Future Receivables: Meaning in a Merchant Cash Advance
Future receivables are the payments your business will collect from customers going forward, such as card sales, cash deposits and invoice payments. In a merchant cash advance, you sell a share of them to the funder in exchange for money today.
What does future receivables mean?
Your business earns money every day it's open. The receivables are that stream of customer payments yet to come. A funder buying future receivables is paying you now for a slice of that stream. Instead of lending you money against it, the funder owns a share of it until the purchased amount is delivered.
Why does future receivables matter to your business?
This is the idea that separates an MCA from a loan. Because the funder bought part of your future sales, it shares the risk that those sales come in slower than expected. That's the reason for reconciliation clauses and the reason a true MCA doesn't have a fixed repayment date. When a contract strips out that risk sharing, it starts to look like a loan in disguise.
What counts as future receivables?
Contracts define receivables differently. Some cover only card sales, others cover every payment the business receives. Read the definition so you know exactly what you've sold a share of.
What if sales stop?
If the business fails despite good faith effort, the funder takes a loss on receivables that never materialize. Contracts treat a closure you cause on purpose very differently.
Why does it matter for pricing?
Because the funder is buying receivables rather than lending, the price depends on how confident it is that your sales will keep coming.
Where will you see it?
In the opening sections of the merchant agreement, which describe what's being sold, and in the UCC financing statement, which often lists receivables as the collateral.
Which terms are related to future receivables?
The full list is in the glossary. Owners ask about this in What's the difference between an MCA approval and an offer?.
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.