- 1Roitblat says audits reveal problems rather than create them.
- 2Key areas: RTR reconciliation, wire records, syndicator splits, default status and documents.
- 3Clean audits help funders with syndicators and institutional investors.
This piece summarizes a guest column by David Roitblat, founder and CEO of Better Accounting Solutions, a New York City accounting firm specializing in merchant cash advance companies.
Roitblat's central argument is that audits do not create problems, they reveal them, and that the panic around audit season comes from the gap between the order a funder believes it has and the order it actually keeps. He illustrates it with a Chicago funder whose auditor asked for ten funded deals, supporting documents and matching bank activity. Assembling them exposed missing application pages, two payoff letters saved under different names and a renewal not linked to its original advance.
Where books slip
- RTR reconciliation. Balances can look clean in the CRM while processor reports and the ledger lag. A payment that fails Friday, is resubmitted Monday and posts Tuesday can leave the funder and auditor with different stories. A daily or weekly match of processor deposits to merchant balances prevents the drift.
- Wires. Funding, collections, reserve and syndicator payments each touch different books. Roitblat cites a funder that found three wires booked as syndicator payouts were actually renewals paid in error from the wrong account. His fix is a rule that every wire carries a note and supporting detail when sent.
- Syndicator splits. Inconsistent entries or renewals that skip the residual update stand out in audits. One company tracked participation in a spreadsheet only one employee understood, which Roitblat calls a process built around a person rather than a system.
- Default classification. Delayed payments linger as active because no one wants to declare default. In his example, a Texas restaurant stopped paying for three weeks while collections notes sat in a personal notebook, so the books still showed it active.
- Documentation. Applications should match funded terms, bank statements should be complete and file names should make sense to the whole team.
Controls and habits
Auditors do not expect big-bank segregation of duties from a small MCA shop, Roitblat writes, but they expect clear responsibilities: one person prepares a payout, another reviews it and a third reconciles bank activity. He recommends a weekly ten-minute review of aging reports, a monthly check of syndicator exposure and logging every merchant contact the same day.
Why it matters
Syndicators and institutional investors often request audit reports before deepening commitments. A clean audit signals stability, while a messy one raises questions that cost time and credibility. Roitblat's conclusion is that the calmest funders are not those with perfect portfolios but those that documented their work and fixed discrepancies long before the auditor arrived.
Habits that stick
The calendar matters too. Roitblat says audit-ready habits cannot be assembled the month before an audit; they have to be woven into ordinary operations. He suggests thinking of them not as audit preparation but as the proper way to run a business.
He adds that readiness pays off beyond the audit itself. Disorganized systems leave staff defending their work rather than improving it, while a clean financial environment lowers stress, teaches new hires what good work looks like and lets managers spend time interpreting answers instead of hunting for them. Funders that treat findings as guidance rather than criticism, he says, tend to catch issues earlier and build stronger infrastructure.
Source reporting: deBanked.
