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Avoid Business Cash Advance and Credit Card Processing Problems

Nov 6, 2007
Avoiding business finance problems is always desirable, but it is especially critical to do so when financial issues are intertwined as they are with business cash advance and credit card processing services. There are ten key difficulties which should be anticipated and avoided by following prudent working capital management guidelines.

Business loan strategic solutions and credit card processing are more connected than most commercial borrowers realize, and changes to either are likely to have measurable impacts on profitability. Merchants should take advantage of profitable business finance benefits by successfully coordinating processing and receivables management. The business financing benefits will be especially noticeable if several typical processing and merchant cash advance difficulties can be precluded.

Even thriving merchants periodically need more working capital than they can obtain from a bank business loan. One of the most critical business financing tasks for any commercial borrower is to make sure that short-term cash needs are fulfilled. This is frequently difficult and sometimes impossible for the average merchant.

Effective and timely use of a prudent working capital business loan is an increasingly critical business financing tool when a merchant is faced with a short-term cash shortfall. Commercial borrowers should be forewarned that there can be a substantial number of potential difficulties in coordinating credit card processing, receivables factoring and business cash advance services.

Using Credit Card Receivables and Credit Card Processing

Most merchants have documented credit card processing activity and sales volume. This documentation of processing activity and sales volume is a financial asset, since up to $300,000 can typically be obtained via a business cash advance based on projected future sales volume.

Business Finance Recommendations

Merchants should be aware that there are at least ten serious difficulties that they need to be prepared for before obtaining a business cash advance. These problems are described below to help owners avoid these common merchant cash advance and credit card processing obstacles. After each potential problem is described, a suggested processing and receivable factoring solution is provided.

(1) Working Capital Management Problem to Avoid: Closing costs. Suggested requirement: No closing costs.

(2) Credit Card Financing Obstacle to Anticipate and Eliminate: Fees charged up-front. Recommended requirement: Zero up-front fees.

(3) Credit Card Processing Problem to Eliminate: Collateral required. Recommended requirement: No collateral required.

(4) Credit Card Factoring Difficulty: Financial statements required. Suggested requirement: No financial statements required except for larger business cash advances.

(5) Credit Card Receivables Obstacle to Anticipate: Required to pay off the merchant cash advance with fixed payments. Recommended requirement: Fixed payments not required.

(6) Working Capital Financing Obstacle to Eliminate: Required to pay off the business cash advance over a fixed term. Recommended requirement: Fixed term for repayment not required.

(7) Credit Card Receivables Factoring Problem to Avoid: 2-3 years of ownership required to qualify. Suggested requirement: 1 year of ownership.

(8) Credit Card Processing Difficulty: Credit scores of at least 680 required. Suggested requirement: Acceptable credit scores of 500 and higher.

(9) Credit Card Factoring Difficulty: Business cash advance limited to $50,000. Suggested requirement: Maximum cash advance of $300,000.

(10) Merchant Cash Advance Problem to Avoid: 12 to 24 months of documented sales of $12,000 to $25,000 or more required. Preferred requirement: 6 months of $5,000 or more.

Can the Ten Obstacles Discussed Above Be Avoided in All Cases?

There are viable credit card receivables programs which avoid all of the problems described above. It is not necessary to accept any of these problems in order to obtain business cash advances based on future sales.

It would be a rare situation for all of these potential business finance problems to be of primary importance to an owner. Most commercial borrowers will encounter several of these problems if they are evaluating business cash advance programs that use processing and receivables factoring.

Commercial borrowers should also be alert for business cash advance and credit card processing problems not mentioned above. However, the absence of all ten problems described is a good start toward achieving substantial business finance improvements in working capital management.
About the Author
Steve Bush and AEX Commercial Financing Group provide business finance and commercial mortgage advice, working capital business loan help and AEX Business Cash Advance - Credit Card Processing Reports.
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