Monday, November 19, 2007
Merchant Cash Advance Companies Tightening Up
I keep hearing more and more people talking about how merchant cash advance providers are tightening up their credit criteria and eliminating certain industries that they will no longer provide working capital to. I predicted this would happen months ago, it's the same old story, you can't stay in business funding bad deals. My next prediction, the sales commissions being paid out currently will go down. As many cash advance companies mature and review their financials / profitability they will see they can not turn a profit by funding this type of merchant and paying out the level of commissions that they have been. I've already seen in the marketplace several merchant cash advance companies telling agents/ISO/resellers that they no longer want their business and/or lowering their commissions.
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2 comments:
Consistency... Those who made this industry their core competency, are not trying to make a quick buck but instead are trying to build a reputable long lasting industry; they survive! They may lose business one day to the new comers but they win it back the next day simply because they know what they're doing and they have their identities figured out. The company that wants to be everything to everybody fails...
Consistency... Amerimerchant, AdvanceMe, ARF, American micro loan and a few others have been here for a long time in some cases they started the industry and all the new comers are making stupid mistakes trying to grab market share from them. The most surprising to me is earring how some new company in GA backed by a huge financial corporation is making some of these very stupid mistakes after "buying" some experienced people from the space, and already they had to fire a whole bunch of sales people. High commissions and low prices is a recipe for failure . . . To all the ISOs out there: Consistency is priceless, it's the only guaranty that your residual checks will be here tomorrow!
All the companies that have been here for a while are still going strong and are keeping their criteria the same. They are not tightening, they are just keeping their prices, their commissions and their approval rates the same...
ARF is not a leader in the industry. They were "layering" deals with cash advances. Not a wise business decision.
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