Marketing Agencies and Consultancies: 6 Reviews of Retainer Revenue and MCA Claims

A monthly retainer can look more dependable than the contract that produces it. A marketing agency or consultancy should identify what the client has purchased and what remains conditional before offering that revenue as the basis of an MCA settlement.

1. Read the Retainer as a Service Obligation

Retrieve the client agreement and any statement of work. Determine the period covered by the payment and the deliverables or availability the agency has undertaken to provide.

The word retainer does not establish that every payment has the same legal treatment. A commercial agency agreement should be examined on its own terms rather than compared with a lawyer's trust account or a different professional arrangement.

Separate work already delivered from services still due. The business needs to know which expenses remain before the collected amount can be treated as available for debt payments.

Identify cancellation, refund and adjustment provisions in the actual agreement. A recurring invoice does not guarantee that the relationship will continue for the period assumed in the forecast.

Keep amendments and accepted scope changes with the contract. An informal expansion of services can reduce the margin available to support settlement even while the invoice amount remains unchanged.

2. Examine the MCA's Definition of Receipts

In LG Funding LLC v. United Senior Properties of Olathe LLC, the New York appellate court considered reconciliation and other features relevant to absolute repayment. The ruling does not make a lost client or a reduced retainer a universal defense to MCA collection.

Read the actual adjustment procedure and identify which receipts enter its calculation. Determine what records the funder requires and preserve the response to a submitted request.

A lower bank balance can reflect more work expense rather than reduced receipts. The request should explain the relevant change rather than assume that a general description of hardship meets the contractual requirement.

Before forecasting a reduced debit, before promising that cash to another obligation, identify what adjustment has been accepted. An unacknowledged request should remain unresolved in the budget.

Ask counsel to review and analyze how the provision was administered if the business disputes the response. The written terms and the correspondence belong in the same assessment.

3. Bring the Client Revenue Schedule to Delancey Street

Delancey Street offers a free confidential initial review of MCA concerns. An agency can present the advance documents and a schedule distinguishing collected retainers from future billing dependent on continuing client work.

The company provides debt settlement services and coordinates legal matters with independent counsel. It is not a law firm. Contract interpretation, collateral disputes and representation require the appropriate legal engagement.

Ask the adviser to ensure that an offer accounts for the cost of delivering the services supporting the revenue. Counsel should ensure that proposed assignments or client communications receive the required review.

Review service fees and the scope of creditor contact. The owner should understand what happens if the funder declines the proposal or requests a different payment schedule.

A settlement source should be described with its conditions. An expected client renewal can be relevant without being presented as a completed commitment.

4. Identify the Rights Asserted Against Client Accounts

New York UCC Section 9-315 addresses security interests continuing in collateral and identifiable proceeds, subject to authorization and exceptions. Application requires an underlying grant and the governing law; a funder's demand does not establish entitlement to every payment the agency receives.

Compare the security description with the client accounts involved. Identify whether another party has asserted rights and provide the relevant documents to counsel.

Review Client Payment Directions

If a customer receives a notice concerning where to send payment, retain the entire notice. The agency should obtain advice before telling the customer to disregard it or supplying competing instructions.

Determine what action has occurred. An asserted right, a court order and a negotiated payment direction require different analysis.

The client agreement may contain assignment or consent language relevant to the proposed arrangement. Counsel should examine that language rather than assume every service receivable can be transferred on the same terms.

Account for the Work Required to Retain the Client

A settlement forecast should include the staff and outside services needed to perform the continuing engagement. A client paying every month can still leave little available cash if the scope requires expenses omitted from the projection.

Identify money collected for expenses or purchases the agency must make under the contract. The owner's entitlement to use that amount requires review of the arrangement rather than an assumption based on the account balance.

Resist the urge to treat pass-through amounts as margin. A large receipt can carry a corresponding commitment that belongs in the same calculation.

An extremely useful comparison tests the effect if the largest client does not renew. The agency need not predict that outcome to determine whether the proposed installment depends on it never occurring.

The calendar can show a full month of work while the agreement permits a different future. The debt plan should use the contract's actual commitments.

Keep prospective projects separate from signed work. A favorable client conversation should not become a guaranteed installment source through a confident sales forecast.

If a key employee or subcontractor is essential to delivery, identify the current arrangement and its cost. The forecast should not assume that capacity remains available after the business changes its payment commitments.

Include collection conditions tied to approval in the forecast. A client may need to accept a milestone or receive a report before an amount becomes payable under the agreement. The agency should identify what remains to satisfy that condition and the person responsible for doing it. An invoice date alone does not establish that the proposed settlement funding will arrive on the same date.

5. Maintain the Client and Creditor Records

Record accepted scope changes and payment adjustments with the relevant agreements. Reconcile invoices with actual deposits.

Simply preserve notices for the assigned professional. The account should distinguish earned amounts, disputed items and commitments that remain unconfirmed.

6. Offer a Payment the Retainer Can Support

Read the settlement's missed-payment terms and the releases due after completion. Identify whether the schedule remains workable when a client payment arrives later than forecast.

An extremely attractive reduction may remain unsuitable if it assumes that every collected dollar can be withdrawn from the business before the services are performed.

Delancey Street's initial review can address the advance while counsel examines the client and security agreements. The useful measure of a retainer is what it leaves available after the agency recognizes the work it still owes.