When the daily debit takes more than the business can sustain, the instinct is to wait and see whether next week will be better. This is the most expensive instinct in the situation.
Calculate What the Debit Is Actually Costing
The first action is arithmetic. Take the daily debit amount, multiply by the number of business days in a month, and compare it to average monthly deposits. If the daily collection is consuming more than a quarter of gross revenue, the agreement is extracting faster than most businesses can replenish. If it is consuming more than a third, the business is in active decline regardless of any other factor. These numbers tell you whether you have a cash flow problem or a structural survival problem. The response is different depending on which it is.
Request the Reconciliation Adjustment in Writing
If revenue has declined since origination, the reconciliation clause in the MCA agreement is the first legal tool available. The request must be specific. What is the current revenue? What adjustment is being requested? What documentation is attached? A written reconciliation demand sent by certified mail and by email creates a record. If the funder ignores it and continues collecting at the original rate, that record becomes material in any subsequent litigation.
Many merchants submit informal requests verbally or through the collections portal. Those requests produce no record and create no obligation for the funder. A formal written demand, referencing the contract provision, is categorically different.
Hire an Attorney Before the Account Defaults
The period before default is the period when the merchant has the most options. Once the account is in default, the funder controls the timeline. Before default, the merchant controls whether and when to default, which collections path is preferable, and what leverage is available. That window closes when the first missed debit is recorded.
An attorney retained before default can send a representation letter that transfers all communications to counsel, assess the contract for vulnerabilities, open negotiations with the funder’s legal department, and create a documented record of good-faith engagement. All of these actions are harder or impossible after the account enters formal default.
Document Every Communication With the Funder
Every phone call, email, portal message, and written notice from the funder should be preserved. Funders sometimes make representations during collections calls, including statements about forbearance options, payment adjustments, or settlement ranges, that they later deny making. A merchant who has preserved contemporaneous notes and correspondence has a factual record. A merchant who has not is dependent on the funder’s account of what was said.
The collections call you did not document is the call the funder will describe differently when the dispute reaches a hearing.
Assess the Personal Guarantee Exposure
When the business account is being drained, the personal guarantee becomes relevant in a way that may not have been fully considered at origination. The attorney reviews the guarantee terms to determine whether they are limited to the business obligation, whether the guarantee contains any defenses based on the funder’s conduct, and whether the guarantee was executed in a manner that satisfies the applicable formality requirements. A personal guarantee that was signed under conditions suggesting fraud in the inducement is a defective guarantee, and the defect is worth identifying before the funder tries to enforce it.
Consultation with Spodek Law Group is where this becomes an actionable strategy rather than an unresolved drain. The first call costs nothing.
