Anaya Vance was a reporter for deBanked.
Got an Offer to Settle Your Debts? Be Careful!
May 25, 2023
“Imagine a small business owner who is getting calls and demand letters and lawsuits from their creditors,” said Steven Zakharyayev, Managing Attorney at Law Offices of Steven Zakharyayev, PLLC, “then this debt relief company comes along and claims they can help. Desperation makes them an easy target.”
Unlawful debt settlement schemes can take many forms but a common one is a third party enticing a merchant into believing that they can resolve their debts at a discounted price when there is no basis for that to be true.
“[The scammers’] marketing preys on small business owners who may be in tough financial situations with ‘pie in the sky’ promises,” Zakharyayev said.
Common red flags indicating a potential fraudulent marketing pitch include requests for upfront payments, down payments, or monthly installments. Third party assistance in and of itself is not necessarily unlawful but the debtors should conduct thorough due diligence on any proposal they receive.
“Consumers can look up the debt negotiation companies and find out if they are legit and how they work by looking up reviews and searching up the company,” said Manny Yosipov, CEO at Advanced Recovery Group.
Debtors should also take care to understand whom it is they are even speaking with. Sometimes the identity of the person calling to address a debt is not clear. Is it a creditor? A collections firm acting on behalf of a creditor? Or a third party with no relationship to the creditor at all? This can become all the more confusing when more than one communcations channel is being used.
“The amended FDCPA allows debt collectors to use newer technologies, such as email and text messages, to communicate with consumers regarding their debts, subject to certain limitations, which protect consumers against harassment or abuse,” said Yosipov.
Meanwhile, Zakharyayev emphasizes the importance of creditors informing clients about the types of communications they might receive from third-party scammers and the unrealistic promises these scammers may make to settle their debt. Merchants should be aware that debt settlement companies often charge significant fees to settle debts that merchants could likely handle themselves.
“Businesses and their customers are usually better off in the long run if they communicate and are transparent with their financial records,” said Zakharyayev. “Once the debt settlement companies get involved, the situation gets more complicated and ironically less likely to settle.”
10 Commandments of ACH Processing For Brokers
May 18, 2023deBanked recently spoke with Zalman Notik, the Operations Manager of MCA Track & GoACH. Notik offered up so much advice about ACH processing that it’s been codified into a helpful list! Below are his 10 Commandments of ACH Processing.
1. Always disclose your fee. Merchants are generally okay with paying something they agreed to pay if it is disclosed.
2. Make sure that everything agreed to is in writing and plainly stated. e.g. “We’re going to debit your account for $1,000 when we get you approved for a loan.” There’s a difference between the short, long way and the long, short way. To avoid lengthy disputes, negative Google reviews, and claims of undisclosed fees, opt for the straightforward method rather than the convoluted one.
3. Remind the merchant (in writing and by phone) that you will be debiting their account on X date. As a courtesy reminder it’s probably a good idea to give that merchant a phone call saying, “Hi, John, congratulations, I got you the $100,000, we’re so excited that it worked out well and I’d like to remind you that for our agreement we’re going to debit your account tomorrow.” This can avoid a broker’s payment getting returned if in fact that merchant planned to transfer all their funds elsewhere.
4. Any change to the amount that was agreed to should come with new signed paperwork. If a broker has a piece of paper stating that they’re allowed to debit somebody’s account $10,000 and then debit them $4,000, $5,000, or $8,000, that merchant could dispute it, and they will win because they never agreed in writing to $8,000, they agreed to 10.
5. Collect a copy of the merchant’s ID and a voided check with the business name on it. Be sure that everything matches.
6. Confirm with the merchant that they own the account – Not a spouse, cousin, or friend etc. When checking state records and the business is owned by a spouse, that spouse should be signing the agreement. For example, if a couple owns Joey’s pizzeria and one of them signs the paperwork there could be a possibility that broker will receive a dispute two months later. Turns out that the other spouse is the legal signer on the bank account and now that broker is out of money. A good way to verify is through IDs or a voided check with the business name on it.
7. Communicate with your ACH provider – e.g., “The merchant said the payment will not clear etc.” No one likes surprises. Communication with the ACH provider makes them feel comfortable about working with that broker again in the future.
8. Store paperwork in a secure location so that if there is a dispute you can provide everything to the ACH processor in a timely fashion. NACHA Operating Rules & Guidelines are enforced by the government for every ACH payment. If a broker debits an account, and that merchant disputes the transaction over a period, that broker will need to provide paperwork to prove those disputes. Keep those files in a Dropbox or Google Drive account or somewhere safe and accessible.
9. Keep funds in your bank account to cover fees and returns. Having $0 in your account is a bad fit so be disciplined in keeping money in one’s account.
10. Don’t be an A*$%#%$ – if you treat your merchants well and communicate with them, you won’t find yourself fending off disputes etc. Despite what someone may sign, if the merchant feels they have been mistreated throughout the process it’s not going to stick, potentially leaving that broker with problems.
It’s Not Just You, Small Business Lending Fraud Really is On The Rise
May 3, 2023
LexisNexis Risk Solutions recently conducted a small business lending fraud study that observed a significant increase over the last two years. According to the study, lending fraud grew by 14.5% since 2021. Fintech and digital lenders experienced the greatest increase in fraud at 16.5%. While fraud against smaller banks, large banks, and credit unions remains high, fintech and digital lenders suffered the most as a percentage of revenue at 7%
Remote channels, which comprise mostly of online and mobile, continue to be the primary driving force of fraud-related losses. Sixty-four percent of lenders have reported altering their approach to remote channel fraud detection and mitigation.
The increase in fraud is just another challenge that the industry must find a solution for. And while the expectation for fraud to rise persists, plans to boost investments in fraud prevention are also set to increase. Expanding staffing on fraud teams, special fraud prevention initiatives, and increasing spend on vendor solutions are three options SMBs can use to address it, according to the study.
Speaking to the Masses
May 2, 2023
“I think public speaking translates into how much you can sell, right?” said Dylan Brodeur, Blockchain & Digital Assets Analyst at Marcum LLP. “And your work is how much you can back it up. Those two things together are a good recipe for any business going forward and lasting a long time.”
An oft-overlooked skill in the field of finance is public speaking. Some may wonder… ‘public speaking? What exactly does that have to do with the alternative finance industry?’ But it is just as effective as closing a deal. Whether it’s participating in a panel, communicating with clients daily, or simply networking with other professionals, capturing the audience’s attention is crucial. So, what’s the strategy?
Brodeur preps for different circumstances. Sometimes the opportunity is short and one has to work with what they’ve got. In one example of prep, he said he asked himself, “‘Okay, if I had to say one line, let’s say my whole thing was 10 seconds, what do I want people to know in 10 seconds?’”
In preparation for Broker Fair 2023, Brodeur has been working on an approach for the Transacting Deals in 2030 panel. He mentioned considering his audience, what they know, and meeting them where they are, as opposed to speaking over them. In doing so, he hopes what he says does not get lost in translation. Knowing the audience and the overall message he’s trying to convey will bridge that gap, he said.
“You introduce yourself, you introduce your product or service, and then you want to say how can that benefit the audience that you’re pertaining to,” said Juan Caban, Managing Partner at Financial Lynx. “So, if you stick to those three things, you should come up with a nice engaging presentation.”
This step-by-step process was not second nature to Caban when he attended his first networking event a ways back, which he had no clue he would be speaking at. In a “BNI-like” networking group of about 40 people, he realized, “I have to perfect a 30-second elevator pitch about who I am and what I do.” Now, Caban’s game plan goes as follows: putting himself in the audience’s shoes, figuring out what would engage them, writing it down, and then reciting it aloud.
“I’m still not naturally good at speaking,” said Marci Slagle, President at Bank Financial Equipment Finance. “I’m very good at what I know, but I’m not comfortable when I’m up in front of 100 people. I’m very comfortable when I’m in a small group of 5 to 10 people. So it’s something that every time that I do [much larger groups] I overcome my reticence to public speaking.”
Being knowledgeable and prepared on the topic one is discussing makes it much easier than trying to “fly by the seat of your pants,” Slagle explains. Preparation for her involves being well-versed in the questions being asked and the subject matter being discussed. Slagle also advises bringing someone else onto a panel to delegate areas of weakness in expertise that the person might not have.
According to Caban there’s a popular saying, “If you don’t plan then you’re planning to fail.” Practice makes perfect especially in an industry of perfectionists. Fortunately, there are numerous approaches to choose from, so it’s important to experiment and find the one that works best.
“…Plan, prepare, memorize, recite; even if you just memorize a paragraph, and just recite the paragraph verbatim in your first few just to get those out,” said Caban. “…the more you do it, the more you’re going to get comfortable.”
“I would say attend the events,” said Slagle. “Make sure you say hi to 10 or 15 new people at every event and volunteer for the panels because that’s an easy way to kind of slowly put you into a public speaking position where you can just talk to your strengths. And you have other people to talk to, to fill in where you don’t have those strengths.”
Are You Prepared For a Recession?
April 26, 2023
“Different industries thrive through different times and circumstances where others may not weather them as well,” said Kevin Duffy, SVP of Sales & Business Development at Channel Partners Capital.
The new interest rate environment and slowing economy could be viewed as a specific circumstance and some experts say we’re on pace to experience a recession. But that might not be all bad, according to some industry veterans. Duffy’s colleague at Channel, Chris Cainion, VP of Sales and Business Development, told deBanked that if things slow up a bit, it could be a opportunity to “work on efficiences within your business.” For those in the funding industry specfically, the Channel colleagues said that it’s a time to leverage your strengths, monitor your portfolio, communicate with your customers, be opportunistic, and manage your liquidity.
“Cash is king as the credit crunch is increasing,” said Eleni Delimpaltadaki Janis, Managing Partner & Chief Investment Officer at Equivico. “Focus on looking at your expenses very carefully, looking at where can we create efficiencies in your balance sheet and reserving cash for the future.”
Recessions tend to separate the really good companies from poor ones, said the folks at Channel, who emphasized that they are among the ones prepared for change or a slowdown.
“It’s important for us to be able to first hone in on a type of industries that are good for this type of climate,” said Duffy. “And then the ones that aren’t, we got to be a little bit more careful. It also gives us a chance to work on other things that make us flow, our app-to-funding or funding-to-conversions and things of that nature that helps us be more competitive and more competent as we progress and starting to pick up business again.”
For Janis, if an eventual recession becomes a crisis, she said to never let a crisis go to waste. “In other words, crisis comes with opportunity in the industry, whether you are a FinTech high growth startup or small business, the reality is that a crisis will end up eliminating some of your competitors, and will bring a spotlight on weaknesses that your company or others may have, and an opportunity for those who are solving real problems and have quality products to stand up and gain market share,” Janis said.
Too Many Cash Flow Management Tools? Business Blueprint Looks to Address Inefficiencies
April 24, 2023
“One of the bigger things [small business owners] realize is, ‘Wow I spent so much time on the financial, the back office, and not what I love, not what initially drew me to starting a business,’” said Brett Sussman, VP of Marketing & Sales for Business Blueprint and Banking at American Express.
American Express recently conducted a survey with 1,100 small business owners that found that more than three quarters were looking to consolidate their cash flow management tools. That’s because they are often forced to rely on multiple tools to manage and project their cash flow, which uses up valuable time and impacts their ability to just focus on their business.
“What’s happening is in today’s uncertain economic climate small business owners are seeking this visibility and there used to be an expression that ‘cash is king,’ I now think it’s moved to ‘cash flow is king,’” said Sussman.
The survey participants included business owners with anywhere from fewer than 10 employees to 500 employees, spanning various industries. The survey revealed that 60% of SMBs use between two to three cash flow management products currently, with 62% spending 5 hours a week on various platforms and 18% spending even more time. It also showed that consolidating cash flow management products onto one platform would help build confidence among business owners and reduce the time they spend on these tasks.
The cost of tools themselves is also a concern. The data revealed that 36% want more affordable pricing.
“Price is certainly a consideration here and there are out there free cash flow management tools, and that’s something that we’re currently offering with Business Blueprint from American Express,” Sussman said.
Unsurprisingly, American Express is addressing their own findings through Business Blueprint. Among the key benefits of their cash flow management tool is ease-of-use, interoperability, and that it’s free.
Are Canadians Terrible at Self Promotion?
April 17, 2023Canadian-based company, Nuvei, just released a set of commercials featuring Canadian-American actor Ryan Reynolds as their new investor. The series jokes that American tech companies get all the attention because “Canadians aren’t good at self-promotion.”
Nuvei is a technology company that offers payment solutions to businesses to accelerate their revenue growth. Products include payments, payouts, platform integrations, and Banking-as-a-Service. Using their tools, businesses can connect with their customers in more than 200 markets, 47 locations, and 600 alternative payment methods.
Reynolds said that when he invested in Nuvei he used Canadian dollars, which is a real thing.
Take a look!
What’s Your Equipment Worth? They’ll Tell You
April 14, 2023
Sandhills Global, a publishing and technology conglomerate, has served as a central marketplace for selling heavy equipment since 1978. Often considered the auto trader of the industry, it primarily focuses on the sale of used machinery in the transportation, construction, and agriculture sectors.
“Nearly every dealer in the country, be it a Caterpillar, Volvo, Peterbilt, or John Deere dealer, works with us because we’re the hub where they go to move their US machinery,” said Mitch Helman, Sales Manager at AuctionTime.
AuctionTime is one of many used-equipment marketplaces owned by Sandhills Global. Other popular Sandhills brands like AuctionTime include Machinery Trader, Tractor House, and Truck Paper.
“Virtually every wholesale buyer and dealer is our customer, allowing us to showcase their equipment to a wide range of potential buyers, including the average Joe or end user, who are typically found on Machinery Trader and Truck Paper. These buyers are the ones we want to reach, as they’ll often pay the most for the equipment,” explained Helman.
Sandhills strives to educate sellers on setting realistic prices for their equipment, helping them understand the retail value versus the auction value. Their value insight portal tool provides information on the specifics of the equipment, depending on its features and location, as location can greatly influence its worth.
“First and foremost, customers come to us to determine the market value and worth of their equipment. If they have a returned asset, we’re then able to connect them with different buyer bases, depending on the asset, to help them get the most money back in their pocket,” said Helman.
And those customers, it turns out, very often are drawn from Sandhills’ print publications.
“…It’s interesting because you hear print media is dead, there’s no need for print, all these newspapers are going away, but in our industry print has turned into like a physical search engine and it ultimately drives more traffic to the internet for people to look at more pictures, videos, specs and stuff like that,” said Helman. “And so, it’s still very relevant and vibrant in our spaces as of today.”
These publications can often be found at truck stops, tractor houses, and local convenience stores. Once a reader goes to a site like AuctionTime, the craigslist-style homepage (a tab says a new look is coming soon) will guide users to various live auctions or fixed-priced listings with photographs. A 2013 Hamm 3307 smooth drum roller located in Olney, Illinois, for example, is currently up for sale for $56,900. The listing has it all, including an integration to get shipping quotes and a button to apply for financing.
Ultimately, Helman explained that in a way the market depends on them to compile all this information to establish which way the market is going and what’s happening. “They love it,” he said. “Absolutely love it.”
