5 Tips for Better MCA Collections

Shaya Gorkin is an experienced attorney and the COO of Monetaria Group, a premier collections agency specializing in merchant cash advance and commercial debt recovery. To connect with Shaya, email shaya@merelcorp.com.

With the benefit of our collective decade of experience working in collections for the merchant cash advance industry, our team at Monetaria Group has come to understand all too well the importance of recovering funds for our clients and all the difficulties associated with that. The MCA sector poses distinct obstacles and challenges for collections; but, by implementing the correct systems and strategies, we’ve found that outstanding payments be recovered, without it having to be a painful and drawn-out experience.

Here are five key strategies for better MCA collections that we have implemented with our clients, that can help you too:

1. Be familiar with the industry you’re being asked to advance.

Often, MCA companies offer small businesses short-term funding in their moments of need. This means that the funders are betting on the business’s ability to take advantage of the opportunity being offered to them and turn the ship around, enabling them to repay the advance without any complications or issues.

To ensure you are giving your company the best chance of getting its money back, it is essential for funders to have an understanding of the industry and the businesses they are working with to be able to evaluate their advance worthiness and anticipate fluctuations in repayment ability.

2. Establish relationships and overcommunicate.

Having strong relationships goes a long way in MCA collections, for both the funders and their clients. Establishing trust and open communication with clients will inevitably lead to a better understanding of their specific needs and challenges. Additionally, it goes without saying that developing positive customer relationships can lead to more successful negotiations and repayment agreements.

3. Be proactive and offer solutions.

Instead of passively waiting for merchants to default, proactively reach out to them to check in and see if it’s time to discuss reconciliation and other solutions. This shows a willingness to work with them and allows for potential issues to be addressed before they become major problems.

4. Utilize the best available technology.

Over the past decade, the merchant cash advance space has seen an explosion in the creation CRMs and softwares to service and assist the MCA businesses. Utilizing these technologies will greatly improve the efficiency and effectiveness of your business and will be a great asset in ensuring you are collecting all that is owed to you. Look for the services that offer the features you need, such as custom reports, client breakdowns, automated payment reminders, online portals for customers to make payments, and data analytics- they are all out there ready to assist you.

5. Have a contingency plan.

Despite your best efforts, some merchants will still default. Having a well-crafted contingency plan in place that doesn’t put all your eggs in one basket will minimize the potential negative impact on your business. This includes doing a very thorough underwriting of the merchant’s business. Additionally, be prepared to explore your options in terms of collecting what is owed to you. This may include selling the debt, restructuring the payment, hiring a qualified third-party debt recovery agency, or legal action.

Having all these in place will more than adequately prepare you for a successful MCA collections experience, and help you avoid all the stress and headaches it can present otherwise.

eCapital ABL North America Division Funds $95 Million in Q4 2022

MIAMI – January 23, 2023 –eCapital Corp. (“eCapital” or “the Company”), a leading finance provider for businesses across North America and the U.K., issued $95M in lines of credit during the fourth quarter of 2022 through its eCapital ABL North America division. With this working capital, the companies – which include CPG products in the home and lawn categories – plan to grow their businesses by expanding product lines, scaling customer reach, and driving operational efficiency.

“Our team continued the momentum through the very end of 2022, by providing unparalleled financial solutions to our clients,” said Brian Cuttic, Chief Executive Officer Asset-based Lending at eCapital. “The dedication of our team is evident in our ability to understand and meet the unique needs of each business we serve, allowing them to achieve their goals with custom financial solutions that support their growth. We are proud to have closed out another successful year working alongside such amazing businesses and look forward to continued growth in the future.”

The businesses funded by eCapital ABL North America in the fourth quarter of 2022 include, but are not limited to:

• A $20M facility for the creators of the popular first-of-its-kind bathroom fragrance and other home fragrance products. The company will use the funding to sustain operations through peak seasons and accelerate the business for the future.
• A $35M facility for a manufacturer and distributor of watering products and accessories. Backed by a prominent private equity sponsor, the company will use the working capital from eCapital to support operations across its multiple brands and manufacturing and distribution facilities.
• A $40M facility for one of the largest candle producers in the U.S. Also backed by a private equity sponsor, it will use the line of credit from eCapital to support continued product innovation and expansion among its multiple brand names and private labels.

eCapital ABL responds quickly to a business’ unique and changing needs, whether trade cycles, seasonality, customer base or other critical factors impacting growth. With international reach and expansive expertise in multiple sectors, eCapital ABL is uniquely positioned to support businesses with customized lines of credit that provide maximum flexibility to meet their goals and achieve long-term, profitable growth.

About eCapital Corp.

eCapital is committed to accelerating access to capital for companies in the United States, Canada, and the U.K. By leveraging a team of over 800 experts and proprietary, industry-leading technology, eCapital is creating the future of business funding. With a full suite of products such as freight factoring, invoice factoring, lines of credit, asset-based lending, payroll funding, and equipment financing, eCapital ensures businesses have the funds they need to do more. Through its Transportation, Staffing, Wellness, Healthcare, Factoring and ABL divisions, eCapital delivers customized funding solutions for over 80 industries. To learn more about eCapital, visit eCapital.com.

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From Zero to $28 Million

Back in June 2022, Eddie DeAngelis was getting ready to launch QualiFi in a Philadelphia suburb. After having started in the industry as President and partner with Bizlender in 2013 and then founder and CEO of Amerifi, LLC in 2017 (later acquired by Nav Technologies Inc.), success for DeAngelis’ newest startup was bound to draw heavily on the experience he had gained throughout his career. But, times had changed a little.

“In my opinion, this is probably the hardest and most competitive over the last 10 years this business has ever been,” he told AltFinanceDaily. “Every deal shopping around, they’re working with multiple brokers…”

QualiFi connects businesses with funding sources. Real estate loans, AR financing, PO financing, equipment financing, and term loans are among their core products. It’s not a revolutionary business model in that of itself. The key is in execution, which by any measure the company seems to be accomplishing quite well so far. In August alone, QualiFi closed 33 deals for a total of $2.4M in financing and continued the streak until November when it eclipsed $11.3M in just one month split across 57 deals.

In roughly less than seven months since launch, DeAngelis said they’ve surpassed $28M in closed deals. To be sure, DeAngelis doesn’t take all the credit for the impressive start. Jason Maury, a QualiFi partner and VP of Sales, has been instrumental in executing the company’s strategy, DeAngelis said. Part of that strategy he shared.

“99% of all our traffic is from inbound leads,” DeAngelis said. The company runs a variety of marketing campaigns that includes social media but nearly half is attributable to referral partners.

“We have banks, a couple of credit unions, and CPAs that we work with that send us some of their clients that are either maxed out on their line of credit or just simply can’t get approved from the bank,” he said.

The company doesn’t take any of those relationships for granted, which means QualiFi reps need to be qualified to take on their tasks.

“We have an approximate five week on-boarding process for all new hires,” DeAngelis explained, adding that it’s one of the most intensive sales trainings out there. New people to the business must go through it before they get on the phone with potential customers. All of that training is on-site at the company’s office, not something that is offered remotely. Doing this business in person is something QualiFi puts a high value on as the team is expected to be in the office Monday-Thursday. Fridays are allowed to be remote.

There’s a little more to it. DeAngelis said that “culture and the environment is another piece” and that leadership is about supporting everyone and keeping a team mentality.

“Even after they’re done their five week training, Jason and myself are always all over the floor,” DeAngelis said. “We’re very involved in the trenches day-to-day. We do ongoing support training once a week…”

All told, even with the current state of the economy, QualiFi anticipates an opportunity to help more business owners when they will probably need it most.

“We’re remaining pretty optimistic,” DeAngelis said. “As we’re going into an even more volatile economy in the new year, I think the banks are really going to be squeezing and not really looking to put too much money out there and take any risk at all. So I think that a lot of that business is going to come our way potentially. That’s what we’re hopeful for.”

The Next Frontier: Financing the ERC

“I have never sold a product that has no daily, no weekly, or no monthly payments,” said David Goldin. That is until now, he explained, because of the Employee Retention Credit from the IRS that’s sweeping the country. Goldin’s new company, Finance ERC, that he co-founded with Newtek co-founder Jeffrey Rubin, is buying the future ERC receivables of small businesses that have filed for it. A key feature? No payments.

“You basically drop off the money, they don’t pay you out of cash flow, we get paid when the checks arrive,” Goldin said. “It’s an amazing offering.”

Goldin is no stranger to the SMB finance game. He is one of the reasons that the MCA product exists today in the United States. A documentary about it was the second most watched in all of 2022, for example. And he’s still a busy guy. One of his other businesses, Capify, finances small businesses on two continents every day.

“I’m busy in the morning with the UK and I’m busy at night with Australia, but I had a lot of free time during the day,” he said about how he was able to pursue yet another venture. “I approached Jeff and we were seeing that there was a gap in the market that the checks don’t arrive.”

The ERC, a potentially generous tax credit available to eligible businesses, has recently enjoyed greater awareness since it was included in the March 2020 CARES Act. Businesses that qualify can amend previous returns to receive a refund. Folks in the small business finance industry, already in direct communication with businesses about their financial needs, have taken notice.

Finance ERC won’t do the filing itself for a business. They have to had filed already to seek out the funding, which can go up to $1 million at present. It’s the waiting game between filing and actually receiving the refund that leaves merchants in a crunch. Goldin said the wait time is “best case scenario three months, worst case scenario a year plus.” And there’s no guarantee that the claims will be paid. That’s a risk they bear.

The deals come in from a variety of sources, business loan brokers, MCA platforms, ERC filing companies and more. The funding amounts can be significantly larger than an MCA and with no payments to be made, is incredibly competitive. A number of other financial service providers are charging a fee just for helping the businesses file for the credit in the first place, which in itself can be lucrative, but Finance ERC sticks just to the funding.

“We work with the funding companies, we work with the brokers, the various ISOs, it’s a great product,” Goldin said.

But the life span of the ERC is purportedly capped. Some experts say that businesses can only amend their 2020 tax return through April 2024 and their 2021 return through April 2025 [dyor]. But then that’s supposed to be it, allegedly.

“That presumes the government is not going to offer any future tax incentives,” Goldin said. “What we’re building at Finance ERC is a platform to finance tax credits. [The ERC] is the first credit.”

The opportunity, he explained, is preparing now for what may repeat often in the future.

“We put together the right players and vendors,” Goldin said. “We’ve hired a super senior management team.” It’s a system that includes sales, marketing, operations, finance, underwriting and more, to be prepared to scale.

But even in the present, opportunity abounds.

“The best estimates I’ve read are 5-6 million ERC are still eligible,” Goldin said. “People in this industry call it America’s best kept secret.”

And thus as marketing of the ERC continues to grow all around, Finance ERC is ready to work with businesses, brokers, and filers going through the process. Businesses can even use the funding from Finance ERC to pay the fee to file in the first place.

“So now all of a sudden they put the risk to me which I’m happy to do for a file that we like, and I pay the filing company / the broker gets paid right away,” Goldin said.