Your capacity to approve and disburse merchant cash advance might be limited. There may be more customers demanding advance. However, your MCA business may not be able to fulfill their needs (it may be due to funds shortage or any other reasons). So, it can be a logical decision to outsource MCA service backed by the resources of another company. To enter such a relation, you need to open an account with the company at your back, and such an account is called a white label accounts in MCA.
In simple words, the services are sold under your label. However, these are provided by another company at the back. This is the concept of white labeling in MCA industry.
Features Of A White Label Accounts In MCA
- The sourcing company provides the services at the back.
- There is no market risk for the business providing services from the front. In other words, there is no need to ensure availability of resources to perform services.
- It’s like a competitive revenue sharing model leading to financial prosperity of both companies in front of a customer and the company at the back.
- There is no cost to directly implement the MCA program for the company.
- Helps avoid direct cost of service implementation. Although, certain cost is payable under the labeling arrangement.
- There is a back-office helping you in application screening, managing finance, and looking for the recollection aspects.
- White label accounts come with a comprehensive reporting structure, operations management, functional monitoring.
Further, white labeling can be appropriately implemented in the following two stages. These stages include implementation schedule and operational schedule.
Implementation schedule refers to planning aspects like training, setting up a back office, finalization, and launch of the services.
Training enables employees to adequately perform their responsibility. Sometimes, connecting customer demand with the sourcing company can be challenging. Hence, employees training helps to make the process transparent.
The operational schedule refers to performing daily tasks and continuous performance evaluation. It’s about understanding how operations will be managed.
For instance, it’s expected to develop responsibility mapping for the front and company in the backup. In other words, it helps to make clear responsibility for the marketing, background assessment, funding approval, disbursement, and collection of the finds.
Advantages Of White Labels In MCA
There are various advantages of doing MCA business under white-label; these advantages include but are not limited to the following.
1. Enhanced Retention
white label accounts help to retain business customers. It’s expected to enhance loyalty from customers that have been affiliated with the business and want to do business again and again.
It’s important from a financial and business development point of view as well.
2. Revenue Boost
White labeling unlocks your business’s potential to attract and serve new customers.
There is no need to worry about the resources required to serve business customers. Hence, it can be an excellent way to boost your revenue and attract higher business profitability.
3. Brand Promotion
Usually, the company offering white label MCA services is large in size and has strong marketing capability. Hence, it can help to promote your business and attract new customers. Further, some white label accounts providers have multiple options to choose the level of participation.
For instance, you can discuss to ascertain if you want to get on balance sheet support or off-balance sheet as well. It helps to clarify expectations from each other in terms of performance and other matters related to service performance.
4. Value Addition
White labeling partner brings certain strategic competence to your business. In fact, your white labeling partner may be greater in size and leading to more and more value for your MCA business. Hence, it can be good to affiliate with and grow yourself.
5. Have A Backing Company For Your White Label Accounts
White labeling partner is expected to bring innovative technology, strong corporate governance, compliance, comprehensive product suite, marketing support, and access to key market information.
Hence, it can help you in supporting and expansion of your business.
Disadvantages Of White Label Accounts In MCA
Following are some of the disadvantages of white labeling.
1. White Label Accounts May Have A Higher Cost
The cost of running a white label account seems to be higher than providing services through internal business operations.
So, it might lead to reducing profit for your MCA business. Hence, this option may not suit the business in the long run.
2. Less Control Over Service
Since a third party provides white-label services, your business may not exercise significant influence over an extensive part of the services.
In other words, you are dependent on the sourcing company for the quality of services. So, you might not be able to exercise control over business operations. Hence, in the long term, you need to develop internal competence to execute business operations.
Conclusion – White Label Accounts
White labeling refers to buying services from a backend supplier and selling under your brand. It’s a solution for businesses with higher demand for the services but limited operational capability.
The features of the white labeling include backend services, limited marketing risk, no direct cost of providing services, and revenue sharing with the company in the back.
In the context of MCA, the backend company can provide funding, assess the background of a potential borrower, and help collect the funds.
There are various advantages for entering in the white labeling MCA accounts. These advantages include enhanced retention of the employees, revenue-boosting, brand promotion, value addition, and use of the company providing service from the backend.
On the other hand, there are a few disadvantages for entering the white labeling arrangement with perspective to MCA. These disadvantages include limited control over service quality and the cost incurred to get the services.
Control is diluted as the company in the back performs service. And the front company does not have a direct influence on the quality of services.
So, if you need white label service or confused about any aspect of MCA, we can offer extensive help to keep quality higher and ensure business success.
