Keep a Watchful Eye on Your Merchants Until New Years
If you work in the Merchant Cash Advance(MCA) business, November and December should be your favorite months. Holiday sales translate into enormous surges in both cash advance and processing residuals. If you don’t know what residuals are or don’t have them included in your compensation structure then OOPS! (Your employer won’t like us too much).
A struggling ISO can rise out of the red on the coattails of their merchants and have a very black friday themselves. But proceed with caution for clients that have an outstanding MCA balance. The surge in sales can be all too tempting to keep for themselves.
A photo we took at a store on Black Friday
Did your retail store client process a big fat ZERO on Black Friday? Did that liquor store do less business in the days leading up to Thanksgiving than in prior weeks? If so, the merchant may be hijacking your future receivables and with that, your largest residual paycheck of the year.
It is not uncommon for stores to hire temporary workers and open additional lanes and cash registers to accommodate increased foot traffic. It is also the time when their secret backup credit card machine they never told you about rears its ugly head. While we can sympathize with a business for needing extra terminals, we don’t condone the use of ones that breach their MCA contracts.
What to do? If you haven’t already, now is the time to call your clients to find out if they need additional equipment. It can’t hurt to make the first move before they act on their own and intentionally or unintentionally use another merchant processing service.
Additionally, some small business owners may try to process all sales in excess of their monthly average through an alternate machine. So a mall retail store processing $10,000 month on average continues to process that same $10,000 in November and December, leaving you completely unsuspecting that an additional $30,000 was processed elsewhere. Monitor the retail, food service, and liquor store accounts on a daily basis from now until New Years.
Treat your clients right and work with them to ensure they don’t miss a beat. Out of receipt paper? Ship them extra rolls! Processing an unusually large sale? Get the signed invoice or receipt to ensure funds are not held.
Veterans in the Merchant Cash Advance business have come to expect this last month and half of the year to be the most rewarding. But make sure the merchants are equipped to handle the sales, monitor their activity, and keep an eye on them. Happy Year End.
-The Merchant Cash Advance Resource
Last modified: February 21, 2013
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.