New Jersey businessmen Robert Rochman and Lonnie Lauer say the financial software they purchased from a small Albuquerque company is so effective they plan to market it nationwide.
Albuquerque-based American Software & Computers Inc. created CreditStar as an affordable, easy-to-use package for small- and medium-sized businesses to manage their own customer credit programs rather than farm those services out to banks.
Rochman and Lauer, who sell gourmet food and health and wellness equipment to individuals and retailers, have used the software for about five years. In fact, Rochman set up a new company, Jefferson Financial Services, to manage credit for Country Gourmet Foods, which he owns, and for Healthways Marketing, which he and Lauer run together.
"After we saw everything this software did, we realized it could be used by many thousands of small businesses in many different industries," Rochman says. "We said, 'Holy Cow, we're sitting on top of a real money-making powerhouse here.'"
The partners are working out details with American Software President Richard Hadad to create "CreditStar Marketing" as a three-way partnership to aggressively sell the software.
Hadad, who spent 20 years developing the product, says the partnership comes at just the right time.
"Until now I've only marketed it on a very limited basis to work out every potential kink, but after years of development, I'm finally completely satisfied that once we sell the software we won't get phone calls about things that don't work," Hadad says. "I'm ready to launch an aggressive [national] marketing campaign."
Hadad first conceived of the software in the 1970s to manage credit for his own direct-food-sales business. He then launched American Software in 1986 to build CreditStar into a commercial product, but because he created the first version on the old DOS system, he had to redesign it for Windows in the 1990s.
He began limited sales in 1996, with a total of 17 customers in the past decade, most of whom provided feedback to perfect the product, Hadad says.
The software automatically manages all credit-related tasks for a business, including pulling credit reports, calculating an applicant's credit risk, tracking a customer's account history, managing monthly statements, adjusting interest rates and generating collection letters.
"We built it as a modular system so clients can purchase just the basic software and then add on modules for other services later on," Hadad says. "The first module costs $6,500, and each additional one $2,500."
By using the software for in-house credit management, Had-ad calculates a company can earn $370 for every $1,500 in financing it approves for a client, assuming a 21 percent interest rate. By adding 15 such accounts per month, a business could earn more than $47,000 a year for credit management, Hadad says.
"Many companies want to do their own financing, but they're afraid to get into it," he says. "We built this software specifically to provide small- and medium-sized companies with the same advantages that major companies and corporations have."
Vince Renda of California-based Steinberg, Fineo, Berger & Fischoff PC says his firm uses CreditStar to manage about 3,000 bankruptcy settlements for creditors.
"It helps us keep careful track of all payments on each account by debtors," he says. "We would have paid a lot more if we had purchased custom software."
Jim Wissert, retired manager for the Equifax credit reporting agency, says Hadad has managed to develop an effective, but affordable system for small businesses to manage what normally is a very complex financial service.
"This software lets small businesses do what Bank of America, Visa and Master Card have been doing for a long time," Wissert says. "It lets the little guy operate like the big guy."
Hadad has invested about $2 million since 1986 to build CreditStar. His company has had about $200,000 in total revenue over the past decade, but he expects sales to grow rapidly as the new marketing campaign gets underway.
The company will triple its workforce, from five employees now to at least 15 by the end of 2007, Hadad says.
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