Risk and Revenue: How Underwriting and Sales Collaboration Drives Success

December 17, 2025

Let’s be honest – in the fintech space, Underwriting and Sales teams can sometimes feel like they’re on opposing sides of a tug-of-war. Underwriters want to mitigate risk, while sales reps are working hard to fund customers. For small businesses in need of financing, this balancing act is everything, especially when quick, clear decisions are needed to manage an unexpected challenge or take advantage of an opportunity. But what if I told you that these two teams can be the ultimate power couple, propelling success? In this post, we’ll dive into underwriting and sales collaboration, uncovering best practices, essential data sharing strategies, and common pitfalls to avoid.

Why a Strong Partnership Matters

Before we dive into the nitty-gritty, let’s remind ourselves why it’s crucial for Underwriting and Sales teams to work hand in hand:

• Faster Funding: When underwriting and sales are aligned, funding moves through the pipeline more smoothly. Underwriters can anticipate Sales’ needs, and sales reps understand what’s required for successful funding.
• Better Quality: Collaboration leads to improved quality. Sales teams focus on submissions that fit underwriting criteria, reducing the risk of non-remittance.
• Happier Customers: Sales teams setting realistic expectations and understanding underwriting practices can lead to a seamless process from initial contact to funding, creating a positive customer experience, leading to repeat business and referrals.
• Increased Revenue: Ultimately, well-oiled underwriting and sales collaboration translates to improved conversion rates, higher funding amounts, and portfolio stability.

Ways to Work Together

Now that we understand the “why,” let’s explore the “how.” Here are tried-and-true strategies for fostering collaboration between Underwriting and Sales teams:

• Maintain Regular Communication: Encourage frequent check-ins, whether it’s weekly meetings, shared Slack channels, or even informal chats. Communication fosters understanding and builds trust.
  
• Establish Clear Expectations: Define roles and responsibilities for both teams. Sales should know the submission criteria and process steps inside and out, and underwriters should be transparent about their decision-making process.
• Create Joint Goals: Align incentives by setting shared targets that encourage both funding volume and quality. This could include metrics like conversion rate, average funding amount, or customer satisfaction ratings.
• Cross-Training Opportunities: Give underwriters a taste of the sales process and vice versa via dedicated shadow time. This builds empathy and a deeper understanding of each other’s challenges.
  
• Celebrate Success Together: When you start exceeding those performance goals, acknowledge the contributions of both teams. A little recognition goes a long way in building morale and strengthening collaboration.

The Data Exchange

Data is the lifeblood of any funder and sharing it strategically between underwriting and sales can be a game-changer.

• For Underwriting: Share funnel metrics, service levels, and customer experience data. This helps underwriters identify trends, refine criteria, and improve efficiency.
• For Sales: Provide insights into approval rates, common blockers, and ideal customer profiles. This empowers sales reps to target the right submissions and increase everyone’s chance of success.

Pitfalls to Avoid

While the benefits of collaboration are clear, there are some common hazards to watch out for:

• Lack of Communication: When teams operate in silos, misunderstandings and frustrations are inevitable.
• Misaligned Goals: If Sales are incentivized solely on volume, they may prioritize quantity over quality, leading to friction with underwriters.
• Information Gaps: Data is an asset, but it’s useless if it’s not shared. Encourage transparency and open communication.

Final Thoughts

The funders that will thrive are those that foster strong partnerships between underwriting and sales. You can create a collaborative environment where both teams feel valued, empowered, and aligned towards a common goal. Remember, it’s not about Sales vs. Underwriting, but rather Sales and Underwriting working together to drive success. Embrace collaboration, leverage data, and watch your portfolio grow. A strong, unified partnership doesn’t just strengthen your portfolio; it leads directly to more small businesses helped, critical working capital provided, and vibrant communities impacted by their success.

Revenue-Based Financing Underwriting: Balancing Growth and Risk

September 16, 2024

Revenue-based financing (RBF) has emerged as a compelling alternative for businesses seeking growth capital without the impediments of equity dilution or strict debt terms. As the RBF landscape expands, so does the need for robust underwriting practices. In this post, we’ll explore the strategies and insights that drive successful RBF underwriting teams.

RBF offers undeniable benefits: flexible remittance tied to revenue, quick access to capital, and no equity surrender or personal guarantee. Yet, this rapid growth and flexible benefits underscores the importance of prudent underwriting. As risk professionals, we’re tasked with assessing customer viability, mitigating potential losses, and aligning RBF terms with risk profiles of each client. Underwriting teams should have deep interest in client success and provide capital that benefits their business and supports growth.

A Holistic Approach to RBF Underwriting

While RBF’s focus on revenue is central, underwriting goes beyond simple revenue calculations. A holistic risk review includes:

Revenue Quality

• Stability: How predictable and consistent is the revenue stream? Are there seasonal fluctuations or over-reliance on a few large customers?
• Growth: Is the company’s revenue growing, and what is the trajectory? Growth indicates potential, but rapid, unsustainable growth might be a red flag.
• Margins: Margins offer insight into a company’s pricing power and cost management. Higher margins often reflect greater resilience to downturns.

Business Model

• Industry: Some industries are inherently more volatile or risk-prone. Evaluating the company’s position within its industry is crucial.
• Customer Base: A diversified customer base is generally safer than relying on a few key clients.
• Competitive Landscape: How strong is the company’s position relative to its competitors? Are there barriers to entry that protect their market share?

Financial Health

• Cash Flow: Positive cash flow is crucial, particularly for early-stage companies. It demonstrates the ability to meet ongoing expenses and remit.
• Burn Rate: How quickly is the company spending its cash? A high burn rate may signal the need for additional funding, potentially affecting future remittances. Average daily and ending balances offer insight into cash flow stability.

Key Underwriting Strategies

A thorough risk assessment is the cornerstone of RBF underwriting. Key strategies include:

• Scenario Analysis: Don’t just rely on current performance. Model different revenue scenarios and sensitivities (e.g., optimistic, pessimistic, most likely) to understand the full range of outcomes and the impact on remittance ability.
• Cohort Analysis: Study the performance of similar customers in your portfolio. Are there patterns or trends that can inform your risk assessment of a new applicant?
• Industry Benchmarks: Compare the company’s performance metrics (e.g., revenue growth, margins, customer churn) to industry averages. This helps contextualize their performance and identify strengths or risks.

Qualitative Factors

In addition to quantitative analysis, qualitative factors play a critical role:

• Management Team: The experience and track record of the management team can significantly influence a company’s success.
• Market Opportunity: How large and attractive is the market the company is targeting? A bigger market often means greater potential for growth.
• Regulatory Environment: Are there regulatory changes on the horizon that could impact the company’s business?
• Reputation: Consider community support and online reviews. Are online reviews negative? Do negative news searches to find areas of concern that could put remittance at risk.

Aligning Pricing with Risk

RBF pricing should align to the customer’s risk profile.

• Revenue Share Percentage: Higher-risk customers may require a higher revenue share percentage to compensate for the increased risk of default.
• Term Length: Longer terms can reduce the monthly payment burden for customers but they may also increase the total cost of financing over time.

Final Thoughts

Robust underwriting is essential for both funders and customers. By carefully evaluating risks, tailoring terms to the customer’s risk profile, and staying informed about industry trends, RBF can continue to be a viable and attractive financing solution. For funders, disciplined underwriting practices ensure a balanced risk-return profile, making RBF a sustainable option for growth-focused businesses.