6 Things to Know About MCA Reconciliation Requests

If you’re behind on an MCA, and your revenue is down, you’ve probably heard someone tell you to “file a reconciliation.” Maybe your broker told you. Maybe another business owner told you. Maybe you read it on Reddit. Here’s the truth: reconciliation is a real right in most MCA contracts, but the way it actually works is nothing like what people think. And if you do it wrong, you’ll hand the lender everything they need to default you.

Short answer: Reconciliation is the clause in your MCA agreement that’s supposed to let you adjust the daily payment down when your revenue drops. In theory, it’s the thing that makes an MCA legally a “purchase of future receivables” and not a loan. In practice, funders make it as painful as possible to actually use. Most business owners who request one get denied, slow-walked, or defaulted in the process.

Read this before you file anything.

1. Reconciliation is the thing that keeps the MCA from being a loan.

This is the part nobody explains. An MCA is legally structured as the purchase of a percentage of your future receivables. Not a loan. The entire legal fiction rests on one idea: if your revenue goes down, the payment goes down with it. That’s reconciliation. Without it, an MCA is just a loan with a 150% interest rate, and courts have started calling them exactly that. Which means the funder needs the reconciliation clause to exist, but they don’t want you to actually use it. And they’ve built the process around that contradiction.

2. Most contracts require you to ask, in writing, with documentation.

You don’t get reconciliation automatically. You have to request it. And the request has to come in the format the contract specifies – usually written, usually with bank statements, usually with processor statements, usually within a specific window. Miss the window, use the wrong email, forget a document, and they’ll deny you on procedure. Read the reconciliation clause in your agreement before you do anything. Not the summary your broker sent. The actual contract. The language varies wildly from funder to funder and the procedural requirements are where most requests die.

3. The funder will stall you, and stalling is the strategy.

Here’s what actually happens when you file. They’ll acknowledge the request. They’ll ask for more documents. You’ll send them. They’ll ask for different documents. You’ll send those. Two weeks go by. Meanwhile, the daily debits are still hitting. Your account is still getting drained. The whole point is to run the clock, so by the time they respond, you’ve either caught up on revenue, bounced a payment(which is a default), or given up. Funders know most business owners can’t sustain a reconciliation fight for 30 days while the ACH is still pulling. That’s the whole game.

4. Filing a reconciliation, does not pause your payments.

This is the one that gets people defaulted. You file the request, you assume the daily debits will stop, or at least slow down, while the funder reviews. They don’t. The ACH keeps hitting at the full amount, until the funder formally agrees to adjust it. If you block the ACH because you think you’re “in reconciliation,” you’ve just defaulted. The contract is very clear on this, even if the conversation with your broker wasn’t.

5. A denied reconciliation can actually help you, later.

Here’s the counterintuitive piece. If you file a proper reconciliation request, with full documentation, and the funder denies it or ignores it, or demands daily payments that are mathematically impossible given your revenue – that denial becomes evidence. Evidence that the MCA is functioning as a loan, not a purchase of receivables. Attorneys who fight MCAs in court use exactly this. A well-documented, ignored reconciliation request is one of the strongest pieces of evidence you can have, if this ends up in litigation. Which means filing it correctly matters even if you expect to be denied.

6. Reconciliation is not debt relief, and it’s not a fix.

The last thing to know. Even if the funder grants the reconciliation, all they’re doing is lowering the daily payment to match the specified percentage of your actual receivables. The balance doesn’t go down. The factor rate doesn’t change. You still owe the full purchased amount. Reconciliation buys you time, and sometimes breathing room, but it doesn’t solve the underlying problem. If the MCA was unaffordable at the original payment, it’ll be unaffordable at the reconciled payment too, just slower. Business owners who treat reconciliation as the answer end up right back where they started, three months later, with less runway and fewer options.

If you’re considering filing a reconciliation, do it right, do it in writing, and don’t block the ACH while you wait. And if you’re already stacked, already behind, and reconciliation isn’t going to be enough – that’s a different conversation, and it’s one you should have before the funder accelerates the balance on you.