True Revenue: Meaning in a Merchant Cash Advance
True revenue is the part of a business's bank deposits that comes from actual sales. Funders calculate it by taking total deposits and removing transfers between accounts, loan or advance proceeds, refunds, returned deposits and other money that isn't income.
What does true revenue mean?
Your statement shows everything that landed in the account. Not all of it is sales. Moving money from savings, depositing an owner loan or receiving a new advance all look like deposits. An underwriter goes line by line and strips those out, and what's left is the revenue that supports an offer.
Why does true revenue matter to your business?
Offers are sized from true revenue, not gross deposits. If half your deposits in a month were transfers, the funder sizes the offer on the other half. Owners are sometimes surprised by a small offer because they were counting every deposit. Knowing your own number ahead of time sets realistic expectations.
What gets removed?
- Transfers from your other accounts.
- Loan, line of credit or advance proceeds.
- Owner contributions.
- Returned or reversed deposits.
- Refunds and chargebacks credited back.
How do you make it easy to read?
Run all sales through one business account, label transfers clearly and avoid shuffling money between accounts right before you send statements. If a large deposit is a one-time sale, say so up front.
How do you check it yourself?
Take one recent statement and highlight every deposit that came from a customer or a card processor. Add those up. That figure, not the statement's total deposits, is close to what an underwriter will use.
Where will you see it?
In an underwriting worksheet or broker summary, usually as monthly figures next to gross deposits. In an offer explanation, where the funder says what monthly revenue it used.
Which terms are related to true revenue?
- Deposit count
- Average daily balance
- Business checking account
- Will one big deposit help my MCA offer?
- Net funding
The full list is in the glossary. Owners ask about this in Do funders look at profit or revenue for an MCA?.
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.