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KPI's Funders Use To Track ISO Performance

Updated: Jan 22, 2023

When measuring how sales partners, mainly independent sales organizations, perform, most merchant cash advance direct funders will track a few Key Performance Indicators which they use to determine if an ISO is a valuable partner or whether they need to part ways with them. This is a very important area for funding companies as many depend solely on ISO referrals, some mixed self-generating deals along with ISO referrals, and other funders who have totally eliminated their ISO partner program for various performance reasons.

On both the funder and the ISO side the information we will discuss here are some KPIs that will allow brokers to understand funders’ processes better and for some funder's ideas or strategies to implement if they haven’t already.

One of the main KPIs tracked are submissions received compared to deals funded, commonly referred to as conversion ratio. There are other definitions or formulas for conversion ratios, like offers to funded deals.

Loss ratio, the amount of loss from default in real dollars from any deals over a particular time, is a very important KPI as it could be the only statistic needed to determine whether to continue to work with a broker shop.

Total submissions and total deals funded are also straightforward KPIs that all funders should know of their referral partners.

Then there are some subjective ways of measuring ISO performance that aren’t easily measured numerically but can be given ratings to produce a performance score, like how they are professional to deal with, their negotiation tactics, and their reputation on things like backdoor deals or stacking, and other information.

Let's dive into each one of those measurements to get an insider view as to what the heads of ISO departments will look at from the funding side perspective.

Funded deals are really the bottom line that any funder and ISO care about. However, how getting to that end total of funded deals is extremely important because that number doesn’t tell the whole story.

No funder wants an ISO sending 500 submissions per month if only one funds.

Funders also do not want ISOs who shotgun their deals to 10 funders when the deal doesn’t fit the box of 7 of them, which means some wouldn’t give competitive offers.

Why would you send the same file on initial submission with an 820 credit score, 100k monthly revenue and everything else clean, to an A paper funder and a C-D paper funder?

You shouldn't, that's simply a waste of time since those 2 funders aren’t even close to the same categories.

So funders track conversion ratio to see how many submissions per month you are

sending in and how many of those submissions are actually funding.

Where should an ISO be with respect to a percentage?

A minimum would be 6 to 7%, so for every 100 submissions 6 to 7 deals are funded.

At 10 to 11% you are on the good side. At 18-20% you should be usually in the top tier of ISOs. This is considering a minimum amount of 100 submissions, as we wouldn't say a 50% number based on 1 funded deal out of 2 submissions total to mean much.

Loss Ratio is a bit more involved when tracking given an ongoing effort to collect, but the balance remaining at time of default is the starting point. We wouldn’t include the default fees or any other extra fees added once a default occurs. Essentially once a merchant defaults that balance will be compared against the total dollars funded for that ISO.


If an ISO has funded a total of $1 million with a funder, and just had a default with balance due of $100k, that’s a 10% loss rate. All funders should want their ISOs at 10% or below.

Of course when a default happens it doesn’t necessarily mean the ISO or broker was responsible in any way since the funder should have fully underwritten the file before approval. However, if a merchant defaults soon after funding, especially within the commission clawback time period policy, it could be a direct reflection on the ISOs business or broker sales practices.

This is why loss ratio is so important, because if an ISOs deals are defaulting at a high rate early in their term, then likely there is something going on to lead to that which cannot be tolerated.

Anything higher than a 12-15% loss ratio for an ISO over a rolling 6-9 month period will get you terminated.

Since the ratio will be on a rolling period typically, it includes collected money after default due to payment arrangements(true-up). Therefore if merchants are curing their default and you are still closing deals with that funder then your loss ratio will come down eventually.

Total Defaults will also be tracked right next to loss ratio, giving another perspective. It’s never ok to have defaults so all brokers should keep track of this once they get notified by the funder. They should also work with the funder in order to get the merchant back on track.

When comparing total defaults to total funded deals, a funder will have to decide on what’s acceptable depending on when defaults happen relative to the funding date. An ISO should always review their processes if more than usual defaults happen within reasonable time after funding to find the root cause and see if changes in process could prevent future defaults.

The subjective ways to measure ISO performance can be boiled down to overall reputation and comfort with working with the ISO and their team of brokers. It would be up the funders ability or willingness to track and score an ISO on categories mentioned previously like how professional they are or how they are when negotiating offers.

All ISO relations reps or managers want to work with good brokers that produce results. They would put up with a broker that is difficult to work with but gets results but not if they aren’t getting results. At the same time even if they like working with a broker that broker still needs to fund deals and do so efficiently.

In conclusion

There’s a balance a funder has when creating the KPIs tied to the performance of an ISO and when to keep some ISOs on board for at least a period of time to prove themselves or to terminate them as soon as they fall below certain minimum thresholds. With trends in the industry going towards funders having an inside sales team or using the large marketplace providers, it’s more important now than ever to find and keep the ISO partners that perform above the minimum KPI standards and are professional and great to work with at the same time.


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Christian DeCollibus
Christian DeCollibus
Apr 07, 2023
Rated 5 out of 5 stars.

might bring this topic up on the main forum

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