5 Tips for Better MCA Collections

Shaya Gorkin is an experienced attorney and the COO of Monetaria Group, a premier collections agency specializing in merchant cash advance and commercial debt recovery. To connect with Shaya, email shaya@merelcorp.com.

With the benefit of our collective decade of experience working in collections for the merchant cash advance industry, our team at Monetaria Group has come to understand all too well the importance of recovering funds for our clients and all the difficulties associated with that. The MCA sector poses distinct obstacles and challenges for collections; but, by implementing the correct systems and strategies, we’ve found that outstanding payments be recovered, without it having to be a painful and drawn-out experience.

Here are five key strategies for better MCA collections that we have implemented with our clients, that can help you too:

1. Be familiar with the industry you’re being asked to advance.

Often, MCA companies offer small businesses short-term funding in their moments of need. This means that the funders are betting on the business’s ability to take advantage of the opportunity being offered to them and turn the ship around, enabling them to repay the advance without any complications or issues.

To ensure you are giving your company the best chance of getting its money back, it is essential for funders to have an understanding of the industry and the businesses they are working with to be able to evaluate their advance worthiness and anticipate fluctuations in repayment ability.

2. Establish relationships and overcommunicate.

Having strong relationships goes a long way in MCA collections, for both the funders and their clients. Establishing trust and open communication with clients will inevitably lead to a better understanding of their specific needs and challenges. Additionally, it goes without saying that developing positive customer relationships can lead to more successful negotiations and repayment agreements.

3. Be proactive and offer solutions.

Instead of passively waiting for merchants to default, proactively reach out to them to check in and see if it’s time to discuss reconciliation and other solutions. This shows a willingness to work with them and allows for potential issues to be addressed before they become major problems.

4. Utilize the best available technology.

Over the past decade, the merchant cash advance space has seen an explosion in the creation CRMs and softwares to service and assist the MCA businesses. Utilizing these technologies will greatly improve the efficiency and effectiveness of your business and will be a great asset in ensuring you are collecting all that is owed to you. Look for the services that offer the features you need, such as custom reports, client breakdowns, automated payment reminders, online portals for customers to make payments, and data analytics- they are all out there ready to assist you.

5. Have a contingency plan.

Despite your best efforts, some merchants will still default. Having a well-crafted contingency plan in place that doesn’t put all your eggs in one basket will minimize the potential negative impact on your business. This includes doing a very thorough underwriting of the merchant’s business. Additionally, be prepared to explore your options in terms of collecting what is owed to you. This may include selling the debt, restructuring the payment, hiring a qualified third-party debt recovery agency, or legal action.

Having all these in place will more than adequately prepare you for a successful MCA collections experience, and help you avoid all the stress and headaches it can present otherwise.