Originally Posted by Wing Man Frank
Work in sales for a finance company. We offer a product called a Merchant Cash Advance.
Wiki defines it as: "A Merchant Cash Advance was originally structured as a lump sum payment to a business in exchange for an agreed upon percentage of future credit card and/or debit card sales".
In effect we look at a businesses credit and debit card sales history over either a 6 or 12 month period (12 if it's a seasonal business) and advance a sum of money based on those numbers (normally around 100% of their average montly card volume). We charge a fixed fee and get repayment through a fixed % of their daily transactions, e.g. we advance 10k, repayment is 13k and we get 10% of their daily card transactions until they have repaid the 13k in full.
When I first joined I thought there was no way a company would pay a fee of effectively 30%. Seemed ridiculous to me, yet having advanced millions of pounds into the market I've suddenly realised it's not too bad of a product! It's expensive, but it works for the right person.
Sorry for the long and boring explanation but thought I might as well explain it properly. Hope it makes sense?
Yeah makes sense. Sounds quite interesting tbh.