MCA Payments Are Bouncing: 5 Steps Before the Next Collection Attempt

If the MCA payments are bouncing, there are five things to do before the next pull.

• Don’t block the ACH.
• Have the funder’s agreements read if you haven’t.
• Gather your business checking account statements, because that’s the evidence.
• Ask for a reconciliation, a lower pull or weekly payments.
• Communicate deliberately.

When the deal is signed, the funder builds payment into a revenue forecast. Later, the market changes: a slow month or lost contract. In an ideal world the size of the schedule would change to match, but reality is more difficult. If you needed a double advance or got two advances close together, you’re paying for all of that now. Is your business failing, or are the payments just wrong for your revenue? A bounce alone doesn’t answer that; the business may be just caught in a situation where the ACH schedule is disconnected from reality.

An ACH that “bounced” can often be re-sent. The National Automated Clearing House Association allows ”two more attempts” after the first return. The re-submission will be marked RETRY PYMT. So the next attempt is coming and there’s time to act before it.

The first step is not to block the ACH. Most agreements treat blocking as an event of default. This may mean fees, UCC notices to your customers, your processor and lawsuits. The notice alerts them to send future payments to the funder, not your business. Stopping payments may be part of a deliberate strategy, but never an improvisation. If business payments are truly unauthorized, there are only 2 banking days to return them; consumers get sixty days.

Reconciliation Clause

The second step is reading the original funder agreements now. Read them all. An MCA is framed as the sale of a percentage of your future receivables. Many contracts have a reconciliation clause that adjusts a fixed daily payment to actual revenue. Funders will rarely volunteer this.

The clause treats a “fixed” ACH pull as an estimate of the amount purchased. If revenue goes up, the payment is too low. If revenue drops, the purchase overshoots and the pull is too high. The reconciliation adjusts the payment to the amount actually purchased. It allows the funder to call the deal a purchase, not a loan. This type of contract helps cash flows match in difficult circumstances, so a funder is often hard-pressed to refuse.

Here’s an example of reconciliation in action: you start the contract with monthly revenue at $260,000 a month, and the funder sets the daily pull at $1,857. It says this is 15% of daily deposits. If your sales fall to $170,000 a month, 15% becomes $1,214. You’re paying $640 a day more than you should. In this example, the reconciliation request is simply asking for the percentage that was contractually agreed to. The change is a simple adjustment, not charity or begging for mercy.

The catch is the drafting. The clause can say reconciliation is at the funder’s ”discretion.” The day to request can be five days after the month’s end; an email address may be incorrect. Some agreements have no clause at all. The paper here decides what can be done.

The third step is to document the revenue now. If the reconciliation clause requires bank statements, then those statements drive the process. If the agreement is for processing revenue, then records from your processor are proof. Get current records for the period that you want to adjust. You may know that revenue is low because you’re seeing it daily, but what matters now is documenting it.

The fourth step is to make the request, if you want reconciliation. It’s straightforward: a written request to the address the clause says; your records; the math of receipts times percent. The funder may reject it for technical reasons: a wrong recipient, missing records or the wrong email box.

If the clause’s requirements are impossible to meet, you may still renegotiate. That happens when a default they must chase is worth less than steady payments. A successful request makes the math of a schedule work again, lowers the monthly payment and extends the term. Be specific about your current revenue. Offer to back it up with statements. It’s safer to propose a number the deposits support and a later review date.

You can also ask to switch from daily pulls to weekly, even if the monthly total is the same. Daily pulls don’t fit some revenue streams, like contract jobs paid after work or restaurants daily revenue. It’s often agreed as part of any conversation.

Reconciliation can start running in days, if the original contract lets it. You can usually negotiate a reduction within one to three weeks. If the ACH can be lowered, it can also rise. The funder who honors a reconciliation watches your later statements to see if revenue is back up. The requests have to keep coming.

The fifth step is to communicate deliberately or not at all. Every conversation with a funder contributes toward a longer pattern that shapes later negotiations. What’s said and when is a choice for deliberate business strategy. Denying a request creates records of how this particular funder behaves.

Adjust the Debt Itself

The payments may have never been affordable from the day you signed them. Turning $8,000 a week into $4,000 will not save some contracts. If the math of the deal never worked, then at some point the answer isn’t trying harder, but to adjust the debt itself. Your strategy could include debt consolidation or settlement. If you’re here because the funder made demands that you couldn’t meet and now they’re sending attorneys, that’s a different process. Get the funder agreements read by someone now.