Lightspeed Capital: ‘Our goal is shorter MCAs’

“Today, our typical remittance period for a merchant cash advance is approximately seven months,” said Asha Bakshani, CFO of Lightspeed during the company’s Q3 earnings call. “Our goal is to target a shorter remittance time frame, and we are making great progress towards that end.”

That objective can be most likely attributed to the company’s desire to redeploy that capital as fast as possible since the company is always closely monitoring and managing its cash flow.

“Aside from potential buybacks, our largest use of cash will be growing our merchant cash advance business,” Bakshani added. “There are currently $106 million in merchant cash advances outstanding, and we intend to continue to grow this high-margin business over time.”

Like other e-commerce platforms that do the same (Shopify and Block), Lightspeed has continued to be impressed by the overall positive impact of providing working capital to its own client base. In their regular quarterly financial docs for example, they explain that the purpose of their MCAs are “to help [merchants] with overall business growth and cash management. Merchants are meant to use these cash advances to manage their cash flows, to buy inventory, and to invest in marketing, amongst other things.”