Reconciliation

A fixed daily or weekly debit is only an estimate of your holdback percentage. Reconciliation corrects it. You send bank statements or processing reports for the period, the funder compares what it collected with the agreed percentage of your actual receipts, and the difference is credited back or future debits are adjusted.

Reconciliation is part of what makes a merchant cash advance a purchase of receivables rather than a loan. When New York courts decide whether an advance is really a loan, they weigh whether the contract has a reconciliation provision, whether it has a finite term, and whether the funder has recourse if you file for bankruptcy.

Read the clause closely. Some give you a right to reconciliation on request within a set number of days. Others leave any adjustment to the funder's sole discretion, which gives you much less. This is general information, not legal advice.