Fixed debits from your bank account
Many MCAs collect a fixed amount by ACH debit every business day or every week. A hypothetical $65,000 total payback collected over about 168 business days works out to roughly $387 per business day, or about $1,935 per week if the same total were collected weekly over the same period (about 33.6 weeks). Use the agreement's actual schedule; these figures are illustrations.
A share of receipts
Some agreements collect a percentage of card-processing receipts or deposits, sometimes called a holdback or specified percentage. Payments rise and fall with sales, which can lengthen the payback period when sales slow.
Reconciliation
Some fixed-payment agreements describe a reconciliation process that can adjust payments to reflect actual receipts. Ask whether the agreement includes one, how to request it, what documents are needed, and how long it takes. Do not assume it exists or is automatic.
Test the schedule before you sign
- List your deposits and fixed expenses by day or week for a recent slow month.
- Subtract the proposed payment and check the remaining cash cushion.
- Consider what happens if a large customer pays late.
- Ask what fees apply to a returned or missed payment.
Watch for collection problems
The FTC has brought cases alleging that some MCA providers withdrew more than agreed or kept withdrawing after a balance was paid. Monitor your account and keep records of payments made.