Running a successful payday advance operation requires skill, planning, and using every resource available to lower losses and maintain high profits. Few understand this better than John Lie-Nielsen, a co-founder and managing director of Allied Cash Advance in El Cerrito, California.

“Payday lending is obviously non-traditional lending. It’s critical to know as much about your applicants as possible before approving an advance. That’s why we use Teletrack in all of our stores,” stated Lie-Nielsen in a recent interview.

Allied Cash Advance stores use Teletrack as part of their standard approval process to provide them with key consumer information that they cannot get from the application alone. Teletrack provides them with unique non-traditional consumer information that is gathered from businesses across the country. Teletrack consumer data can tell payday advance personnel if an applicant is a high risk for becoming a charge-off, currently has multiple open loans, has been charged-off from other payday advance businesses and whether or not the consumer is using a fraudulent Social Security number. Obtaining this data during the approval process makes it possible for payday advance personnel to base their lending decisions on verifiable facts. It also helps ensure that the maximum number of advances are approved for good consumers.

“Knowing the details of an applicant’s history weighs heavily when we’re making the decision to approve the advance or not” said Lie-Nielsen. “We discovered that very early.”

“Teletrack more than paid for itself the first month we were using it.”

Lie-Nielsen explains, “When we opened our first stores, initially we had not yet installed the Teletrack system, and after a couple of months we realized that bad debt had become a real problem. As our number of delinquent consumers grew, we decided to it was time to give Teletrack a try. After activating the service, the number of delinquent consumers began to decrease,” continued Lie-Nielsen. “In fact, once we activated the service, I think that Teletrack more than paid for itself the first month we were using it.”

According to Lie-Nielsen, preventing bad debt is a key part of Allied Cash Advance’s protocol for keeping losses to a minimum. Knowing a consumer’s history prior to approval is the key to operating a profitable payday advance business.

“Teletrack helps you know the consumer and makes you feel more comfortable doing business with the consumer. Teletrack information can help you determine if a consumer isn’t being completely honest about their previous history with other payday advance providers. You can get that information from Teletrack, and that’s why I think Teletrack continues to be a good tool in helping us make sound decisions in our operation.”

At Allied Cash Advance, part of the strategy for stopping bad debt at the source includes conducting a Teletrack inquiry on every new consumer. They will also inquire on any previous consumer making an application if that individual has not been an active consumer for period of 60 days or more. According to Lie-Nielsen, this strategy helps Allied Cash Advance get a more accurate idea of what activity the consumer has been involved in since he was last approved for an advance.

In the case of a new or returning consumer, new Teletrack data might help to avoid giving an advance to over-leveraged borrowers. The inquiry report will show any inquiries from other payday advance businesses from the current pay period. If multiple inquiries are listed, there is a good chance that the consumer may currently have advances out with other companies. In either situation, store personnel are aware that the consumer may pose an unacceptable risk and further investigation is warranted.

In addition to using Teletrack for risk analysis and fraud risk assessment, Allied Cash Advance also relies on Teletrack for skip-tracing services during the collections process. “Teletrack is a tool we use to help us make successful collections,” states Lie-Nielsen. “Teletrack information can help us figure out where to start in the process of locating and trying to contact delinquent consumers and that’s crucial as accounts move into the collection phase.”

Allied Cash Advance reports their charge-offs to Teletrack on a regular basis. In turn, Teletrack helps locate charge-offs on the back-end. When a reported charged-off consumer attempts to do business with one of Teletrack’s thousands of contributing businesses, current information is provided back to Allied Cash Advance and may assist in recovering money owed.

“We definitely recommend using Teletrack,” concludes Lie-Nielsen. “We have been using Teletrack for the last three years or more and I can say that Teletrack’s service provides a great source of fraud risk assessment protection for anyone in the payday advance industry.”

John Lie-Nielsen and his business partner, Scott Crockett, were first introduced to the payday advance industry while working as investment bankers for Montgomery Securities. After studying the industry, they left Montgomery Securities and founded Allied Cash Advance in 1999. Headquartered in El Cerrito, California, Allied Cash Advance currently operates 50 mono-line payday advance stores located throughout California and Arizona. Company expansion continues at a rapid pace as the business doubles locations and revenue every twelve months.

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