Missed Payment: Meaning in a Merchant Cash Advance
A missed payment is a merchant cash advance debit that fails to collect, usually because the account didn't have enough funds or the payment was blocked. Most contracts charge a fee for each returned payment and treat repeated misses as a potential default.
What does missed payment mean?
When the funder's ACH debit hits your account and there isn't enough money, the bank returns it. The funder records a missed payment. One or two during a rough week happen to plenty of businesses. A pattern of them, or a string with no explanation, tells the funder the advance is in trouble.
Why does missed payment matter to your business?
Missed payments cost money directly, through returned payment fees from the funder and often overdraft or NSF fees from your bank. They also show up in your statements, which future funders read. And many contracts list a certain number of returned payments as an event of default. The best response is fast: call the funder, explain and ask about reconciliation or a modification before the misses pile up.
How do you catch up after a missed payment?
Ask whether the funder will spread the missed amounts over future payments rather than collecting them all at once, which can trigger another bounce.
How do you protect the account?
Keep a cushion equal to a few payments in the account where you can. It's the simplest protection against a single slow day turning into a returned debit, fees and an uncomfortable call with your funder. Overdraft protection from your bank can help too, but it carries its own costs.
Where will you see it?
On your bank statement as a returned item, and in the fee and default sections of your contract.
Which terms are related to missed 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.