How MCA Payments Are Structured
MCA repayment is structured around daily or weekly automatic withdrawals from your business bank account via ACH. The specific structure depends on your agreement type.
Fixed Daily Withdrawal
The most common structure. The funder calculates a fixed dollar amount deducted every business day. This amount is determined by dividing the total purchased amount by estimated business days in the repayment term. For a $135,000 purchased amount over 6 months or 130 business days, the daily payment is roughly $1,038. This does not change regardless of actual revenue, creating problems when revenue fluctuates.
Percentage-Based Withdrawal
Some MCAs take a percentage of daily credit card receipts, typically 10 to 20 percent. This model is more flexible because payments decrease when sales decrease. However, it only applies to credit card revenue, and many businesses receive significant revenue through other channels.
Weekly ACH
Some funders offer weekly withdrawals instead of daily. The amount equals five daily payments consolidated. This simplifies cash management slightly but does not reduce total cost.
How This Affects Cash Flow
Daily withdrawals create a unique dynamic. Your balance is reduced every morning before you can use funds for operations. You need a higher average balance to cover both payments and daily expenses. If revenue deposits in the afternoon but ACH hits in the morning, you face insufficient fund situations even when total daily revenue exceeds the payment.
Reconciliation and Payment Adjustment
If the payment structure creates cash flow problems, review your contract’s reconciliation clause. You may be entitled to request adjustment based on decreased revenue. Exercising this right proactively is one of the best ways to prevent escalation into a default situation. Submit reconciliation requests in writing with supporting bank statements.