Denise Shomo, President of capital financing company Cutter LLC, understands her clients well, because she once ran an ISO and sold her merchant portfolio to Cutter. Negotiations for that transaction went so well that when the sale was complete, Cutter founder David Daily offered her a job, which she accepted.
Franklin, Tenn.-based Cutter LLC was founded in 2006 to provide ISOs and merchant level salespeople (MLSs) a means to sell their portfolios to build their business and to be fairly compensated in the process. Daily described Cutter as a "very, very simple company" that provides ISOs and MLSs with working capital from their residual streams. "That's all we do," he said.
Shomo said the company works hard to be a partner and that flexibility helps make it work. She also noted that growth is a primary goal of many who turn to Cutter for financing options. "The majority of clients we deal with are looking to use the funds we provide to grow, so they don't entirely deplete their cash flow. For example, if they have a $10,000 residual stream coming in each month, they might want to sell $5,000 and get an influx of cash, start a sales team, or apply it towards buying equipment, research development, or product investment."
Daily stated that Cutter purchases whole and partial portfolios and has no regional limitations. "We can do business with people who have a lifetime residual and do not actually own the contract, but own the residuals," Daily added.
According to Daily, Cutter distinguishes itself from other businesses by its research. It completes essential fact gathering to develop a full understanding of each ISO or MLS portfolio under consideration. When qualifying a potential customer for financing, Cutter reviews 12 months of a client's portfolio data to determine a consistent average valuation that excludes fluctuations in volume throughout the year. There is no minimum amount to qualify. Cutter looks at large and small portfolios equally and has quick approval turnarounds.
"As soon as I get the customer data, I start working the same day, and I try to get an offer to them next day," Shomo said. "That is my goal. Most times I'll make an offer, and if it is accepted, then we start moving forward to the remainder of the due diligence."
Once a sale is finalized, the transfer of merchants to Cutter is a smooth and seamless process, according to Shomo. "The ISO moves the merchants into a portal where we provide full support, and the merchants don't know they were sold," she said. "We don't make an announcement that their account has been sold; we fly under the radar but let them know we are here assisting. When you spend all that time and effort signing up merchant accounts, you have a relationship with those merchants, and you want to hand them off to someone you trust to do a good job. We feel we are best at that."
Cutter prides itself on providing generous fees to customers who refer business. "Once an ISO sends a referral to us, they actually get paid for it," Shomo said. "I've heard nightmare stories, where people have referral programs and they never get paid. As soon as we close, we pay the referral source. We do our best to close every deal you send us even if it's really small, because it's important to us to take care of our clients."
Shomo also emphasized that Cutter is a company you can trust to treat you fairly. "We offer fair market value for unique characteristics," she said. "For all those reasons, we have never disappointed a seller in an acquisition. We have always had successful acquisitions, and the fact that we have been around for so long shows that we are a strong company."
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