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Best practices for business cash advance firms to be published2008-04-03A new document that specifies best practices and standards for firms that provide business cash advance services is set to be released. The Best Practices for Merchant Cash Advance Providers: Assessment of Risk white paper, which is being published by AdvanceMe, is aimed at helping the industry address risks and accurately forecast growth. It states that the current financial situation, with tightened lending criteria, could lead to an increase in business cash advances, particularly from businesses with high risk merchant accounts or bad credit merchant accounts. In light of this trend, it has become increasingly important for firms that cater to high risk merchants to protect themselves from potential losses. The white paper proposes that the sector create a legally compliant industry list to identify merchants that may have engaged in fraudulent behavior. Other proposals include defining risk/reward targets, creating a stringent underwriting process and employing continuous portfolio analysis. One of the benefits that high risk merchants may find from a business cash advance is that they do not have to deal with lengthy wait times at a bank.   |
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