[QUOTE=chalupacollects;2213106]
Quote:
Originally Posted by Exhibitman
"Marx, which had been approved by PSA as a group submission outlet, indicated it had taken in over $954,000 in 2020, had $4.4 million in revenue during 2021 but because of its debts, ran out of money in August."
"the company says the suspension of PSA’s lower cost services last year resulted in a disruption of its revenue. After ramping up its business in 2020 including the opening of a storefront, Marx says it “was in so much debt that all revenues were being absorbed by the daily and weekly payments to merchant banks which made loans to the business.”
There in bold lies the rub. These Marx people were funding their business off of loans secured by their daily credit card receipts. How it works is the processor loans you money off of your daily or monthly average of projected (read future) card dollars processed for a higher rate than something secured and then the card processor pays themselves back on a daily basis by deducting the payment from the daily receipts sent back to Marx. So if you processed $1000 per day and your loan payment is $200 per day. They would fund you $800. It actually can also work on a daily percentage.
That said, once PSA shut down, Marx could not take payments or make payments hence the cash flow problem. At least a good part of it.
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Tim,
Here's the unanswered $64,000 question, WTF did they do with all this money they borrowed? It obviously wasn't left in the Marx business or used to buy assets still in the business. So, did they intentionally plan this to pull out or use the funds personally, and then file bankruptcy to get out of paying it back? Or maybe they made some stupid investing ot business decision(s) that led them to lose the money. As Adam pointed out before, the $60K of bad debt from one customer, plus the $50K allegedly stolen by the one bookkeeper, doesn't begin to explain the over $1M in outstanding debts they reported in their bankruptcy filing. I'm assuming (actually hoping) the court requires at least some fundamental forensic accounting be performed on the Marx company books to maybe find out what was done to really get the company in the position it is now in, and to determine to what extent the owner(s) were intentionally involved so as to decide if there are any potential civil or criminal charges or penalties they may be liable for.