[JSL23]

Let me preface this by saying I don't want to throw YS under the bus and enjoy working with them. I just want to see if this is some coincidental, fluky thing that hasn't happened to anyone but me; if it has and does happen to other Brokers it should be fixed.

A couple of weeks ago I had one of my clients get a payoff letter from YS. His balance was very low, like 3-5 payments remaining. The payoff letter had his balance a lot higher than it actually was. The Owner of my firm explained that their system can be 5 days behind because they haven't received the ACH report for the week(something like that) and that even though they will take more than what they are owed, they will reimburse within 5 days. So, okay, a little bit annoying but not the end of the world. I explained to the Merchant and he was cool with it. 3 days after he is funded, not only did Yellow take more than they were owed but they were still ACHing his account!! He called to complain and I told him it was probably because their system is a few days behind. Don't worry, YS will reimburse you.

Last week I funded another Merchant who needed a payoff letter from YS and THE SAME EXACT THING HAPPENED!! Not only that, but I called the Merchant from a couple of weeks back and he still has not been reimbursed. Not going to mention names, but I called someone at Yellow today about it midafternoon and my call was not returned.

So both Merchants(regular clients of mine) had to pay $500-$1000 extra AND have multiple pulls taken AFTER Yellow was paid off. My question is-were these two isolated incidents I was lucky enough to have to deal with or does this happen all the time? Also, what can be done to prevent this?

[isaacdstern]

Our Ach system that we use does not clear payments for 5 business days so we are always 5 days behind on clear payments. In regards to over collections...any overpayments are always credited to the merchants.

[Sean Cash]

Many ACH processors institute delays for high risk merchants like MCA companies. PayPal typically takes 3 business days for an ACH payment to go through. Even LendingClub which has done $5 billion in consumer loans has a 7-10 day ACH processing delay.

ACH is an incredibly outdated system in itself and it certainly does impact the accounting of payments in this industry.

[omegafund]

Sure happened to other clients of mine. YSC gets to use the clients money for longer!!Yeah they will get reimbursed without the interest

[JSL23]

That I already know Isaac, that it is behind 5 days. But once you receive a payoff cant you stop the extra pulls somehow? Also, why has it not been credited back to the Merchant after over 2 weeks(3 weeks tomorrow actually)? If someone has to pay an extra, lets say $1000 and then after that getting $200 pulled 5 more times before they're through, don't you think that leaves a bad taste in their mouths?! It definitely will, especially if it is not being credited back and calls are not being returned.

I know ACH systems have delays, but what we're talking about is not just a delay; it is somebody who is choosing to pay off instead of stack, getting double-dipped so they can get funded. It's an annoyance, credited back or not. And when it's not credited back when it should be, that's just sloppy customer service.

[isaacdstern]

Once we receive a payoff we still may see a few more cleared payment because our balance is always a few days behind. Once we see all cleared payments hit we send back any over collections. There are always specific cases where collections or legal fees need to be collected after the deal is paid in full. Call me about any specific cases and I will walk you through the specifics

Isaac-917-743-8369

[isaacdstern]

Additionally we do not stop debiting until we receive that payoff. People are always asking us to stop debiting that XYZ company is paying us off....kind if like" the checks in the mail" once we are paid off we stop all debits

[JeffMulford]

Companies like "ach works" pull three days ahead. Issac is right, you cant rely on trust worthiness of a client to pay you off. The only thing you can really believe is submitted paperwork and that sometimes is doctored(thus the saturation of contracts with portals like decision logic and bank login information). The difference between the payoff balance and actual balance at time being honored, should be sent back to the merchant as stated. Otherwise merchants would being "paying off everyone," turning off their daily debit whenever requested, extending the term at their discretion. Good explanation Issac, with uncollateralized money, its pretty clear cut and dry. When the merchant has someone payoff the balance, ill turn it off. Any difference the merchant will see.

[funding pro]

Just to be clear on the logic behind it, lets say someone is funded on a 10 day program, and there is a 5 day lag time for the ACH's (which we all understand and agree on), you would in theory ACH the merchant for 15 days because you are unsure if those last 5 payments are going to be collected?

[HeatherF]

We have a 3 day lag with our ACH as well. What we have done to our system is updated it to report the pending balance. This shows what we have debited without waiting for confirmation of it clearing. If the file has NSF'd or account frozen you will know before that 3 days anyways. This has help us to alleviate the calls and issues with merchants screaming about giving them there money back from pay offs, paid in fulls, and refinances.

Sean is correct in that the ACH system is on outdated system and so far the only solutions that have come up are companies like dwolla but are a hindrance in that the customer has to have an account on there end as well to bypass going through the reserve.

[isaacdstern]

We offer merchants a pending balance as well but if a deal is overpaid by 2 days worth of ach's according to the pending balance but the last 5 days are still unclear I can not refund the merchant until all funds have cleared. We do everything we can to get real time info to our isos and merchants but with a 5 day lag that's not always possible

[JSL23]

I understand that Isaac, and have no problem with the lag; it is what it is. It is something that should somehow be addressed though, at least so they don't have to have additional funds taken from their account for another 3-5 days. My real problem was the time lapse that the client has not been reimbursed and my call wasn't returned. (it may have been this morning, I'm out of the office today.)

Bottom line is, it is, as someone mentioned before very antiquated and not client friendly at all. It goes from being an annoyance to a real issue when there is no communication and we, as the Brokers get to be the ones needing a towel to wipe the egg off our face! Luckily, both Merchants are regular clients of mine and both very reasonable people.

I appreciate you offering your number and to handle the situation yourself, thank you. I am working from home today and do not have the file. I will either get it and call or have the Owner of my firm call and hopefully get this taken care of.

[isaacdstern]

I agree its an antiquated system but we do our best to offer cleared and non cleared balances to merchants and isos. Unfortunately until info is available in real time its the best we can offer. Here is my full info so if you or anyone else out there has the same issue I can address it personally.

Isaac D. Stern
Chief Executive Officer
Yellowstone Capital LLC
PH (800) 955-2411 X 1060
Fax (888) 315-8546
Cell (917) 743-8369
Isaac@Yellowstonecap.com

[JSL23]

Ok, Isaac, I emailed both files to you. Thank you for making yourself available.