Why reconciliation exists
A merchant cash advance is not structured as a loan. The funder purchases a percentage of your future receivables, and the amount you remit is supposed to move with those receivables. That is the entire premise the structure rests on.
In practice, most funders set a fixed daily or weekly debit based on a projection of your revenue. When your actual revenue falls below that projection, the fixed debit no longer reflects the agreed percentage — and reconciliation is the contractual mechanism that is supposed to correct the gap. Courts examining these agreements have looked closely at whether reconciliation provisions function in practice or exist only on paper.
What does your contract actually say?
This is where most merchants get stuck, and where the outcome is genuinely decided. Reconciliation language varies significantly between funders. Some agreements make reconciliation automatic at set intervals. Others require the merchant to request it in writing within a narrow window, with specified documentation attached. Some make it discretionary on the funder's side — and even that phrasing has limits.
Your rights depend on the specific language of your agreement. Two businesses with the same funder, the same balance, and the same revenue decline can have very different reconciliation outcomes because they signed different versions of the contract.
What counts as revenue?
This question decides more reconciliation disputes than any other. An agreement may define receipts narrowly — card processing volume only — or broadly enough to sweep in deposits that were never operating revenue at all.
Common classification problems we see:
- Transfers between the business's own accounts counted as new revenue
- Proceeds from other advances counted as receipts
- Refunds, chargebacks, and reversals never netted out
- Loan or credit-line draws treated as sales
- One-time or non-recurring deposits used to inflate the baseline
What documents you need
The agreement
Signed MCA agreement plus every addendum, amendment, and modification.
Bank statements
Full statements covering the reconciliation period — not summaries or screenshots.
Processing records
Merchant processor statements showing settled card volume.
Payment history
Every debit the funder took, with dates and amounts.
A worked example
Suppose an agreement purchases 15% of receipts, and the fixed remittance was set against a projection of $200,000 in monthly revenue.
On these facts, the business remitted $12,000 more in the month than the agreed percentage of actual receipts. Over six months that is $72,000 — money that came out of payroll, inventory, and rent.
Illustration only. Whether an adjustment or refund is available depends on your agreement's terms and your documentary record.
What if the funder refuses?
Make the request in writing, attach the documentation the agreement calls for, and keep the response. A refusal to honor a reconciliation provision in the funder's own contract can itself be a breach — and it is a breach the funder created, in a document they drafted.
That written record matters later. It becomes leverage in negotiation, a basis for a payment reduction or refund claim, and a defense if the funder eventually sues or moves to arbitration.
One thing not to do: stop paying on your own. A unilateral stop payment is a breach on your side, and it hands the funder the cleaner case. Any change to what you remit should be grounded in what the agreement actually permits.
If you have multiple advances
Each agreement is analyzed on its own terms. Different funders define receipts differently, impose different notice requirements, and set different reconciliation intervals. It is common for one funder in a stack to owe a substantial adjustment while another owes nothing at all — which is exactly why stacked positions need to be reviewed together, in order of exposure.
Common questions
Does every MCA agreement allow reconciliation?
No. Many contain reconciliation provisions, but the trigger, notice requirements, documentation, and deadlines vary by funder. Some agreements make it difficult to invoke by design.
How far back can reconciliation go?
That depends on the agreement's stated reconciliation period and any deadline it imposes. Some agreements limit review to a recent window, which is one reason acting early preserves more.
Can reconciliation result in a refund rather than just a lower payment?
Sometimes. Where remittances were calculated on revenue higher than what the business actually received, the difference may be an overpayment. Recoverability depends on the agreement's terms and the record.
Will requesting reconciliation put me in default?
Invoking a right your agreement grants is not a default. Stopping payment without contractual basis is a different matter — that is what creates exposure.
I've already been sued. Is reconciliation still relevant?
Often yes. A funder's failure to reconcile can be raised as a defense or counterclaim. If you have been served, see our stage-by-stage guide.
Which funders does this apply to?
Reconciliation language appears across the industry. We have handled matters involving hundreds of funders — see the MCA companies list.
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