Fixed Payment: Meaning in a Merchant Cash Advance
A fixed payment is a set daily or weekly amount collected on a merchant cash advance regardless of that day's sales. It's sized from your average revenue and adjusted only through reconciliation or a modification.
What does fixed payment mean?
Most advances today use a fixed payment rather than a true percentage of each day's sales. The funder looks at your typical deposits, applies the agreed specified percentage and turns that into a flat number. It's simpler for everyone: you know exactly what comes out, and the funder knows what it collects. The link to your sales comes through the right to reconcile, not through the daily amount moving on its own.
Why does fixed payment matter to your business?
Predictability is the benefit. The risk is that a fixed payment doesn't slow down automatically when sales drop. If you have a bad week, the same amount comes out. That's why understanding your reconciliation rights matters so much with a fixed payment. They're the safety valve that keeps the advance tied to your actual business.
How does a fixed payment compare with a split?
With a split of card batches, the payment rises and falls with each day's sales automatically. With a fixed payment, you ask for the change. Which is better depends on how steady your sales are and how your customers pay.
How do you test whether it fits?
Look at your slowest week of the last few months. If the fixed payment still fits that week with money left for your regular bills, the amount is comfortable. If it only fits your average week, ask for a smaller advance or a longer term before you sign.
Where will you see it?
On the offer summary, in the contract's payment section and on your statement as a repeating debit of the same amount.
Which terms are related to fixed payment?
The full list is in the glossary. Owners ask about this in Can I make extra payments on my merchant cash advance?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.