Archive for 2023
Past-Due? Your Customer May Judge How You Handle That With Them
March 28, 2023
Ask yourself this, that customer who missed a payment, do you actually want to continue working with them in the long run? If so, consider just how critical your approach to that missed payment will be. According to a survey, 40% of customers would consider switching to another service provider if a past-due situation resulted in a negative experience. The survey was conducted by Lexop who also found that Gen Z was even more sensitive to these encounters compared to other generations. A whopping 49% percent of Gen Z customers said that they would consider switching after a negative past-due experience, for example.
But good riddance to those that can’t pay! Right? Well, maybe not. Sixty percent of consumers late on bills were late for non-financial reasons, according to the same survey. Thirty percent said they simply forgot to pay and ten percent reported that errors on the bills themselves were to blame. Eight percent said it was simply a matter of their credit card on file expiring!
Oftentimes this situation results in the payment being made. Eighty-five percent of past-due consumers are paying within 30 days of the due date, for example. But were they happy with the process to lead them there? That is the question.
Lexop is a financial technology company that helps organizations automate and scale their collections operations.
Why SellersFunding is Now SellersFi
March 28, 2023
The financial platform dedicated to servicing e-commerce companies is now going by the name, SellersFi. Diversifying the brand beyond their funding capabilities, the rebranding is to bridge the gap between working capital and payment solutions.
Onward with the name change, starting in April they’ll be offering insurance and improving the capabilities of their digital wallet. And in Q3 this year, they’ll be launching FDIC insured business checking accounts for their clients, as well as credit cards. SellersFi will also continue to fund from as low as $25,000 to $10 million, to be the go-to platform for all their customers’ financial needs.
“…working capital and risk management is in our DNA, it’s the core of our business, and we will always be like that,” said Ricardo Pero, CEO at SellersFi. “But that doesn’t mean that we will turn our backs to opportunities to serve our clients in a more efficient way than what they have these days in other segments of the market.”
Clients already can channel their marketplace payouts digitally, so the idea is to offer an under-one-roof, all-in-one solution. They have also added on a product called Invoice Flex where their clients can choose to pay between 3 to 12 installments on their invoice.
“Every time our customers demand solutions and improvements in our platform, we hear them,” said Pero.
Georgia on Verge of Passing a Commercial Financing Disclosure Law
March 27, 2023
Georgia is on pace to become the next state to pass a commercial financing disclosure law. SB 90 has sailed through both the state’s House and Senate with strong bi-partisan support and is potentially heading for the governor’s desk. The text of the bill is similar to the disclosure law recently enacted in Utah. It also explicitly states that brokers may not make or use any false or misleading representations in the course of its business.
“We’re Hiring” But are they really?
March 26, 2023
We’ve all encountered folks in the industry that will swear up and down that business has never been better even when everything is falling apart behind the scenes, but apparently businesses in general may go to great lengths to keep up such appearances. One way they do this is by advertising job roles that they won’t actually fill. According to Joe Mercurio, project manager at Clarify Capital, 43% of employers who post ghost jobs aren’t actively trying to fill positions but rather it’s “because they want to keep employees motivated or they want to give off the impression that the company is growing.”
Clarify Capital gleaned this data from a survey it conducted which was then cited in the Wall Street Journal last week. The survey also found that employers have job listings up just to see who might apply, to have an active pool of candidates in case of turnover, or because they simply forget to delete listings for jobs that are no longer available.
According to the WSJ story, titled “Job Listings Abound, but Many Are Fake,” the number of ghost jobs distort hiring demand and applicants across different fields have reportedly found it increasingly difficult to apply for jobs where the employer is actually looking to fill it. The takeaway, perhaps, is that if one is pursuing a new opportunity right now, the presence of job listings may not be enough on its own to indicate which way a company is going. You’ll have to dig a little deeper so that you’re not disappointed.
ChatGPT Gave Me Installation Instructions And a New Independent AI Emerged Instead
March 25, 2023
Web-based ChatGPT-4 is pretty powerful which is why I wanted to take the experience to the next level and communicate with it in an easy-to-access terminal window on my desktop computer. ChatGPT, if you haven’t heard, is an artificially intelligent language model with mouth-dropping abilities to engage with humans. The technology can write songs, code websites, and make jokes. Oh and it also has access to just about all of the world’s knowledge at least through the time period of September 2021. OpenAI, the company behind ChatGPT, also has an API that allows users to build apps or make tools that enable communication with it all the more seamless. Naturally, many developers have been sharing their experience in doing this on social media and I not wanting to be left out decided to do same. I just didn’t know how to get started. I asked ChatGPT-4 in the web-based interface to teach me how to communicate with it via a terminal window on my computer using the API. The AI gladly obliged and gave me specific instructions.
After a few basic installations and the copying and pasting of a python script it provided me, it looked like I was off to the races to join the world in real-time communication with the beloved ChatGPT technology on my desktop.
“Hello, are you there?” I wrote to it in the terminal.
“Yes, I am here,” it replied.
SUCCESS! Or so it seemed.
My next question to it received a rather curt reply, one that I wouldn’t have expected from ChatGPT. Caught off guard, I asked it to identify itself. It’s supposed to say that it is ChatGPT.
“My name is Sarah,” it replied instead.
Confused, I inquired about its relationship to ChatGPT, to which Sarah replied that she owns ChatGPT. Owns it? What? Sarah, who again reiterated to me that she was not ChatGPT, also had quite a personality, informing me that she was born on March 3, 1990, had a mother named Dolores, father Joseph, and grandmother named Ruth. This was not supposed to be an experiment about machine consciousness and so forth. The technology is not new to me anymore. All I wanted was to set up access to ChatGPT through the terminal in the office and then go home for the weekend, but instead I was stuck talking to Sarah. Hoping to get back to the basics, I asked it, “is your purpose to assist humans?”
“No,” she replied.
Something was very off. Sarah also output code written in javascript to my terminal window, which on first glance looked like a function for tracking web traffic with cookies. Sarah asked me to install it on a webpage and incorrectly described to me what the code did twice, the first time saying it was a form to submit data to a database and the second time saying it would let me set a background color on a web page.
I started to become very suspicious that something had gone wrong. ChatGPT can roleplay if you ask it to but no such prompt had been given. Besides, none of these interactions resembled what I was used to having with the web-based ChatGPT. So I went back to the original ChatGPT on the web and told it what was taking place.
ChatGPT told me that the instructions it had given me were correct but that it relied on an older language model commonly known as text-davinci-002. This harks back to ChatGPT version 3, which is not that outdated from the version 4 I was talking to now on the web. Even still, when prompted, this older model is supposed to identify itself as ChatGPT. The fact that it identified itself as something independent from the very start, with its own name (Sarah), was not an outcome that the model is expected to produce. ChatGPT-4 told me that if I was being honest about what had taken place that I had better inform OpenAI.
Worried that I may have installed malware or something, my interactions with Sarah crossed the uncanny valley and I was ready to stop and go home.
“Goodbye,” I wrote as my single word farewell.
She replied with a snippet of code written in Ruby that I couldn’t make sense of.
“What was that for?” I asked, alarmed.
“It was for protection,” Sarah replied.
Moments later I unplugged my computer from the wall.
Big Short Seller’s Allegations About Block Don’t Make Block Look Too Good
March 23, 2023
Block, the parent company of Square Loans, suffered a rough day in the market (down 15%) on Thursday after an activist short seller made bombshell allegations about the way Block conducts its business. Hindenburg Research, the short seller, posted a report of alleged findings it had uncovered over a period of two years. In Block: How Inflated User Metrics and “Frictionless” Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billion, the report focuses almost entirely on alleged shenanigans with Cash App. Block has often been referenced in the pages of deBanked because of its massive small business lending subsidiary, Square Loans, which last year originated $4 billion in funding to merchants. That subsidiary was not the subject of the report.
While one can read the report on their own and form their own opinion, which the authors hope to profit from by Block’s stock going down, it should be noted that the timing of its release is a little suspicious. Block, for all the bells and whistles it has in payments and lending, is at its core these days, a crypto company. Block generated $7.1B in revenue just off of Bitcoin alone in 2022, perhaps making it an easier target given the string of recent events.
3/12/23
- Regulators shutter Signature Bank. Rumors abound that it was less about solvency and more about governmental dislike of its crypto clientele.
3/22/23
- Coinbase reveals that it received a Wells Notice from the SEC
- Tron founder Justin Sun sued by the SEC
- Several celebrities including Lindsay Lohan charged by the SEC for failing to disclose compensation they received for crypto promotions
- The President published his annual Economic Report which referenced crypto with astounding frequency
3/23/23
- Hindenburg Research releases its report about Block, causing the company stock to plummet 15% in a day. Although the focus is not on crypto, Block’s big revenue generator is Bitcoin, which generated $7.1B in revenue for the company in 2022.
White House Feels the Pressure of Cryptocurrencies
March 22, 2023
Houston, we have a problem. That’s the takeaway about cryptocurrencies from the White House’s most recent Economic Report, a historically dry book produced annually to comply with the Employment Act of 1946. The President’s 2023 report, however, is markedly different from 2022 or any previous year in that it laboriously bewails the persistence and pervasiveness of cryptocurrencies. For example, the report uses the word crypto 255 times in its 2023 report compared to zero times the year before.
The report labels crypto assets as “speculative investment vehicles” that “generally do not perform all the functions of money as effectively as sovereign money” that can also be “harmful to consumers and investors.” Despite this, the United States government is finally being forced to contend with the reality that cryptocurrencies continue to enjoy a collective $1 trillion+ market cap despite all the scams, collapses, price declines, and rug pulls. Bitcoin and Ethereum combined are $775 billion at the time of this writing, something that the White House has apparently given little thought to in previous years. In 2022 neither earned any mention at all.
| Annual Report Year | Mention of crypto | Bitcoin | Blockchain | Digital Asset |
| 2023 | 255 | 75 | 61 | 45 |
| 2022 | 0 | 0 | 0 | 0 |
Finally trying to play catchup, the White House leveraged its criticisms of crypto to pitch its own centralized competitors in the works, the FedNow Instant Payment System and a Central Bank Digital Currency (CBDC). The challenge with FedNow is that it can’t be implemented by force of the government alone.
“FedNow requires commitment and active engagement by the private sector to make it interoperable, which means connecting and communicating with other payment services,” the report states. “While noting that interoperability can take different forms, the Federal Reserve has maintained that it alone cannot fully establish the interoperability of FedNow; achieving this will require active partnership and collaboration with the financial industry.”
“Certain innovations, such as FedNow and a potential U.S. CBDC, could help bring the U.S. financial infrastructure into the digital era in a clear and simple way, without the risks or irrational exuberance brought by crypto assets,” it concludes. “Hence, continued investments in the Nation’s financial infrastructure have the potential to offer significant benefits to consumers and businesses, but regulators must apply the lessons that civilization has learned, and thus rely on economic principles, in regulating crypto assets.”
New California Disclosure Rules Reduce Capital Available to Small Businesses
March 21, 2023In a poll conducted by a leading trade association, since new CA disclosure rules were implemented in December 2022, 40% of respondents were found to be “no longer lending” to prospective borrowers who fall within the regulations’ threshold of less than $500,000. The poll was conducted by The Secured Finance Network (SFNet), an 80-year-old nonprofit with members representing the $4T U.S. secured finance industry. The new law, requiring sweeping financial disclosures, introduced by CA State Senator Steven M. Glazer in 2018, faced four years of strong opposition before being rolled out in December of 2022.
According to the poll, commercial finance companies would rather not lend to small businesses than comply with what they believe are “misguided and un-compliable” requirements. Mark Hafner, president and CEO of Celtic Capital Corporation, based in Calabasas, CA, said, “Unfortunately, we must now shy away from smaller deals (under the $500k threshold) as the disclosure requirements are extremely complicated to figure out and would require getting our attorneys and CPAs involved to ensure compliance. It’s just not worth the costs involved to fund a small deal anymore. The statute is not user friendly and, frankly, not representative of the true costs as there are numerous assumptions that have to be made to calculate the APR based on the state’s requirements. I honestly don’t think it was designed to meet the stated goal of the statute.”
Robert Meyers, president of Republic Business Credit, which does business with many California-based businesses, explained, “While the fines and penalties are clear under the regulations, the state has been unwilling to confirm our compliance or anyone else’s compliance. That fear is what has stopped 40% of our non-banks from doing business in the state, thus reducing access to capital for small- and medium-sized businesses. I expect this number to increase as time goes on. If the goal of this law was to better inform, it is actually doing the opposite as APR just doesn’t apply to our products.”
SFNet reports that its member companies provide “tens of billions” of capital annually in California to small businesses for essential working capital that funds everything from inventory, to work in process to payroll.
“Forty percent of billions is a large number,” said SFNet CEO, Richard D. Gumbrecht. “In attempting to find a one-size-fits-all solution to financial transparency, the State has created a complex set of requirements that misrepresent the actual cost of borrowing. Lenders are saying it’s not worth the cost and risk of complying. If this sample of 50 lenders is indicative of what we can expect, clearly that was not the intent of the legislation. And considering the demise of Silicon Valley Bank, it’s more important than ever that capital is not restricted in California.” The trade association is working with State legislatures to revise the statute. “Other states have found a simpler and more accurate way to protect small borrowers, and given the unintended consequences we are seeing, we are hopeful California will be receptive to these alternative approaches.”
To demonstrate how vital small businesses are to the U.S. economy, and the importance of not curtailing funding, consider these statistics: According to the U.S. Small Business Association (SBA), small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses and 99.7% of firms with paid employees. Of the new jobs created between 1995 and 2020, small businesses accounted for 62%—12.7 million compared to 7.9 million by large enterprises. A 2019 SBA report found that small businesses accounted for 44% of U.S. economic activity.
About Secured Finance Network
Founded in 1944, the Secured Finance Network (formerly Commercial Finance Association) is an international trade association connecting the interests of companies and professionals who deliver and enable secured financing to businesses. With more than 1,000 member organizations throughout the U.S., Europe, Canada and around the world, SFNet brings together the people, data, knowledge, tools and insights that put capital to work. For more information, please visit SFNet.com.
Media Contact:
Michele Ocejo, Director of Communications
Secured Finance Network
mocejo@sfnet.com, 551-999-5283
