[Lmonus]

I personally believe commissions should only be clawed back in Fraud cases when a merchant steals the capital and stops payment on the funder within the first week. That's clearly malicious and im sure a broker would understand that. Although the majority of ISO Agreements have some form of Clawback clause in them, im not a fan of taking an ISO's commission back and have only done so twice in the last 3 years.

[Kevin Henry-Seacoast]

Putting my investment banker hat back on..... Over the years I did many deals up and down the balance sheet. A lot of them were with great companies that I knew would benefit greatly partnering with the capital source I brought them to. In such instances I usually structured my pay based on the performance of the company. Small amount up front and payments annually based on performance and in most cases warrants on the back end(equity deals or mezz deals).
In all cases I demanded quarterly earnings reports from the client. My agreement was always with the client not the source of capital.

So....if any of my compensation is being based on performance....you cool believe I want some proof of the activity.

[WestCoastFunding]

Amazing how many people get played into thinking they’re working with a funder when in fact they’re working with a broker pretending to be one. 99% of the time they could have figured it out with basic research.

[Kevin Henry-Seacoast]

Amazing how many people get played into thinking they’re working with a funder when in fact they’re working with a broker pretending to be one. 99% of the time they could have figured it out with basic research.

Know your customer!
Know your referral sources!
Know your capital sources!

There are suckers born every minute.

[NoBigDeal]

I personally believe commissions should only be clawed back in Fraud cases when a merchant steals the capital and stops payment on the funder within the first week. That's clearly malicious and im sure a broker would understand that. Although the majority of ISO Agreements have some form of Clawback clause in them, im not a fan of taking an ISO's commission back and have only done so twice in the last 3 years.

So, I'm curious, if you fund a merchant and then they default pre30 days and it gets back to you (from the merchant or however) that the broker is the one who carroted the merchant to take your deal and promised a LOC or some other non-existent loan to the merchant with good payment history after 10 payments, what would you do? what's your thought process?

[RickyR3712]

So, I'm curious, if you fund a merchant and then they default pre30 days and it gets back to you (from the merchant or however) that the broker is the one who carroted the merchant to take your deal and promised a LOC or some other non-existent loan to the merchant with good payment history after 10 payments, what would you do? what's your thought process?

Black list iso. Just like you have to underwrite merchants, you have to underwrite iso.

[pcfunder]

Black list iso. Just like you have to underwrite merchants, you have to underwrite iso.

You would black list ISO and not clawback?

[RickyR3712]

You would black list ISO and not clawback?

Unless the iso agreement has a clawback.If you have solid proof than i will say sue.

[Lmonus]

So, I'm curious, if you fund a merchant and then they default pre30 days and it gets back to you (from the merchant or however) that the broker is the one who carroted the merchant to take your deal and promised a LOC or some other non-existent loan to the merchant with good payment history after 10 payments, what would you do? what's your thought process?

I would blacklist the ISO from our company and call it a loss. Its not worth trying to clawback commission from a scammer, its probably a sweep account he is getting his commissions deposited into anyways.

[Lmonus]

Black list iso. Just like you have to underwrite merchants, you have to underwrite iso.

This is a fact. Learn from the mistakes and find a better source of business.

[abfunders]

I think everyone is assuming that something actually happened based on the title of the thread.
The OP is just asking, "Is this standard?" The answer is "yes."

And we're just all noticing that he's submitting to a broker. Which is fine, especially if he's just starting out and he doesn't want to get messed over from the funders by being backdoored. It's not worse than working for someone....

[NoBigDeal]

I would blacklist the ISO from our company and call it a loss. Its not worth trying to clawback commission from a scammer, its probably a sweep account he is getting his commissions deposited into anyways.

I'd at least try to collect it back, and once they send back the commission, then you can cut them off and call them all the names you'd like.

[Chambo]

I personally believe commissions should only be clawed back in Fraud cases when a merchant steals the capital and stops payment on the funder within the first week. That's clearly malicious and im sure a broker would understand that. Although the majority of ISO Agreements have some form of Clawback clause in them, im not a fan of taking an ISO's commission back and have only done so twice in the last 3 years.

what's alos messed up here is that if the fund DOES collect the money late on, they don't pay you the commissions, even though they got their money

[Lmonus]

what's alos messed up here is that if the fund DOES collect the money late on, they don't pay you the commissions, even though they got their money

If a funder claws back commission and the merchants gets to the finish-line without having to include a 3rd party collection team, then commission should be re issued to the iso.

[Chambo]

If a funder claws back commission and the merchants gets to the finish-line without having to include a 3rd party collection team, then commission should be re issued to the iso.

SHOULD BE....and ARE....are tow different realities

[Lmonus]

SHOULD BE....and ARE....are tow different realities

Very true.

[OC Funder]

If a funder claws back commission and the merchants gets to the finish-line without having to include a 3rd party collection team, then commission should be re issued to the iso.

OP is in a tough spot there because he'd be banking on funder being honest about collection efforts AND submitting ISO to be honest about re-issuance. OP: kiss that commission goodbye. Fund your way out of it (and work your way towards direct relationships).

[T B Morgan]

You guys are great, thank you for sharing your experience and your knowledge with me.

I did not sign up with that company, because as I said I don’t agree with there being a claw back. There were some other things said that turned me off to working with them that I didn’t mention, but the claw back really did it. I do understand, thanks to you guys, that I will more than likely run into that on quite a few contracts.

[pcfunder]

commission clawback is a ***** though because most people don't bank on funding merchants that are going to default and funders capital is expensive for a reason. Funders have top of the line collections departments for a reason as well.

[ThomasF]

Question: Do any cash advance funders send regular statements to referral partners outlining the client's activity?

Most funders do when you syndicate.

[Sachip24]

claw backs are standard usually 30 days some 45 days. If merchant missed a payment and got back on track I don't agree with commissions being clawed back or if they do default and lender still collects full payment even if it takes longer I don't think commission should be clawed back since they got their money. Being standard is usually 30-45 days claw back period, for an ISO to promise xyz after 10 days is just stupid on the ISO's part and lender should definitely cut them off.