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05-19-2022, 11:15 AM #1
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- May 2022
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- 62
Clawback Policies
Whats ya'lls experience with them, I know for our lenders we have a wide variety of clawbacks ranging from what seems fair and reasonable to rather severe and egregious. Has anyone ever redlined there iso and negotiated the clawback?
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05-19-2022, 11:27 AM #2
If you're trying to re-negotiate a clawback policy and asking them to take it out of their ISO agreement, what would that funder think about you then? You'll probably get a "We're no longer interested but best of luck".
If you're not submitting deadbeats that just wanna get funded then walk away, you shouldn't really be worried about clawback policies.
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05-19-2022, 11:35 AM #3
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- Jun 2017
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- 2,051
Clawback policies that really grind my gears are the standard 30 day clawback policies...... when the funder is doing 20-30 day deals. And they try to clawback on a 30 day deal that has repaid principle.....and then defaulted.
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05-19-2022, 11:44 AM #4
- Join Date
- Dec 2021
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- 154
Capitalize has a standard 20 payment clawback policy but will always be reasonable and give the ISO time to try and save the deal.
If you'd like to start submitting you can send right away to subs@capitalizegroup.com or call me at the number below to get acquainted.
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05-19-2022, 11:50 AM #5
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- Nov 2021
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For a daily payment deal 20-30 payments is pretty common and understandable
Even 45 payments is understandable
Anything beyond that is bull**** and if you're being clawed back after that you shouldn't be doing business with the funder anymore
Unless you coached the merchant about modifying payments or the old greasy term loan / LOC in 30 days pitch, in which case it would be justified pretty much any time
If a deal goes south out the gate but you manage to get the merchant back on payments you should definitely be negotiating with the funder to be paid your commission once the deal is paid in full / paid off / renewed, that is entirely reasonableLast edited by SendDocsPlox; 05-19-2022 at 11:53 AM.
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05-19-2022, 11:51 AM #6
- Join Date
- Jun 2015
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- 3,313
yes you can negotiate for ones that fully pay within a certain allowed percentage of times . so if a guy misses a couple of payments here and there that should not be clawed back .
i had a funder that someone missed day 30 payment ,they clawed back, but have renewed him 3 times since . got paid on the renewals but never got back the original . i no longer work with that funder.
Also industry standard is 30 days so if someone has longer , negotiate that .
however if your goal is to negotiate to zero clawback , than you will get what ridextreme said above
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05-19-2022, 12:10 PM #7
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- May 2022
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- 62
No clawbacks are understandable and acceptable in most forms , but I have a lender whos clawback is for the entire term for sure the part i have to paraphrase is what causes it , its something like 5 declines total or 3 consecutive declines, but that applies to day 115 out of 120 , in theory the merchant could have perfect payment history and maybe have a fraud alert or something on his account and it takes a few days to resolve and that could cause a clawback at the very end of a term. it sounded messed up so i asked and im glad i did
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05-19-2022, 12:14 PM #8
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- Dec 2021
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- 42
Most funders have a 20-30 day claw back policy.
If you're dealing with a funder that has 30 day approvals all day, you'll probably have more claw backs but I think it's based off the amount of deals funded with them.
They have to take their funding guidelines into consideration when setting their claw back policy and expect to have losses too. Broker have to get paid for their time and efforts for selling the deals.
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05-19-2022, 01:38 PM #9
- Join Date
- May 2021
- Posts
- 34
It's actually pretty simple. (or not)
Mainstream Funders should ClawBack commission if a deal defaults within 30 days, this pretty much applies to every industry that is commission based to a different extent. (think of RE brokers renting out apartments, they usually don't get paid commission until a full month has passed and there were no issues with the new tenants they brought, at least in the NYC area.)
Funders doing 30 day deals all day - The ISO should get ready for at least a 50% ClawBack overall on their deals with those funders, and some of these funders don't even pay commission until they hit principal, or the deal is paid in full (and some never pay claiming it defaulted after 1 bounce
Funders should also ClawBack if the deal defaulted through a direct action of the ISO even after 30 days. (i.e. double funding, multiple stacks, promising LOC's after 30 days of payment history, selling the deal as a daily that can be lowered with just one phone call after 30 days, (yes, some ISO's do that) charging huge PSF's etc.)
Now regarding a deal that went bad and the ISO is the one that got them back on track, there are many factors that can affect if a commission should be paid out there or not. (i.e. was the file already sent to legal, meaning the funder is automatically already paying 20-30% in legal fees, how long until the deal went back on track, what's considered back on track, is the funder now planning on renewing etc.) but those cases don't have a clear answer when it comes to commission, it's more a case by case basis.
Now a regular clean deal that defaulted after 30 days, with no wrongdoing from the ISO's side, should IMO, NOT BE CLAWED BACK UNDER ANY CIRCUMSTANCES.
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05-19-2022, 03:10 PM #10Direct Funder | FirstLine Advance | New York, NY.
firstlineadvance.com
Call us: 929-592-3073
Email us: subs@firstlineadvance.com
1st position and up | Snap Funding within 2 hours | No credit checks
Currently accepting new ISO's!
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05-19-2022, 03:29 PM #11
- Join Date
- Jan 2017
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- 378
We have a zero clawback policy. Sign up and fund with me today!
Paul Boxer
Merchant Marketplace
Chief Operating Officer
Chief Revenue Officer
Cell: (516) 805-9209
paul@merchantmarketplace.com
www.merchantmarketplace.com
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05-20-2022, 07:58 AM #12
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- Mar 2021
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- 183
Clawbacks make sense..
The funder should always give the iso/merchant a bit of time to figure out before demanding the commission be sent back, it creates a healthier funder/iso relationship IMO.
Had a merchant that defaulted on day 30
sent wellen back $8,200... it stinks but part of the biz.
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