Reconciliation is the clause your MCA funder hopes you never invoke. It exists in most purchase and sale agreements, usually buried in a section on adjustments or true-ups, and it requires the funder to reduce daily or weekly deductions when your actual receivables fall below the level the parties assumed at signing.
Most business owners learn about it after the damage is done. The right steps, taken in sequence, produce better results than a single call to your account manager that goes nowhere.
Step 1: Locate the Reconciliation Clause in Your Contract
Before you contact anyone, find the language. It will appear under terms like “reconciliation,” “true-up,” “adjustment,” or “modification of remittance rate.” Some agreements use the phrase “specified percentage” to describe the holdback, and then provide that deductions must remain consistent with that percentage across all revenue periods. That language is your basis for the request.
If your agreement contains no reconciliation provision, you are not without options, but you are making a different argument, one grounded in the classification of the agreement as a loan rather than a purchase of receivables.
Step 2: Pull Three Months of Bank Statements
Reconciliation requests live or die on documentation. The funder’s calculation was based on projected receivables at signing. Your request is based on actual receivables since then. Gather three months of complete bank statements, including all deposit activity, not just the balance history. The total deposit figure is what matters.
Step 3: Calculate What You Were Supposed to Pay
Take the specified percentage from your contract, typically between five and twenty percent, and multiply it by your actual monthly deposits. The product is what the funder was contractually entitled to collect each month. Compare that figure to what was actually debited. If the actual debits exceed the product of the percentage and actual deposits, you have a facially valid reconciliation claim.
The funder purchased a percentage of future receivables. It did not purchase a fixed daily amount regardless of whether receivables materialized.
Step 4: Prepare a Written Reconciliation Request
Do not request reconciliation by phone. A verbal conversation produces no record and creates no obligation. Write a letter or email addressed to the funder’s account management or legal department, citing the specific contract section, attaching your bank statements, showing your calculation, and requesting an adjusted remittance amount consistent with your actual receivables percentage.
The formality of the request signals that you are prepared to enforce the right, not simply complaining.
Step 5: Propose a Specific Adjusted Amount
Funders respond better to proposals than to requests for relief. When you submit your reconciliation demand, include a specific proposed deduction amount, derived from your calculation, that reflects the true percentage of recent receivables. Give them something to approve rather than a problem to solve.
Step 6: Request Confirmation in Writing Before Any New Debit
If the funder agrees verbally, do not accept that as binding. Request a written amendment or a confirmation email that states the adjusted amount and the effective date. An oral modification of a written agreement is often unenforceable under the contract’s own terms. The writing is the agreement.
Step 7: Document Every Debit After the Request
Once you have submitted your reconciliation request, begin documenting every subsequent debit against your account. If the funder continues collecting at the original rate after acknowledging your request, those excess deductions become the basis for a breach of contract claim or an ACH dispute, depending on the mechanism of collection.
January 2025 saw a significant enforcement action in which a funder was found to have systematically ignored reconciliation demands while continuing to collect fixed daily amounts, treating the documentation of those demands as evidence of the pattern.
Step 8: Engage Legal Counsel If the Request Is Denied or Ignored
A denied reconciliation request is not a final determination. It is the beginning of the legal phase. An attorney can review the contract for additional leverage, challenge the classification of the agreement as a purchase of receivables rather than a loan, file an ACH dispute with your bank, or seek emergency injunctive relief if the deductions are eliminating your ability to operate.
The reconciliation right exists because regulators and courts noticed that funders were collecting fixed amounts regardless of actual revenue. Funders who ignore written reconciliation requests are accumulating exposure, not escaping it.
A first call costs nothing and assumes nothing. If your MCA payments are exceeding what your actual receivables justify, that gap is worth examining with legal counsel before the account runs dry.
