Remittance: Meaning in a Merchant Cash Advance
A remittance is each payment the funder collects from your business under a merchant cash advance. It's the daily or weekly amount that comes out of your bank account until the purchased amount is delivered.
What does remittance mean?
When you sell part of your future sales to a funder, you agree to hand over a share of those sales as they come in. Each handover is a remittance. On most advances today, the remittance is a fixed ACH debit sized to match your expected share of sales. On some, it's a split of each card batch taken directly by the processor. The word comes from the contract language, where you remit the funder's share to them.
Why does remittance matter to your business?
The remittance is what you feel every day or week. Its size decides whether the advance is comfortable or tight. Because it's supposed to track a share of your sales, most contracts give you a way to ask for an adjustment if sales fall. That's the reconciliation process. Knowing the remittance is tied to sales, not a fixed debt payment, helps you understand what to ask for when business slows.
How does remittance affect cash flow?
Plan your week around the remittance. Knowing the exact day it comes out, and keeping enough in the account to cover it, avoids returned payments and the fees that come with them. If a big expense lands on the same day, move money in ahead of time rather than hoping the debit clears.
Where will you see it?
In the payment section of the contract, next to the specified percentage, and on your bank statement as a recurring debit from the funder.
Which terms are related to remittance?
The full list is in the glossary. Owners ask about this in Is an MCA factor rate monthly or for the whole 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.