There have been dramatic changes recently in the Reverse Factoring or Future discount of credit card receivable business.(MCA=Merchant Cash Advance). As recently as less than 2 years ago this was a little know product with just a few players. As in any business ventures success breeds imitators some who are professional with new angles but also many that either are unknowledgeable of the industry or worse opportunistic and not legitimate players who are looking for the short term killing. The good players are concerned and are in the process of forming an organization to maintain ethical standards and best practices.
Unfortunately the Media in it's Nouveau journalism mode has distorted the facts of our product. There is no question that this is a needed and helpful product for small business when used correctly. It will be around for many years to come along with other relatively high cost products such as leasing. That it is relatively high cost there is no question but that is necessary considering the costs and risks involved. It is fee based with the mark up open faced for all to see as there are no hidden fees. Sterling funding and other legitimate companies in the field take pains to not have a merchant who would be hurt by using this system use it. We want the merchant to use the funds to improve their business and not use it for a stop gap solution and dig their business into deeper trouble. There are no costs or obligations for a merchant to apply for a MCA. We can analyze and do a credit check at no cost to the merchant and then they can decide if it is right for them.
Another recent development has be the advent of Auto dialing and large phone room shops. To some degree this is educating the merchant to MCA but also has the negative effect of being highly annoying. Some merchants are receiving repeat calls every week. Also some companies and sales people are using overly aggressive and smarmy tactics to induce a merchant to become their customer. A number of companies are facing problems with some already out of business because of their lack of understanding of the fundamentals of the business. Some are offering very high unsustainable commissions in the hopes of capturing the market, while others have poor underwriting guidelines or very inefficient back room or support systems for their sales force and customers. Some reps are churning deals offering very marginal ones to many funding companies in the hopes that one will take it. Others accept contracts that are of obvious poor quality in the hopes of making a sale. None of these practices help our industry.
At Sterling Funding we take a very professional an innovative approach. Our IT and software is proprietary giving us the speed, flexibility and information to our sales team and customers as needed. Sterling Funding works closely with our sister company; Sterling Payment Technologies which does most of our processing and has exclusive products and methods to offer. Sterling Funding is also unique in our choice of sales agents. Besides high ethical standards they must be in a good financial position so that they are not tempted to do marginal deals. They are trained to say no to a merchant that will not be helped. We feel that our office staff and back up is the best in the business. If we have complete and proper information Sterling moves with lightning speed. Also contrary to our competition our underwriting guidelines have not changed. Sterling also has the advantage of having underwriters who have extensively sold the product which is unique in our industry.
To summarize this is a very good and needed product. If those in the media would talk to the merchants who have used MCA instead of trying to sensationalize the negative they would find that with just a few exceptions that the merchants do love the product. Because of the flexibility where they can stop after the pay off for a few months the "Renewal" rate is extraordinarily high in the industry
