Merchant Cash Advance Accounting PitfallsJanuary 13, 2015 | By: Sean Murray
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.
Phone (845) 875-6030
Fax (845) 678-3574
Please consult with an accountant to assess your particular situation and needs.
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.