Why You Specifically Need An MCA Accountant for Your MCA Business

David Roitblat is the founder and CEO of Better Accounting Solutions, an accounting firm based in New York City, and a leading authority in specialized accounting for merchant cash advance companies.To connect with David or schedule a call about working with Better Accounting Solutions, email david@betteraccountingsolutions.com.

Doing the books for a merchant cash advance (MCA) business isn’t like doing the books for other types of businesses. That’s something that seems pretty intuitive for those of us in the industry to understand, but often I see many business owners still trying to handle finances themselves or hand it off to a general accountant who isn’t well-versed in the MCA world, which leads to unfortunate messes that require some costly cleanup work. The reality is that while any accountant can keep basic, or even complex financial records, managing the finances of an MCA business requires more than just a surface-level understanding.

Take a situation I encountered recently: a business owner decided to use their regular accountant to handle their books, deciding that the cost of an MCA industry-qualified accountant was too much for him at that point in time. The accountant he picked was a competent elderly gentleman who produced the financials regularly and on time, and things appeared to be going smoothly until his investors realized their syndication income had been reported incorrectly. The accountant, unfamiliar with MCA-specific accounting, treated the income like a standard loan repayment and the business owner hadn’t noticed the misreporting when he passed the report on to his financiers. The investors were confused and frustrated with the mistaken report, and felt like they weren’t getting a clear picture of the company’s financial health and cash flow situation. I was actually able to help him clear up the issue, but the whole mess and subsequent (thankfully temporary) mistrust could have been avoided entirely if the accountant was someone who understood the specifics of the MCA business.

Handling the finances of an MCA business isn’t just about tracking the cash coming in and out. There are particular rules around recognizing income, such as how to deal with syndication fees, manage different types of funding, and correctly categorize income like commissions and fees. It’s also critical to understand how to report income for tax purposes versus what’s required for investor reporting. For example, recognizing income too soon or too late can have a big impact on your cash flow, tax obligations, and even how your business is perceived by others.

I’ve seen businesses try to use standard accounting methods and find themselves with financial statements that don’t accurately reflect their operations. In one case, a company overstated its income because it applied a generic accounting approach. This not only increased their tax burden but also strained their cash flow. They needed someone who understood the nuances of the MCA world to correct these issues, adjust the income recognition methods, and align them with industry standards.

Another challenge everyday CPAs struggle with is keeping up with the constant changes in MCA deals – from advances in different repayment stages to syndication agreements with external investors. Without careful tracking, discrepancies can quickly arise, and they’re often not noticed until they’ve become significant problems. Even for businesses using cash basis reporting because their revenue is under $10 million annually, it’s crucial to handle things correctly. Deferring tax liabilities by timing income recognition can be a smart move, but only if done accurately. Otherwise, there’s a risk of audits or having to pay back taxes with penalties. I’ve helped businesses navigate these tricky waters after they ran into trouble because their previous accountant didn’t know when to use cash basis versus accrual basis reporting.

A good MCA accountant knows how to navigate the specifics of your business. They understand what to watch out for, how to manage the unique aspects of the industry, and how to avoid problems that could end up costing you time, money, or reputation. I’ve seen too many businesses suffer preventable setbacks by either doing it themselves or relying on someone who didn’t have the right knowledge. The cost of hiring an accountant who specializes in MCA is minimal compared to the potential financial losses from mishandled books or compliance errors.

At the end of the day, having an accountant who understands the MCA industry isn’t just a nice-to-have; it’s a necessity. The complexities of this business require a specific set of skills, and working with someone who gets that can help you keep your business running smoothly and avoid unnecessary headaches in the future. Make sure you have the right support in place to protect your business and keep things on the right track.

Search Engine Algorithm Changes Impacted NerdWallet’s Small Business Lending Business

“Let’s say, you’re searching for a small business loan. You ideally, I think, want to comparison shop relevant choices, leveraging a brand you trust. And so if you see a government website explaining what a small business loan is, that doesn’t help, neither does a nonprofit website showcasing local grants nor is it helpful to see a regional bank that doesn’t do small business loans, right?”

This hypothetical was posed by NerdWallet CEO Tim Chen during the company’s recent quarterly earnings call. And that’s because a search engine update (which intuitively sounds like Google) actually impacted their SMB loan business in Q2.

“So during Q2, yes, like we said, [there was a] major algorithm update and [it] created meaningful headwinds on our search ads, and to a lesser extent, our traffic,” Chen explained. “So I’d characterize it as saying it’s stabilized and started getting a little better. Generally speaking, we think search is working well when it matches user intent and surfaces the best answers. And by that standard, we and a lot of industry observers felt like things went a bit haywire last quarter. So we think it’s inevitable, some of these kinks get worked out because there are strong commercial incentives for search engines to get it right. They want happy customers who keep coming back so they can sell more search ads.”

NerdWallet is one of the few companies in the business lending space to specifically draw attention to organic search traffic’s impact on its bottom line. NerdWallet, who previously acquired Fundera, has dominated in organic search rankings for top keywords for years. An investigation carried out by AltFinanceDaily in 2018, for example, showed that NerdWallet and Fundera were consistently the top result(s) for basic business loan queries on Google.

But search wasn’t the only thing on their minds:

“SMB loans, particularly in originations, saw an increasing amount of pressure in Q2 as elevated rates and tighter underwriting persisted, combined with some of the organic search traffic challenges,” said NerdWallet CFO Lauren StClair. “So we continue to drive growth in the quarter with our diversified product offerings for small and midsized businesses in areas such as credit cards and banking. We believe we have a substantial runway for growth in both diversifying SMB subcategories as well as scaling SMB loans over the long run, though expect to face a tougher growth profile in the near term as we await a more robust lending environment.”

NerdWallet also recently laid off 100 employees.

Northteq’s Aurora Platform Powers ElmBlue Capital’s Equipment Finance Launch

[MINNEAPOLIS, MN, February 12, 2024] – Northteq, LLC, a leading provider of Salesforce loan origination solutions, is thrilled to support the launch of ElmBlue Capital, an emerging lender in the equipment finance market. Co-founded by industry veterans Greg Bourdon, Paul Reny, and Jake Broom, ElmBlue Capital is leveraging Northteq’s Aurora platform to streamline operations and deliver an automated digital lending experience to its customers and vendors.

“We knew we wanted the power and flexibility of Salesforce, and Northteq’s Aurora platform was the perfect match to quickly operationalize our vision,” said Greg Bourdon, co-founder of ElmBlue Capital. “Aurora allowed us to select the features we need now while laying a solid foundation for our future operations to grow.”

The integration of Aurora is a central component of ElmBlue’s business strategy, providing the scalability and flexibility that is critical to compete in the rapidly evolving equipment finance industry. Aurora’s automation and seamless third-party integrations provide real-time data access for vendors, streamlining processes while enhancing transparency and speed in operations.

“We are placing an emphasis on providing resources and financial tools for our partners that expand beyond the scope of what currently exists in the equipment finance space today,” Paul Reny, co-founder of ElmBlue added. “Our focus on automating our workflows and leveraging technology from the onset will ensure our level of service remains consistently high, regardless of capacity or market conditions.”

ElmBlue’s strong operational foundation not only allows them to compete with industry veterans, but also sets them apart through key differentiators such as:

• Fully Automated: ElmBlue launched with Northteq’s out-of-the-box, fully automated loan origination platform, Aurora. This turnkey solution, designed for deployment in weeks, not months, takes deals to signed documents in minutes, streamlining front-end operations while ensuring compliance with industry standards.
• Agile and Future-ready: Aurora’s agile, open architecture and ability to seamlessly integrate with Salesforce AppExchange partners will enable ElmBlue to rapidly adapt to market and customer needs. This ensures that their business model is scalable and poised for future growth, keeping them at the forefront of industry advancements.
• Improved Vendor and Customer Relations: Aurora’s real-time data access and streamlined processes create an unparalleled user experience, helping ElmBlue build transparency and trust with its vendor partners and borrowers.

“Partnering with Northteq has been instrumental in actualizing our vision for ElmBlue,” Jake Broom, co-founder of ElmBlue noted. “Our strategic emphasis on establishing a scalable and efficient operation from inception has positioned us for sustained success in the long run.”

To learn more about ElmBlue Capital’s financing capabilities or to become a vendor partner, visit elmblue.com.

To learn more about the Aurora system and the automation tools Northteq used to support ElmBlue Capital’s business launch, visit northteq.com.

About Northteq
Northteq, LLC is a Minneapolis, Minnesota-based fintech company that has helped over 175 lenders provide their customers, vendors, and employees with intuitive, thoughtfully designed lending solutions. Aurora, Northteq’s flagship product, is an automated, Salesforce powered loan origination system and partner portal. They also offer turnkey Salesforce apps created through key partnerships with fintech industry leaders including Middesk, PayNet, FICO, Equifax, Experian, D&B, TimeValue, LexisNexis, Nintex, Ocrolus, Plaid, and many more.

Northteq is now primarily owned by Arthur Ventures, a respected Minneapolis-based early growth capital firm known for leading investments in B2B software companies. This partnership positions Northteq for continued growth and innovation. Since 2013, Arthur Ventures has partnered with over 50 companies across the United States and Canada. For more information, please visit northteq.com.

About ElmBlue Capital
ElmBlue Capital is a fintech-focused equipment financing lender. Committed to transparency, integrity, and partnership, ElmBlue Capital aims to build long-term relationships, supporting clients and vendors in the trucking and transportation, manufacturing, food processing, packaging, and construction industries. To learn more, visit: elmblue.com.

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Another Small Business Loan Marketplace is Getting a Massive Venue

What’s the difference between a typical bank having naming rights to a sporting arena and a fintech lender? The fintech lender will attempt to serve as a one-stop-shop for everything. And that’s important because this October the Intuit Dome will open its doors in Inglewood, California and become the hometown arena for the LA Clippers. Intuit has a lot of brands. According to the NBA, Intuit subsidiaries TurboTax, QuickBooks, Credit Karma, and Mailchimp will all feature prominently in the venue experience. That draws attention to QuickBooks Capital, the company’s small business lending division which is presently generating more than $1 billion a year in loans. Intuit’s got a fallback option for businesses that might not be suitable for them directly, an automated marketplace that connects business owners with other lenders. It’s been so successful that Intuit states they’ve originated more than $2 billion in loans through it.

This seamless integration of referrals to other lenders is what makes the marketing campaign via arena naming rights so potent. And they won’t be the first ones to do it. SoFi, for example, whose football stadium is in walking distance to the Intuit Dome, just announced its own small business loan marketplace. SoFi Stadium was home to the Super Bowl in 2022 and will be again in 2027. It will also be home to the Olympics in 2028. Not a bad way to get one’s name out there.