True-Up: Meaning in a Merchant Cash Advance
A true-up is a settlement between what a funder collected on a merchant cash advance and what it should have collected based on your actual sales. If the funder took too much, it credits you. If it took too little, the payment adjusts.
What does true-up mean?
A fixed payment is an estimate of your share of sales. Over time, the estimate drifts from reality. A true-up compares the two over a period, usually by looking at your bank statements, and squares the account. It's the mechanism that keeps a fixed payment honest to the idea of selling a percentage of receivables.
Why does true-up matter to your business?
If your sales dipped and you kept paying the fixed amount, a true-up can put money back in your account or lower future payments. It's worth asking about any time sales fall for a sustained stretch. Some contracts call it reconciliation, others true-up. The label differs; the right to have payments match reality is what matters.
How do you do a true-up right?
Request it in writing, send complete statements for the period and keep paying until the funder confirms the result. Save the funder's written answer with your contract.
How often does it happen?
Some contracts let you ask for a true-up once a month, others on a set schedule. A few run it automatically. Knowing the rhythm helps you plan your request around a slow stretch instead of waiting for the next window after the damage is done.
Where will you see it?
In the reconciliation section of the contract, which sets how often you can ask, what documents you send and how quickly the funder responds.
Which terms are related to true-up?
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.