Best Practices for a Credit Card Factoring Provider
By: Daniel Samoohi
Submitted: 2010-08-26 16:08:50 | Word Count: 427
With the economy still on the edge after the sub prime residential financing debacle, small business owners are finding it more difficult than ever before to get approved for a local bank loan. Credit Card Factoring may be a ideal solution. A speedy turn-around time, potential cash advance funding of up to $250,000, and a flexible repayment schedule are all great points for pursuing this different direction for the funding your business requires.
Still, a small business owner would do well to look at more than just the working capital they can obtain. The North American Merchant Advance Association (NAMAA) has a list of best working practices which they endorse for Credit Card Factoring providers. If the company offering you a business cash advance doesn't adhere to these guidelines, it is possibly best to look somewhere else. The guidleines are as follows:
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-Demonstrate lucid disclosure of fees - NAMAA doesn't condone closing fees as part of the application process of merchant advances but recommends that any of these charges be lucidly explained and disclosed. The total repayment number should be entirely elaborated upon and determined before putting the final touches on the contract.
-Give lucid disclosure of recourse - Technically, merchant advances are not regarded as loans; instead they are regarded as a purchase of future credit and debit card transactions. As such, the small business owner can be held personally in debt for any working capital not returned if the entrepreneur opts to violate the agreement.
-Be sensitive to a entrepreneur's business cash flow - A basic contract involves that the small business owner repays a determined portion of Visa-MasterCard receivables on a day to day basis.
-Sales materials disclosure - All advertising materials should make it clear that the contract is one of factoring, not a loan.
-Monitor your Sales Agents/Brokers - Merchant advance companies should make sure that their sales agents or brokers are righteously representing the program.
-Proper repayment of open Merchant Cash Advance Balances - if a merchant opts to take an additional merchant advance with a new company the new lender should immediately pay off the prior balance rather than leaving it to the merchant to pay off the balance.
Author Resource:-
Since early 2008 Daniel Samoohi has helped thousands of business owners in finding trustworthy lenders in order to compare offers for a credit card factoring. By making lenders compete with each other, Daniel also helps businesses in finding great deals for credit card factoring.
