What Happens to My MCA If Sales Slow Down?
A true merchant cash advance is supposed to follow your sales. If sales slow down, you can usually ask for reconciliation, and the funder adjusts the payment toward the agreed percentage of what you actually took in. You'll need to send statements that show the drop. The balance stays the same, so the advance takes longer to pay off, but the payment should fit the slower month.
What does this look like with real numbers?
Say the contract takes 10% of sales, set at $500 a day when you averaged $5,000. Sales fall to $3,500 a day. Reconciled, the payment moves toward $350. Over twenty business days that's $3,000 less going out that month. The unpaid $3,000 is still owed later.
How do you ask for a lower payment?
- Find the reconciliation section in your contract.
- Send the request in writing with the statements it asks for.
- Keep paying while the funder reviews it.
- Get the new payment amount in writing.
Details are in the reconciliation guide.
How soon should you ask?
Ask as soon as a slower month shows in your deposits, before a payment bounces. A funder reviews a reconciliation against recent statements, so a request backed by on-time payments gets a faster yes than one sent after missed debits.
What should you send with your request?
- The bank statements for the slow period, as PDFs from your bank.
- A short note on the cause: a lost contract, weather, a closed road, a slow season.
- Your card processing statements if the funder takes a share of card sales.
- The date you want the adjusted payment to start.
Keep a copy of everything and ask the funder to confirm the new payment in writing. Send the request again each period the slowdown lasts, since most contracts reconcile period by period.
What should you ask the funder?
- How often can I request reconciliation?
- Which statements do you need?
- How long does review take?
- Is the new payment confirmed in writing?
Where can you check your own numbers?
The short version is in the Repayment FAQ. To check the numbers on your own advance, use the MCA payment calculator.
Where do these facts come from?
Want a second look at your advance?
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.