Welcome To New North American Merchant Advance Association Members

American Finance Solutions welcomes the addition of five new members to the North American Merchant Advance Association (NAMAA). The recent addition increases the amount of total companies by almost 50 percent and now NAMAA includes almost all reputable players in the industry. The one lone dissident continues to be Advanceme.

Now if you're selling or marketing merchant cash advance or work for a funding company, you may be asking yourself, "What's the big deal?" There are quite a few reasons why this is significant step for the whole industry:

1. Robust "bad merchant" database - If you sell the product, the first thing NAMAA members do when receiving an application is check it against the database. This saves you and your staff from wasting time and resources on known fraud and defaulted merchants.

2. Unbiased communication lines between funding companies - All NAMAA members have made a pledge to exchange true information on merchants and play fair. So often when American Finance Solutions calls a little player for a payoff amount confirmation, we get the run around. Mean while the small funder is desperately trying renew the client immediately. NAMAA members all have a designate contact that gives the real scoop on a client (weather they were even in collections, slow pay, etc) and don't compromise the payoff process. This means if you're selling for one of the companies, you don't have to worry about losing a deal at the 11th hour.

3. Best practices are adhered to - Knowing that you represent or work for a NAMAA member company, you can confidentially market this to your clientele and assure them that you represent a reputable industry player that conducts business ethically.

I believe this marks a turning point for the MCA industry. We've have officially started to move out of the early growth stage and are also quickly beginning to move into the mainstream financial marketplace.

Again, welcome to Strategic Funding, Genesis, Merchant Advance Funding, Merchant Capital Source and Swift Capital.

Hard And Soft Fraud On The Rise!

Looking back out our application flow over the second quarter at American Finance Solutions (AFS), one clear trend emerged. Fraud submissions have tripled over historic averages. Knock on wood, AFS has successfully avoided funding any of these merchant cash advance contracts in 2011.

When classify fraud deals, we break them down into two categories: Hard and Soft. Hard fraud is when outright crooks are submitting applications for businesses that do not exist, have stolen a business' identity or a desperate actual owner has altered his financial documents to qualify for more favourable terms.

Soft fraud is when a legitimate business has submitted actual documentation, but is still not being truthful about his or her business. For example, they give false landlord contact info to achieve a good rent verification when they actually months behind on rent, present a paid in full letter from their current funding company when they still have a balance, claim to never have had an MCA when they were previously in collections with a competitor, just filed bankruptcy or conveniently forget to inform us that they just consolidated their two locations into one. The scenarios.

Thanks to the North American Merchant Advance Association (NAMAA), most of our fraud is caught upon the initial application submission. Thanks to a great database, fraud alert network and dedicated NAMAA contacts for each member company a funding company can catch fraud early and not waste personnel time on bad deals and keep their sales partners more satisfied since they do not waste their time as well. If you are a funding company, I cannot imagine putting any money on the street without checking with NAMAA. For such a nominal monthly fee you'll save thousands. In AFS, first month we saved over $200,000 in fraud deals that we may have funded.

The reputable funding companies are getting better and better each month at finding both hard and soft fraud. This is very good for the industry. As the fraud rates drop, the industries overall bad debt continues to plummet. My personal estimate is that across the board, bad debt has dropped by 50% over the past 12 months due to fraud detection. This has resulted in a significant cost savings to our legitimate clients. Now, it is not uncommon to see deals with expected paybacks with factor rates well below 1.3, this was unheard of in 2009.

If your a sales organization representing the Merchant Cash Advance product, make sure all your funding sources are with the NAMAA. You'll end up operating much more efficiently by focusing on fund-able deals. Nothing is worse than chasing documents for a week, arguing with your funding company about the validity of paperwork and only hearing a recorded verification call where the merchant is busted! Again, know your merchants well so that as a sales organization you can build a strong performing portfolio with a few funders (it will go a long way in getting special favors or pricing for future clients).

AFS Joins The North American Merchant Advance Association

American Finance Solutions is proud to announce that we joined the North American Merchant Advance Association (NAMAA) this month. NAMAA is a not-for-profit trade association representing the organizations in the US and Canada that offer working capital advance products based on credit, debit and other electronic payment-related revenue streams to small- and medium-sized businesses. The goal of NAMAA is too shape our Merchant Cash Advance industry by providing leadership, education and sharing of information.

With MCA being an alternative financing product for businesses, it is often seen by traditional lenders as a high-risk, expensive and questionable product. Reality is that the Merchant Cash Advance is a fairly priced, un-collateralized business financing that fits its niche in the marketplace. During the infancy of the product in the early-2000s, the product was and sometime continues to be sold incorrectly. The NAMAA recently set Best Practices Guidelines to ensure that all funding companies and agents represent and sell the product properly.

American Finance Solutions has always adhered to these Best Practices since our first day of operation over five years ago, since they are the proper way to do business. For those that do not know the Best Practices, they are six key elements:

1. Provide Clear Disclosure Of Fees

2. Provide Clear Disclosure Of Recourse

3. Be Sensitive To A Merchant's Cash Flow

4. Adhere To Proper Marketing Materials Disclosure

5. Monitor Resellers Of The MCA Product

6. Proper Payoff Of Outstanding Merchant Cash Advance Balances

In addition, NAMAA members all contribute to fraud prevention on both the client and agent side of the business to protect members from unscrupulous individuals. American Finance Solutions looks forward to contributing to the NAMMA organization and helping shape a strong MCA industry that continues to prosper in the future.