Presumably money in the bank = interest. Groupon, it seems, wants to also be a bank. Shouldn't the restaurant owner collect interest as well perhaps. In reality though, can't all this be spelled out in the contract, that would have made it un-ambiguous.

The following is from a hellbanned user, but damned good info so I'm reposting it:

Groupon actually has substantially changed their payout terms, from their 10-Q http://investor.groupon.com/financials.cfm

> Our current merchant partner arrangements are structured as either a redemption payment model or a fixed payment model defined as follows:

> Redemption payment model - Under our redemption merchant partner payment model, we collect payments at the time our customers purchase Groupons and make payments to most of our merchant partners at a subsequent date. We utilize this model in most of our international operations as it conforms with the local market practice. Using this payment model, merchant partners are not paid until the customer redeems the Groupon that has been purchased. If a customer does not redeem the Groupon under this payment model, we retain all of the gross billings for the Groupon purchase. The redemption model generally improves our overall cash flow because we do not pay our merchant partners until the customer redeems the Groupon.

> Fixed payment model - Under our fixed merchant partner payment model, we pay our merchant partners in installments over a period of generally sixty days

No one really makes much money on interest anymore. Currently interest rates for short term cash holdings are very, very low everywhere you could park money. It's more about cashflow for Groupon versus actually making money on the float.

Does Groupon not disclose their payment plans to the business they do deals with?

You seem like a smart fellow, so you tell me. Have a read of section 4 here - what does the very small fineprint say?

http://www.groupon.com/pages/merchant-terms-of-service-1

"and will arrange for payment of for any Now Aggregate Net Amounts due in such form and on such a schedule as will be communicated at the time the DR is established."

Also, the waffle guy could have easily searched Google to learn what this means for him. But we already know that he wasn't nearly conscientious enough to do that.

If something is truly important to a person, they'll study it. For business people, this means studying business contracts before they agree to them. For scientists, this means paying attention to their experiments, keeping their eyes on their instruments, and keeping up with theoretical advances.

To be successful at anything, you have to sweat the details.

I have no motivation to read that wall of text, but if I had a business that was considering a Groupon deal I most certainly would.

That's my point. It doesn't say how they are going to get paid. While it certainly is an example of caveat emptor (or should that be caveat vendItor? The lines blur...), misleading someone via omission is in my opinion just as bad as not telling the truth, if you have an impression via the sales process that payment would be prompt.

Before you object, consider the reaction of the waffle shop owner if he had been told that it would take 3 months to pay for his services, but he still had to outlay capital to provide that service. Does it seem likely he would have gone ahead with the Groupon campaign? One cannot say with absolutely certainty, but I think it likely he would not have proceeded!

True. And I think the way Groupon handles this is unjustifiable. I still think that you should be able to work "out of pockets" for at least 3 months. If you can't do that, why start a business? Seems very risky...

There's gotta be a business here to lend immediately successful groupon victims money at a high rate before they go bankrupt for cash-flow issues.

I know it often "seems too good to be true" if a business tells you that it just needs a little working capital - but in this case they even have the collateral of the groupon money that will be coming in, which they can send proof of.

cash flow problems are situations where potentially an annual 200% interest rate is something a business would jump on: in two months that's only 33% interest rate with the alternative of losing everything due to their "great" campaign, and in this case they already have the money in accounts receivable from groupon.

a good article push with "how to survive a successful groupon campaign" that promotes the service ought to get some traffic.

on 'our' side, I need to point out that the high interest rate is not fleecing - really - as there is incredibly high immediate risk here, which is why the businesses can't simply get a bank loan. The point is that these are all-or-nothing situations that depend on cash-flow, and businesses have demonstrably nothing they can do. This market is not being served - there are no 200% interest rate loans for businesses that desperately need working capital at pretty much any cost.

so, the niche here is that a bank wouldn't look at the collateral of imminent groupon checks, but we can, since we understand the extent of the problem.

why not? is this a real market? doable? thoughts?

Excellent idea. You should pitch this to Groupon!

I doubt very much that Groupon has that kind of moolah to be throwing around :) Let's just leave it at that.

(In my original comment, I considered including that the biggest risk to the business plan is Groupon, and that therefore the business plan should include hedging or insuring against non-payment for groupon reasons. But thought that was too mean-spirited and negative; I hope groupon does well sustainably and indefinitely - by helping small businesses, not at their expense.)

See Wonga in the UK.