.1-0.25% percent is about all you could expect.

 

[Spectre]

If you give it back whats the possibility they then have to declare it as income as its a recurring thing? Good intentions may cause complications.

 

[Rolf Latham]

If you give it back whats the possibility they then have to declare it as income as its a recurring thing? Good intentions may cause complications.

I suspect ongoing rebates and discounts arent construed as income...................yet.

We are about to have a flood tax, a carbon tax, and perhaps also a tax on........

" honey look, I saved you $ 300 on that dress"

ta
rolf

 

[charlieandkath]

Its very common. Most car yards get paid for this service.

0.1-0.25% percent is about all you could expect.

Thanks Blacky. The amount would be on the interest wouldn't it? Not on the total amount borrowed?

 

[charlieandkath]

If you give it back whats the possibility they then have to declare it as income as its a recurring thing? Good intentions may cause complications.

Good point spectre. Thanks for that. Maybe I could give it back to them as a bottle of their favourite grog or something like that.

 

[Peter_Tersteeg]

Good point spectre. Thanks for that. Maybe I could give it back to them as a bottle of their favourite grog or something like that.

Could this come under fringe benefits? (I don't really have a clue about this one). I'd be inclined to donate it to a charity. It's tax deductable, so has negligible tax implications, it'll probably make the customers feel good about it, and you could even use it as an advertising point...

 

[charlieandkath]

Thankyou everyone for helping me out on this subject. I learnt some new angles and through your posts I was able to gain confidence in negotiating with the bank I am referring my clients onto.

I rang the bank this morning and they said it would not be trailling commission at all. It would be a one off payment on the amount the customer borrows through them.

I would become a referral partner of the bank (any pitfalls here?) and am not to give any credit advice (I made sure of my boundaries here thanks to ?? post above, thankyou).

The bank said I would get 1% on what customer borrows. I said I would think about that. My average customer spends $40,000 to $50000 so therefore one off payment of $400 to $500 for doing 5 minutes work.

I will now decide what to do with this money.

Thanks once again Somersofters for your input. Hopefully one day I can give back as much as people do on this forum.

 

[cu@thetop]

Thankyou everyone for helping me out on this subject. I learnt some new angles and through your posts I was able to gain confidence in negotiating with the bank I am referring my clients onto.

I rang the bank this morning and they said it would not be trailling commission at all. It would be a one off payment on the amount the customer borrows through them.

I would become a referral partner of the bank (any pitfalls here?) and am not to give any credit advice (I made sure of my boundaries here thanks to ?? post above, thankyou).

The bank said I would get 1% on what customer borrows. I said I would think about that. My average customer spends $40,000 to $50000 so therefore one off payment of $400 to $500 for doing 5 minutes work.

I will now decide what to do with this money.

Thanks once again Somersofters for your input. Hopefully one day I can give back as much as people do on this forum.

I was approached by a bank to do this. I refer work but don't take a comission. I tell the broker they must give the client a better rate then if client applied over the counter.
I feel my core business would suffer if clients knew I was getting kickbacks for referring them.

 

[charlieandkath]

I was approached by a bank to do this. I refer work but don't take a comission. I tell the broker they must give the client a better rate then if client applied over the counter.
I feel my core business would suffer if clients knew I was getting kickbacks for referring them.

cu@thetop, you are a man of integrity.

Do you know if the bank gives them a better deal? If so then I can understand where you are coming from.

I feel I should recieve something for doing the five or ten minutes work (maybe $50) but then I think the rest should be given back to the customer for them to do what they want. I was thinking if you did this out of the blue it may further your sales as they would see you as having a high level of integrity. What do you think?

 

[Blacky]

Thanks Blacky. The amount would be on the interest wouldn't it? Not on the total amount borrowed?

You beat me to my answer.
It is just a "referral fee" not a trailing commission (ie a one off payment). A lot of banks/financiers have this arrangements. 1% seems like a pretty good rate to me.

Check on the rules because I am pretty certain that you need to disclose that you get paid for the referral. Personally I would be inclined to do this anyway.
Often referred business does get a discount for the client also - though not always.

Personally, if you declare your financial interest in the recommendation, I see no ethical issues - but ethics is always a grey area....


Cheers
Blacky