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Leo, thank you so much for having us here in Miami.

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Thank you for having me. You are a person

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that not only is essential to the MCA world

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and the alternative finance world,

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but we are in your hometown.

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We are on the rooftop, uh, overlooking Miami Beach.

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So who are you?

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Introduce yourself and the company that you're with

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and what it is that you do,

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but also give people the tour of South Florida. Well,

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First and foremost, everyone, welcome to Miami on Miami.

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Um, I'm Leo Vargas.

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I am, uh, the CEO of Triton Recovery Group.

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And what do you guys do?

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We're a collection agency.

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We're a commercial collection agency.

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We're licensed and bonded here in the state of Florida

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to be able to recover in all 50 states.

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So kind of talk to me about

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the products that you guys offer.

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So right now, we, we have two, two products that we offer.

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We do commercial collections. Okay.

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So that is our main product.

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Uh, right now we serve as, uh, the MCA space,

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which is our bread and butter.

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And we have, uh, just, you know, our commercial

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debt recovery that we do as well.

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So those are the two products, but our main product

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is the MCA space.

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So let's talk about the MCA space and collections.

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Um, let's talk about the process itself.

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When you get into collections, how exactly, uh,

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should underwriting be done?

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So either you could avoid go going into collections

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or just overall the, the right way to do underwriting.

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Sure. I, I, I think a lot of it has to do

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with the underwriting process, right?

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The underwriting process to me is the most important piece

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of, uh, of getting a deal done in this industry.

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What do I mean by that? Certain questions that I think need

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to be answered on behalf of the

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merchants when they're taking out these advances

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that I think is prudent

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and important to your decision making as a funder.

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Can you, could you elaborate on Sure.

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What specific questions should, like, gimme like two

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or three examples of what, so

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I'll give you an example. Uh,

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what we see a lot of is

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what are you gonna use the money for?

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It's very important. Um, a lot of, a lot

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of the funding calls that we hear, um, on the backend,

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once the deal's placed with us,

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they don't ask that question.

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No one's really asking, what do you need the money for?

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What is it that you're actually going to use the funds for?

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And I think it's important, um, that the funders understand

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that because at the end of the day,

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you're not underwriting a deal based off of their deposits.

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You're underwriting a deal based on future receivables.

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So understanding what they're gonna use the money for

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and what exactly you're purchasing,

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I think it's the most important piece of, of,

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of underwriting and getting and, and, and approving a deal

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and getting a deal done, getting a deal out the door.

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So understanding where those receivables are coming from

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and mapping that out.

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I think it's the most important piece

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of your underwriting process.

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We have challenges with, uh, just understanding

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where they came up with the offers, right?

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This guy qualified for 50,000.

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Is that truly 25% of their receivables

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or are they overextended?

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Once they're in collections?

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You kind of are able to see where the, uh,

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downfalls were on the underwriting side.

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And, uh, what we see is just mostly understanding

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what it is that they're

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purchasing. And I think that's important.

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Leo, talk to me about what mistakes, uh,

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could avoid getting into collections.

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Like what mistakes, uh, when, when a broker is starting

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to fund a deal that happen often that you see.

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So let's talk a little bit about that

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Over promising.

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I think that's, uh, one, one of the mistakes that I think,

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uh, some of the brokers do on our side.

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Now, we don't deal with brokers.

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We deal with funders directly.

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And, uh, it's very rare that I will have a broker assist me

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to get to, to get a merchant to pay.

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Um, I know on the funder side, meaning first level, uh,

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it's a lot more in the sense of the, the brokers are afraid

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to lose their commissions within that first 30, 30

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to 45 day period clawback period is what they call it.

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So, uh, you know, over promising

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and under delivering, I think is the, the,

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the biggest no-no when it comes down

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to truly setting the expectations for these merchants

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to take the merchant cash advance.

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So let's talk about funders

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and how your clients could be proactive in order to like,

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not have to be in a position

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where they're coming to you for business.

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We've seen it all, honestly, I think, uh,

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and I'll mention it again and I'll double down.

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I think the main mistake is not understanding what it is

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that they're purchasing, uh, what receivables, right?

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And I, I couldn't tell you

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how many times we ask a funder when they place a deal

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with us, can you forward us a copy

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of the receivables that you purchased?

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Right? We don't have that. You had good deposits.

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That's not the way to underwrite a deal, um, in my opinion,

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not in the sense of putting yourself in the best position

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to be able to recover effectively,

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and also for the merchants to be able

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to afford the advances.

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So, Leo, talk to me.

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How could a funder be proactive in making sure they

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have all their bases covered?

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A simple Google search man, honestly, uh,

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be being proactive in the sense where, I couldn't tell you

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how many times my collectors are or,

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or even, um, on the legal side, right?

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We run a Google search

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and you clearly could see the merchants in trouble.

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You clearly can see

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that they have court cases against them, right?

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Uh, that there's judgements that there's tax liens.

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And these are the small things that I think, uh,

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are detrimental to your portfolio as a funder.

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The basic steps, Google the guy's name, Google the company.

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Uh, it goes a long way, honestly.

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And then talk to me about the, the due diligence.

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Besides Googling, what other steps can a funder do

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to really make sure they know

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what they're getting themselves into?

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So what we do here at Triton is very interesting.

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We will go into the county courts

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where the merchants reside.

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Um, a lot of it people are just banking on the New York

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courts or the Florida courts.

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And you know, if you have a BC funder

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that filed a case against you,

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now you're not eligible for funding.

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Truth be told, a lot of the funders

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are not actually going

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after, uh, the, like you said, the due diligence

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to figure out whether

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or not this person's worthy of your money.

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A lot of it has to do with background too.

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I've seen so many, well, you know,

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I've had funders come back

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and say, Hey, look, look, it's a, you know, it's a,

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it's a traffic violation.

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It's a domestic violence he owe,

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you know, it's child support.

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Those are very important pieces.

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I mean, that is the character

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of the business owner that you're funding.

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And I think those, as simple as it sounds,

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those are very important pieces of, of, of qualifying a deal

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and, and actually funding a deal.

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So let's talk about breach of contract. Sure.

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Um, so let's talk about that process itself.

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Like what could one do to kind

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of avoid getting into a breach of

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Contract? Honestly,

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do the reconciliation

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that your contract calls for.

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That is the simple way.

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A lot of the funders, they have a reconciliation clause.

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All of them do. Um, one of the things

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that I hear a lot on the merchant side is we've reached out

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to them at that same email they have on the contract,

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and no one's ever gotten back to me.

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Well, you're not monitoring it.

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And I think that is the most important

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piece of your business.

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To me, retention is absolutely important.

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Um, and just being able to,

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and I encourage a lot of the funders,

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get a retentions department, have someone reach out

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to the merchant couple days

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after funding them just to get an idea as to

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how things are going and stay in touch with them.

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Right? It can't always hit a home run. All right.

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There are going to be cases where you're gonna need

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to reduce your payments.

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You're going to need to work with the merchants

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to prevent the defaults.

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And I think a lot of the defaults

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that we get are preventable.

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Where we are, where we stand today, we've had a suc,

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we have a lot of success in being able to set a lot

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of these merchants up on payments.

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Why? Because we take a rehabilitation approach, right?

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And merchants saying, I wish you guys would've

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been involved from the beginning.

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This was so easy to deal with you.

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But in reality, we understand we're collections.

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We get it, we get the, the pressure points

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that the merchant cash advance money has on your business.

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So, you know, really taking that rehabilitation approach

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and helping the merchants out from the beginning,

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I think will go a long way from some of these funders

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and prevent them from placing deals with Triton,

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which at the end of the day, they have

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to pay contingency fee, right?

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So, and I couldn't tell you how many funders will come back

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and say, that is very expensive.

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How do you charge this? It's, you know, it's an art

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what we do, you have to be aggressive,

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but also at the same time, there's stages

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to that aggression, right?

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And, and certainly not at that first stage.

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I think you're better off,

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you get more bees with honey, right?

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You're better off negotiating

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with the merchant working things out

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and following your reconciliation provision, then just

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de it a default and sending it over to Triton. So

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In your experience, can brokers be useful

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during a resolution with

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A plan? Yes. On

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a first party basis, absolutely. They can be.

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Once we've deemed a default, unfortunately,

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that is not something that we, uh,

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find very useful in this industry.

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We have a clawback period.

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A clawback period typically is about 30 to 45 days.

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What we've experienced is between that time period,

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the brokers are a lot more proactive than they would be once

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that 30 day to 45 day mark, you know, is over.

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Um, I think that the brokers absolutely have that

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first point of contact with the merchants.

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Um, they are the ones

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that have built a report in the relationship,

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and I think they could do a lot more than just within

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that 30 to 45 day mark in helping the

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MCA funders sort of not only get in touch

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with the merchants, but also helping them

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with the rehabilitation process.

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Uh, one of the things that I've seen, uh, that

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that's become an issue in our industry is some of these,

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I call them ambulance chasers, but these attorneys that go

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after the MCA space and,

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and sort of poach some of these merchants to come along

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and retain their services,

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they're getting these leads from some of these brokers,

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which is another source of income for them, I'm sure.

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But it is detrimental to the industry

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because you have an opportunity, you have that communication

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with the merchants where on the other side,

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they're avoiding our clients.

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They're avoiding the calls, they're stopping payments.

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And I couldn't tell you how many merchants said,

259
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I was just following the broker's lead on this.

260
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He told me to stop payment.

261
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He told me he was gonna get me an attorney

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that was gonna do it pro bono in the state of New York.

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Newsflash, we have a lawsuit now I have a judgment,

264
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now I've garnished your bank account.

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What do we do now? So the answer is, I think, uh,

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as brokers, they could do so much more in the industry to,

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to protect the house

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and protect the funders

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that truly have the best interests at heart for you.

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Could you give me an example of like, you know,

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just like bullet points of what brokers could do

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to protect the house?

273
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Absolutely. I think that a lot

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of it is stay in communication, stay in contact

275
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with your merchant, stop funding

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them multiple times.

277
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I think that's very important.

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I, I couldn't tell you how many times I've seen a merchant

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say I was funded simultaneously four times the same day.

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You know, so the pointers are, I think stay in contact

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with not only the merchants,

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but with the MCA funders, not just at your 30

283
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to 45 day clawback period.

284
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Stay on the account, stay on it, have some,

285
00:12:07.865 --> 00:12:09.045
I'm sorry, have some integrity.

286
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Build a relationship and build a relationship.

287
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And I think that goes a long way.

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Not only for you as a broker, um,

289
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but also for funders.

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They're gonna wanna work with you,

291
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they're gonna wanna do deals with you.

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And, um, I think it's very important.

293
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And those are the bullet points for me.

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It's just stay the course

295
00:12:27.985 --> 00:12:30.125
and stay in contact with the merchants.

296
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Stay in contact with the funders.

297
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Just don't see it as a commission. See it as a relationship.

298
00:12:34.985 --> 00:12:36.445
What's been the most common thing?

299
00:12:36.745 --> 00:12:39.245
Uh, funders, brokers tell you about

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00:12:39.305 --> 00:12:41.045
how they ended up breaching a contract?

301
00:12:41.945 --> 00:12:44.565
The most common thing is, uh, no communication,

302
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zero communication with the merchants.

303
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Some of it has to do with the debt.

304
00:12:49.765 --> 00:12:51.765
Settlement companies who are,

305
00:12:51.865 --> 00:12:54.605
are really a true thorn on our side in the industry.

306
00:12:55.105 --> 00:12:56.845
Uh, they don't have the best interests

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at heart for our merchants.

308
00:12:58.105 --> 00:12:59.845
Um, I truly believe the funders do.

309
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I truly believe they try their hardest.

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In fact, when I get a deal,

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our average deal when it goes into default, right?

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Compared to the last payment,

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it's almost two months, Johnny.

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So that means that the funder has held onto the deal even

315
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after they weren't getting paid for two months in attempts

316
00:13:18.285 --> 00:13:20.925
to try to resolve it with the merchant prior to it going

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00:13:20.985 --> 00:13:22.165
to collections.

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I think that's the most common thing, is mostly

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contact communication.

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And then you have the predators of the world, which I,

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I truly believe is, is some, some

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00:13:31.805 --> 00:13:33.325
of these debt settlement agencies

323
00:13:33.635 --> 00:13:35.605
that are promising the world and under deliver.

324
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Let's talk about defaults

325
00:13:37.505 --> 00:13:39.085
and have they been on the rise lately?

326
00:13:39.515 --> 00:13:41.565
Yeah, defaults are on the rise, absolutely.

327
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We are getting anywhere between 40 to 50 cases a day.

328
00:13:45.585 --> 00:13:48.405
Um, and, uh, these are multiple funders.

329
00:13:48.985 --> 00:13:53.005
And what the uptick is, it's truth be told, is it's a true

330
00:13:53.965 --> 00:13:56.045
testament of where we are in the economy today.

331
00:13:56.465 --> 00:13:58.205
And I think the rehabilitation approach

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and really treating these people like people not debtors,

333
00:14:02.065 --> 00:14:05.965
is, is really what, uh, has made us successful.

334
00:14:06.455 --> 00:14:10.085
Right? I'm not saying be soft, okay? That's not the answer.

335
00:14:10.545 --> 00:14:11.845
The answer is stay stern,

336
00:14:12.185 --> 00:14:14.525
but know that there is another human on the other side

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00:14:14.525 --> 00:14:16.125
of the phone who is truly going

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00:14:16.125 --> 00:14:17.765
through a financial hardship.

339
00:14:18.265 --> 00:14:20.405
And they want you to hear them out.

340
00:14:20.795 --> 00:14:22.325
They want you to work with them.

341
00:14:22.825 --> 00:14:25.005
And I think a lot of the funders can do that on their own.

342
00:14:25.195 --> 00:14:26.565
They don't need Triton recovery.

343
00:14:26.745 --> 00:14:28.565
Now, I, I will lose business that way,

344
00:14:29.065 --> 00:14:32.645
but, uh, the industry will be a better place tomorrow.

345
00:14:32.905 --> 00:14:35.925
And I, I truly believe that this industry has so much room

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00:14:35.925 --> 00:14:38.205
for growth, um, and expansion.

347
00:14:38.705 --> 00:14:42.205
Um, so, you know, really truth be told, work

348
00:14:42.205 --> 00:14:44.965
with the merchants, work with your, your, your clients, um,

349
00:14:45.065 --> 00:14:46.445
and they'll be a lot more receptive.

350
00:14:46.505 --> 00:14:47.685
All they want is to be heard.

351
00:14:48.185 --> 00:14:51.205
So for Triton specifically, what exactly is your mission

352
00:14:51.665 --> 00:14:52.665
At the end of the day? Truth

353
00:14:52.665 --> 00:14:55.245
be told, uh, our purpose here

354
00:14:55.905 --> 00:14:57.565
is a very important one.

355
00:14:57.945 --> 00:15:01.565
Um, I think that there is no MCA without collections.

356
00:15:02.505 --> 00:15:04.445
You are underwriting a deal to recover it.

357
00:15:05.185 --> 00:15:07.805
And the reason you're getting bank statements,

358
00:15:08.065 --> 00:15:10.245
the reason you're getting UCC liens,

359
00:15:10.585 --> 00:15:12.885
the reason you're doing your due diligence is

360
00:15:12.885 --> 00:15:16.285
to one day in an event, in a case of a default,

361
00:15:16.625 --> 00:15:19.045
you have the information to be able to

362
00:15:19.625 --> 00:15:21.725
pursue the merchants and go after them.

363
00:15:22.225 --> 00:15:25.645
Um, I think that Triton is a necessary,

364
00:15:26.355 --> 00:15:27.565
call it necessary evil.

365
00:15:27.905 --> 00:15:29.365
That's, I was just thinking of it.

366
00:15:29.515 --> 00:15:31.125
It's a necessary evil at the end of the day

367
00:15:31.125 --> 00:15:34.085
because it sure is you need, we people need you,

368
00:15:35.105 --> 00:15:37.845
but it's also, you're the person everyone wants to avoid.

369
00:15:38.485 --> 00:15:41.805
Everyone wants to avoid, uh, from the funders to the,

370
00:15:41.865 --> 00:15:42.925
to, to the merchants.

371
00:15:43.265 --> 00:15:44.845
But it's, it's, it's necessary

372
00:15:44.845 --> 00:15:48.205
because again, we open the lines of communication, right?

373
00:15:48.545 --> 00:15:50.765
So it's all about how you go about it, right?

374
00:15:51.225 --> 00:15:54.245
And here at Trite, we've trained, um, our employees

375
00:15:54.425 --> 00:15:56.525
to really take a rehabilitation approach.

376
00:15:57.035 --> 00:16:00.165
What can we do to help you get out of this mess you in?

377
00:16:00.585 --> 00:16:02.605
And I think a lot of, a lot of the merchants are,

378
00:16:02.625 --> 00:16:05.885
are very open to having conversations with us.

379
00:16:06.325 --> 00:16:09.845
I mean, our contact ratio is almost 80%,

380
00:16:09.935 --> 00:16:11.445
which is almost unheard of.

381
00:16:11.465 --> 00:16:13.605
Now, I'm not saying we recover 80% of the debt.

382
00:16:13.805 --> 00:16:17.045
I wish I did. Uh, but our contact ratio is high.

383
00:16:17.345 --> 00:16:19.405
So what does that tell me? There's decent underwriting,

384
00:16:19.405 --> 00:16:21.405
you're getting good phone numbers and addresses,

385
00:16:21.825 --> 00:16:24.645
but you're not looking at the true picture.

386
00:16:24.825 --> 00:16:26.805
The true picture is can this guy afford it?

387
00:16:27.065 --> 00:16:28.445
And is he over leveraged?

388
00:16:29.265 --> 00:16:32.965
So Leo, so my big takeaway from our conversation is

389
00:16:33.245 --> 00:16:35.805
ultimately go the extra mile, do the extra work,

390
00:16:35.905 --> 00:16:37.285
do the due diligence upfront.

391
00:16:37.315 --> 00:16:39.685
Correct. So when you're in a position where you have

392
00:16:39.685 --> 00:16:42.205
to call, when they, when people are calling your office,

393
00:16:42.755 --> 00:16:44.285
they know and they have the facts

394
00:16:44.305 --> 00:16:45.725
and they have the receipts, you're like, Hey,

395
00:16:46.025 --> 00:16:47.245
here's why this happened.

396
00:16:47.295 --> 00:16:50.845
Right? Versus surprises being brought up

397
00:16:51.075 --> 00:16:52.765
when you're having conversations. Some of

398
00:16:52.765 --> 00:16:53.765
It's not even surprises.

399
00:16:53.805 --> 00:16:55.325
I think some of the funders know what they're doing.

400
00:16:55.825 --> 00:16:59.645
Uh, it's just more so of do do a little more. Yeah.

401
00:16:59.865 --> 00:17:02.125
And, uh, you're right. It's a great takeaway.

402
00:17:02.325 --> 00:17:03.325
I I think it's important

403
00:17:03.325 --> 00:17:06.405
that the funders do everything they can on the front end

404
00:17:06.945 --> 00:17:09.085
to be able to salvage the relationship

405
00:17:09.625 --> 00:17:11.805
and put these merchants in a better position.

406
00:17:12.235 --> 00:17:16.325
Yeah, it's great. You got a great deal. The broker sold it.

407
00:17:17.305 --> 00:17:21.885
Now you're stuck. Yeah. What do you do next? Rehabilitation.

408
00:17:22.865 --> 00:17:24.125
Leo, thank you so much for

409
00:17:24.185 --> 00:17:25.405
all the information you gave us.

410
00:17:25.405 --> 00:17:28.525
Thanks for, 'cause it truly is the essential part

411
00:17:28.525 --> 00:17:30.325
of the MCA industry, what you guys do,

412
00:17:30.325 --> 00:17:33.525
because you guys pretty much make the MCA world go round.

413
00:17:33.675 --> 00:17:37.005
Yeah. Because it's so important to like really understand

414
00:17:37.005 --> 00:17:39.645
what exactly it is that people are getting themselves into,

415
00:17:39.645 --> 00:17:41.205
either, whether, whether they're a broker

416
00:17:41.225 --> 00:17:42.885
or they're a funder wherever they fall.

417
00:17:43.115 --> 00:17:44.605
It's important to know that, you know,

418
00:17:44.605 --> 00:17:46.045
what you guys do is essential.

419
00:17:46.075 --> 00:17:47.445
Well, Johnny, thank you for having us

420
00:17:47.585 --> 00:17:49.365
and uh, again, I'm so glad

421
00:17:49.365 --> 00:17:51.605
that finally we get the recognition we

422
00:17:51.605 --> 00:17:53.125
deserve as collectors.

423
00:17:53.265 --> 00:17:54.645
Oh, thank you, man. Appreciate it.

424
00:17:54.645 --> 00:17:55.925
Thank you for having us, guys. Appreciate it.