What is an MCA reconciliation?
Buried in most merchant cash advance contracts is a clause funders rarely mention: the right to have your payment adjusted to match your actual revenue. Here's what reconciliation is, why it exists, and how to use it properly.
Why the clause exists, and why it's your leverage
An MCA isn't legally a loan. It's a purchase of a percentage of your future revenue. Reconciliation is the mechanism that keeps that story true.
If you agreed to remit, say, a fixed percentage of receipts, but the funder collects a fixed dollar draft every day, those two numbers drift apart the moment revenue dips. Reconciliation trues them up: on a documented request, the draft is adjusted to match the agreed percentage of what you actually earned.
Funders include the clause because courts weigh payment flexibility when deciding whether an MCA is a true receivables purchase or a disguised loan. That legal fig leaf is your practical tool: where the clause exists, using it is not a favor you're asking, it's a term you're enforcing. It's one of the three routes covered in can daily ACH payments be reduced.
Reconciliation in practice
How a reconciliation request works
Find the clause
Read your agreement for "reconciliation" or "adjustment" language, including the procedure and the deadline window it specifies. No clause? Other routes still exist.
Document receipts
Bank statements and processing records proving actual revenue for the period. The request lives or dies on documentation.
Demand in writing
Follow the contract's procedure exactly: written request, required attachments, correct recipient, inside the window. Sloppy requests get denied on technicalities.
Track the response
Honored: your draft adjusts. Stonewalled: their breach of their own clause becomes leverage in the settlement negotiation that follows.
MCA reconciliation FAQ
Reconciliation is the contractual process of adjusting your MCA payment to match your actual revenue. Because an MCA is legally a purchase of a percentage of future receipts rather than a fixed loan payment, many contracts include a clause letting either party demand the fixed daily draft be "trued up" to the agreed percentage of what the business really earned.
Largely to preserve the legal characterization of the deal. Courts distinguish a true purchase of receivables from a disguised loan partly by whether repayment flexes with revenue. The reconciliation clause is evidence of that flex. That legal purpose is also your practical opportunity: the clause exists, and you're allowed to use it.
Follow the contract's procedure precisely: typically a written request with documentation of actual receipts, bank statements, processing records, within the window the agreement specifies. Funders deny sloppy requests on technicalities, which is why documentation discipline, or professional help, makes the difference.
Honest ones do; reluctant ones stall, demand endless documentation, or quietly ignore requests. A funder's refusal to honor its own reconciliation clause is significant: it weakens their legal position and strengthens yours in any later negotiation. Document everything, including their silence.
Reconciliation resizes the payment to revenue; it doesn't shrink the balance. If the squeeze is temporary, it may be all you need. If the total debt is structurally beyond your revenue, especially with multiple advances, reconciliation is the stopgap while a settlement program reduces the balances themselves.
Find out if your contract has the clause.
Send us your agreement. A free review tells you whether reconciliation applies and what your draft should actually be.
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