MCA Reconciliation Request: Exact Language That Gets Results

Reconciliation is the most overlooked tool in an MCA stack. Most contracts include a clause requiring the funder to recalculate the daily debit when actual receivables fall below the projected receivables the original advance was sized against. Funders do not honor this clause until a merchant formally invokes it with the right documentation and the right language. Done correctly, a reconciliation request can pause or substantially reduce daily debits within 14 to 30 days. Done incorrectly, it gets ignored or denied.

TL;DR

• Reconciliation clauses appear in most MCA contracts, typically under sections titled "Reconciliation," "True-Up," or "Adjustment of Specified Percentage."
• The clause generally requires the funder to recalculate the daily debit based on actual receivables when the merchant requests it in writing with supporting documentation.
• A proper request includes: contract reference, bank statement documentation, calculation of actual vs projected receivables, proposed adjustment amount, and a specific response deadline.
• Funders ignore informal requests. They respond to formal written requests delivered via traceable means.
• Response timelines vary by contract: 5 business days is common; some require up to 30 days.
• If the funder fails to respond within the contractual window, the request itself becomes evidence of bad faith that strengthens later settlement or litigation positioning.

What reconciliation actually is

When a merchant takes an MCA, the daily debit is set at a fixed dollar amount that represents an estimated percentage of expected daily receivables. The contract language often says something like: "Merchant shall remit to Funder a Specified Percentage of Merchant's Future Receipts, estimated at $X per business day."

The estimated percentage is the key phrase. The daily debit is not a fixed payment. It is an estimate of a percentage. The contract obligation is the percentage, not the dollar amount. When actual receipts come in below the projection, the dollar amount of the debit is, by the contract's own terms, overstated.

Reconciliation is the mechanism to correct it. The merchant provides documentation of actual receipts over a defined period. The funder calculates what the daily debit should have been based on actual receipts at the contractual percentage. The funder either refunds the overage or adjusts forward debits, or both.

The clause exists because MCAs are not loans. They are purchases of future receivables at a specified percentage. The legal structure of the product requires the reconciliation mechanism to maintain the purchase-of-receivables fiction. Without reconciliation, the product is a fixed-payment loan, which would subject it to usury laws.

Why funders do not volunteer reconciliation

Reconciliation reduces the funder's daily cash flow. They do not surface the option proactively. Most merchants do not know the clause exists until counsel or a workout advisor reads the contract.

Funders also know that informal reconciliation requests (a phone call, an email asking for help) can be deflected, delayed, or denied without consequence. A formal written request invoking specific contract language is harder to ignore because it creates a paper trail.

The work of a reconciliation request is to make the formal record. The funder either honors the request, denies it (creating a documented bad-faith argument), or fails to respond (creating a stronger documented bad-faith argument).

Locating the reconciliation clause

Pull the MCA contract. The reconciliation language is usually in one of these sections:

• "Reconciliation" (most common section name)
• "Adjustment of Specified Percentage"
• "True-Up Provision"
• "Recalculation of Daily Remittance"
• "Specified Percentage and Estimated Daily Amount"

Some contracts bury the language in a paragraph within "Merchant's Obligations" or "Payment Terms." Read the entire payment section carefully.

The clause typically reads something like: "Upon Merchant's written request, accompanied by such documentation as Funder may reasonably require, Funder shall reconcile the Specified Daily Amount to reflect actual Future Receipts and either refund overpaid amounts or adjust subsequent daily remittances accordingly."

If the contract does not contain reconciliation language at all, the request structure changes. That is a separate conversation involving the legal characterization of the product. Forensic audit work surfaces this gap.

The request structure

A reconciliation request that works contains six components.

1. Contract identification

Open with the specific contract reference: funder name, agreement date, advance amount, funding date, contract number if present. This eliminates any ambiguity about which obligation is being addressed.

Example language: "This letter concerns the Merchant Agreement dated March 14, 2025 between [Merchant LLC] and [Funder LLC], advance amount $185,000, funded on March 17, 2025."

2. Invocation of the reconciliation clause

Cite the section of the contract by number and title. Quote the operative language verbatim. This makes the request impossible to mischaracterize as informal.

Example language: "Pursuant to Section 4(c) of the Merchant Agreement, titled 'Reconciliation,' which provides: 'Upon Merchant's written request and submission of bank statements evidencing actual Future Receipts, Funder shall recalculate the Specified Daily Amount to reflect the Specified Percentage of actual Future Receipts and adjust subsequent daily remittances accordingly,' Merchant hereby requests reconciliation."

3. Documentation of actual receipts

Attach bank statements covering the reconciliation period (typically the most recent 30 to 90 days). Calculate the actual daily average of receipts in that period and present it clearly.

Example language: "Attached are bank statements for [Merchant LLC]'s operating account at [Bank Name] for the period February 1, 2025 through April 30, 2025. During this 89-day period, total receipts deposited were $623,400, representing an average daily receipt of $7,005."

4. Calculation of the corrected debit

State the contractual Specified Percentage. Multiply by the actual average daily receipt. Compare to the current daily debit. The difference is the adjustment requested.

Example language: "The Merchant Agreement establishes the Specified Percentage at 12 percent. Applied to the actual average daily receipt of $7,005, the corrected Specified Daily Amount is $840.60. The current daily debit is $1,240, representing an overstatement of $399.40 per business day."

5. Proposed adjustment

State exactly what the funder should do: adjust forward debits, refund prior overpayments, or both. Specify the dollar amount and the effective date.

Example language: "Merchant requests that Funder adjust the daily remittance from $1,240 to $840.60, effective for the next business day following Funder's response. Merchant further requests refund of $7,988 representing 20 business days of documented overpayment between April 1, 2025 and April 30, 2025."

6. Response deadline

State the contractual response deadline if specified. If no deadline is stated, propose a reasonable one (5 to 10 business days) and reserve rights.

Example language: "Section 4(c) of the Merchant Agreement requires Funder's response within 5 business days of receipt. Merchant requests Funder's written response by May 22, 2025. In the event Funder fails to respond within the contractual deadline, Merchant reserves all rights, including but not limited to suspension of daily remittances pending good-faith reconciliation."

Delivery and documentation

Deliver via traceable means. Email with read receipt to the funder's noticed address, with a copy via certified mail to the funder's address of record on the UCC filing. Keep copies of all delivery confirmations.

Some funders require notice to specific email addresses or specific officers. Check the contract's notice section for delivery requirements.

What happens after delivery

Three outcomes are typical.

Outcome 1: Funder adjusts

The funder reviews the documentation, agrees with the calculation, and adjusts the daily debit. This happens about 30 to 45 percent of the time with funders who respect their contractual obligations. The adjustment is the contractual remedy and the matter resolves at the new debit level.

Outcome 2: Funder negotiates

The funder responds with a counter-calculation, often disputing the documentation, the time period, or the calculation method. This opens a negotiation. With proper documentation, the negotiation usually lands at an adjusted debit somewhere between the original and the requested amount. This happens about 30 to 40 percent of the time.

Outcome 3: Funder ignores or denies

The funder either does not respond within the contractual window or responds with a blanket denial. This happens about 20 to 35 percent of the time. The non-response or unsupported denial becomes evidence of bad faith and strengthens later settlement positioning. Creditor liaison work escalates the matter to counsel at this point.

When reconciliation alone is not enough

Reconciliation is a tool, not a solution. It can pause or reduce a single funder's debit but it does not resolve the underlying stack. A reconciliation that succeeds on one contract may free up cash that enables settlement on other contracts. A reconciliation that fails creates documented bad faith that improves the settlement position on that contract.

The strategic use of reconciliation is within a broader workout. Reconciliation requests go out on contracts with applicable language while liquidity engineering restructures the operating cash flow and settlement negotiations begin on other contracts.

A reconciliation request on every contract simultaneously is usually counterproductive. It signals a coordinated workout to all funders at once and can accelerate aggressive responses. Sequenced reconciliation requests, timed against the broader workout, produce better outcomes.

A real example, walked through

A regional distributor had four MCAs with combined daily debits of $4,800 against actual daily revenue of $18,000 (a 27 percent debit burden). Two of the four contracts had reconciliation language.

Reconciliation requests went out on the two applicable contracts with 60 days of bank documentation. The first funder adjusted within 9 days, dropping that contract's debit from $1,400 to $920. The second funder ignored the request through the 5-day contractual window, then sent a non-substantive denial on day 12.

The first reconciliation freed up $480 per business day immediately. The second funder's non-response became evidence in subsequent settlement negotiations. That contract eventually settled at 38 percent of face, partly on the strength of the bad-faith record.

The combined effect: $480 per day of immediate relief plus a documented basis for aggressive settlement positioning on the second contract.

What to do next

If you have MCA contracts that may contain reconciliation language, the first step is the contract review itself. The clauses are often present but buried. Reach out and we will review your contracts, identify reconciliation provisions, and draft the formal requests with the right structure and timing for your situation.