Reconciliation Clause: Meaning in a Merchant Cash Advance
A reconciliation clause lets you ask the funder to compare your fixed payments with the specified percentage of your actual sales, and adjust the payment when sales fall. It's what makes an advance a purchase of sales rather than a loan. Most clauses require a written request with bank statements, and some limit how often you can ask.
Where does it show up?
In the payment or adjustment section of the contract. Read for the notice method, the documents required, how often you can ask and how long the funder has to respond.
How do you use a reconciliation clause?
Read the steps it sets out, then send the request in writing with your recent bank statements. The funder compares your actual deposits with the specified percentage and adjusts the payment. Keep paying the current amount until the change is confirmed in writing.
What does it look like in practice?
Your payment is $500 a day at a 10% holdback. Sales drop to $3,500 a day. You send the statements. Reconciled, the payment moves toward $350. More in the reconciliation guide.
Which owner question goes with this term?
What happens to my MCA if sales slow down? Answers to the questions owners ask about this term, with what to ask the funder.
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.