Climbing MCAs Ladder of Success: Bookkeeping to Analytics

As your MCA Firm grows and you start to close more deals to provide cash advances, you will also have more participants, ISOs, and transactions to handle. As an unavoidable effect, companies will become more complex. You have now reached the inflection point where you realize that you need to improve many aspects of your daily routine. 

Cash Flow is THE basis of the Merchant Cash Advance Industry, so we need to focus on every lever that affects the cash flow and how good or bad your entity is at protecting and improving cash flow.

After understanding that you need to improve your grip on your company’s finances, the most natural reasoning will be: “What are the skills I need to incorporate into my Business to achieve the desired results.”

In the next post, we will analyze the financial tasks you need to address to achieve smooth MCA Operations.

Who is the best option to help your company climb the financial ladder?

Bookkeepers, Accountants, Controllers, and CFOs

In the most traditional roles, Accountants execute actions that improve and explain recent outcomes; their training is primarily in finding and correcting inefficiencies that affect the near term. They also take a significant role in payroll, ratios analysis – and very important! – devising the best structure to minimize the taxes implications. On the other hand, CFOs —Outsider controllers— typically focus on guiding a company through its financial goals and planning for the future. They use their knowledge and experience to create a strategy that fits within the company’s constraints. While both are essential to running a successful company, let’s see an overview of the specific tasks you need to conduct to handle MCA Financials properly.

Bookkeeping

Proper Bookkeeping is the starting point; this involves tracking all transactions within your business. In the particular case of MCA businesses, the caveat is that you do need an experienced professional to correctly record the various usual transactions, including cash advances, loss provisions, participants’ remittances, repayments, commissions expenses, etc. 

Reporting

At this point, you’re translating your records into information that Managers or business owners can use to fine-tune their processes.

If you take your profit & loss statement, your Balance Sheet, and your Cash Flow statement as-is, they will bring some value to the table. Alternatively, if you look at a customized, digested version of these reports —one that focuses on the past performance of specific outputs, processes, or clients— it can reveal valuable conclusions and insights.

To obtain the best value from any reports, they need to answer your company’s specific questions and have the particular perspective you want to achieve. 

Typically, CRM’s -and other off-the-shelf systems- provide you with the usual metrics of the Industry that are mainly statistically – driven.

But it would be best if you had more insights. Only an experienced team, well versed in technology and with a deep understanding of the business challenges, can analyze and present the information that your transactions provide, coherent with your Bookkeeping while also producing forward-looking insights to make decisions.

Planning and Forecasting

When you work with Bookkeeping and regular statistical reporting, you are backward-looking. However, once you start working with an experienced team, you can use your history to begin looking forward and focus on your highest management goals. By combining historical information with Business analytics, you can test the possible paths you might want to take; ‘what – if’ scenarios, what levers you should pull to pursue your goals, among others.

Yes, in the MCA industry, you have a lot of data to work for you to make you more prosperous. From analyzing your underwriting success to understanding merchants’ payment patterns and the quality of leads provided to you, there is always a possibility of improving your portfolio performance and making appropriate decisions.

A Final Thought

Want to climb the ladder of success and boost your company’s growth?

Start by surrounding yourself with skilled professionals. Your starting point is a bookkeeper/accountant with knowledge in the particular Industry. But with volume comes the need to have proper systems to handle growth, to have a tight grip on cash projections, and then they need to have a knowledgeable team is evident. But also is the cost to cover those necessary skills required, and the time, energy, and effort to overcome the learning curve takes a toll and might deviate you from your growth expectations.

If you don’t have a dedicated finance team, consider working with NISO to understand and improve your operations and finances. Our MCA specialists will be happy to help you with the full spectrum of activities discussed, from bookkeeping to strategic thinking, communication with stakeholders, and producing value for other parts of your organization while maximizing your MCA company’s potential.

You don’t need just a cost center; you want a value-adding team.

Let’s Chat!