Richard Polgar has spent more than a decade in the revenue-based finance space, rising from analyst to CFO at CFG Merchant Solutions and its sister company, CapFlow Funding, an invoice factoring provider. He joined CapFlow in 2012 as a financial analyst and became controller two years later.
When Capflow expanded beyond invoice factoring offerings in 2021, it split into two brands. It launched CFGMS to offer merchant cash advances (now colloquially referred to as revenue-based finance) and kept the invoice factoring products on the Capflow side of the business. Polgar became CFO of both companies shortly after the creation of CFGMS in 2021, tasked with guiding the firm from a small startup into a multi-divisional, nationally recognized player in alternative finance.
In an interview with CFO.com, Polgar talked about his role and how it relates to compliance oversight, a growing priority as new laws reshape how firms in revenue-based finance operate across state lines. Recent regulations in California, New York and Texas have introduced standardized disclosure rules, requiring funders to update documentation, automate reporting and tailor systems to meet varying state requirements.
Richard Polgar
CFO, CFG Merchant Solutions and Capflow Funding Group
First CFO Position: 2021
Notable previous positions:
Financial controller, CFG Merchant Solutions and Capflow Funding Group
Assistant controller, CapFlow Funding Group
This interview has been edited for brevity and clarity.
ADAM ZAKI: As CFO in a niche, specialized sector like revenue-based finance, what are some of your unique responsibilities that are related to your industry?
RICHARD POLGAR: You’re right to say it’s a very niche industry. But, from a finance perspective, revenue-based finance is extremely transaction-heavy. We collect a ton of data, and how we leverage that data is incredibly important.
It might sound cliché, but cash flow is king in our sector. Being able to predict and project expected cash flows gives you real-time portfolio monitoring, such as looking at collection curves, capital deployment versus receipts, these sort of things. It also helps with managing risk.
There are two kinds of risk: systematic and unsystematic. You must manage the risks you can control, because you’ll always face macroeconomic challenges — COVID-19, high interest rates, inflation, supply chain issues and potential policy changes.
And as you mentioned, regulation plays a big part in this industry. It’s important to stay compliant, to do business ethically and to educate people about what our product actually is. There’s definitely a need for access to this kind of capital — especially for small businesses. The key is staying ahead of regulation and ensuring the product remains viable and beneficial to your customers over the long term.
Do you lead the company’s efforts around securing credit lines, managing long-term funding sources and maintaining relationships with lenders, or is that handled by someone else?
Yes. My main focus is corporate finance strategy, and that includes ensuring we have liquidity to support growth.
The most important thing with lender relationships is finding partners who understand your business. Then, one can work [with us] toward the most effective capital solution — lowest cost of funds, most flexible terms and so on.
The type of capital you can access also changes over time. Most companies start with participations, forward-flow or family-and-friends money, then move to more traditional institutional capital sources. Eventually, the goal is securitization, which some of the biggest players in our space have achieved. That kind of institutional investor interest is great for the entire industry.
How do you stay ahead of evolving regulations across multiple states, like Texas for example, and how does regulatory complexity affect your forecasting and planning responsibilities?
The best way to stay informed is to be part of an industry trade organization. We’re part of the Revenue Based Finance Coalition. We also stay connected to the law firms tracking federal or state-level regulatory developments.
And we have a chief compliance officer — that’s essentially his main responsibility. We need someone dedicated to compliance in our industry, especially as regulations evolve.
It’s also about making sure your legal documents are up to date and that your systems can provide the required disclosures and documents for each state. The product must be compliant on a state-by-state basis.
Texas is a great recent example. Everyone is working through that now, if they don’t already have a solution in place. But the goal is to stay compliant so you can continue to fund businesses across all 50 states.
When interest rates rise or an economic downturn seems likely, your product becomes more expensive but grows in demand as businesses can’t secure traditional financing elsewhere. How do you manage that inverse relationship between cost and demand in your forecasting and financial planning?
This is another unique part of our industry that impacts me as a CFO. Even a recession isn’t necessarily bad for us and this industry, as long as our funding sources remain intact.
You’re correct in saying that during downturns, higher quality customers who might not have considered revenue-based financing before may now become customers, as traditional lenders pull back. We saw that after the Great Recession. We saw it again during and after COVID. Small businesses needed access to capital, and this industry was there for them.
We’ve already been through a few macro cycles. That kind of seasoned data is valuable, especially in a young industry like revenue-based financing.
So when you see reports forecasting a recession or financial uncertainty, do you interpret that as risk or opportunity?
Generally, economic downturns are not good news in my opinion, but there’s always opportunity in a crisis, and that’s especially true for revenue-based financing. It depends on the situation.
In an inflationary environment, for instance, if businesses don’t raise prices, their cash flow may suffer, and they might not qualify for small business funding. But our industry is protected in the sense that we base our advances on cash flow. In tougher times, you could apply larger discounts to that cash flow. So, I’d say there are pros and cons either way.
When it comes to investing in technology, are you more focused on improving the finance function itself or using those funds to strengthen areas like underwriting, approvals or data collection?
To all my CFO peers, I’d say if you have the budget, invest in tech across the business, and especially in a transaction-heavy industry like ours, where you deal with daily and weekly payments instead of monthly interest payments.
Within finance, our goal is to automate as many tedious manual processes as possible. That frees up the team to spend less time creating analysis and more time understanding the underlying data and pulling insights from it.
I mostly focus on applying that mindset in our core accounting functions, such as monthly closes, payment applications, ERP integrations, and funding approvals. If we can automate those processes, it’ll be a big benefit for us.
Data analytics is another large focus area for my team, in areas like real-time dashboards, business intelligence tools, and our data pipeline. We’ve used technology to help make those datasets more accessible in recent years.
AI is fascinating to me, but we are still in the early stages of using AI in our industry and in our own company, and we’re not trying to be first movers. But once proven strategies emerge, we’ll explore how to leverage those tools effectively.
You’ve been with your company for more than a decade, which is increasingly uncommon among CFOs, especially in financial services. What has kept you in the role and motivated you to stay through the company’s evolution?
I started with CFGMS in 2015, but before that I was part of our sister company, CapFlow, which I joined in 2012.
I initially joined as an analyst and moved up the ranks — assistant controller, and then CFO since 2021. What’s kept me around is the constant change and challenge. Over the years, my role has evolved, which is important in any career. I’ve had the chance to learn new things and get involved in different areas.
In the last 13 years, the company itself has evolved. We went from a small startup in a WeWork space to becoming one of the main funders in our space. We’re not the largest, like some others, but we’ve grown into an industry leader.
And then, the people — I really enjoy working with our leadership team and my finance team. Many of them have been around for years, and we as a firm pride ourselves on our low turnover. My own team includes people who’ve been with me for six, seven and some even for twelve years. It’s the culture, the people, and being constantly challenged — that’s what’s kept me here.
What is your approach to succession planning? Given your long tenure and the fact that you’ve helped build the finance function, how are you preparing for continuity if you ever needed to step away?
I’ve grown to learn the importance of this as I have grown as a CFO. For all of us, even if we want to stay at our company for our entire careers, things can happen. Life events, health issues, those sorts of things. And, as CFOs, we need to be ready for those unexpected challenges.
Documentation is crucial. But beyond that, I believe a strong finance team needs people around you who understand what you do and can step in. Cross-training is a must and something we’ve focused on a lot.
I believe we’ve done a good job with that across most business functions. But for smaller companies like us, it’s a real challenge. We’re not a Fortune 500 company, so we have to work even harder to reduce whatever risk we can. We’ve done well on my team, but I believe executive succession planning is something every company, regardless of size, needs to develop a strategy around.
