Merchant Cash Advance Accounting Pitfalls

This is question #5 in an interview between deBanked’s Sean Murray and accountants Yoel Wagschal, CPA and Christina Joy Tharp.

• 1. Merchant Cash Advance How to Guide Intro
• 2. Do I Need a Special MCA Accountant?
• 3. and 4. Recording Merchant Cash Advance Transactions on the Books
• 6. Revenue recognition for Merchant Cash Advance
• 7. Q&A – Real questions that MCA companies or syndicators have

Q: Are there any pitfalls for ISOs or funders in the industry with how they run their books? Big no-nos, etc?

A: Here are some of the most common pitfalls we have seen:

• Don’t think of this as a loan – that’s a huge pitfall that we have experienced firsthand (get rid of that word!)
• Don’t have your CFO be one of your syndicators. This inevitably creates multiple conflict of interest issues.
• The biggest no-no – don’t rely solely on spreadsheets! You need a good accounting system that will cross reference and reconcile your accounts. It needs to track and present your cash activity and it should ultimately provide you with your crucial reports. Basically, it needs to accomplish all of the trifecta in question #1.

Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.