Daily remittances,
explained from the inside.

A merchant cash advance is, in its underlying structure, a purchase of future receivables. The funder pays a lump sum today in exchange for the right to collect a defined dollar amount of the merchant's future revenue. The mechanism for collecting that revenue — the daily or weekly ACH debit — is what most operators are referring to when they talk about "the payment." Understanding the mechanics of that debit, and the reconciliation language that surrounds it, is the single best protection an operator has against signing a structure that doesn't fit the business.

ACH mechanics: how the debit actually moves

The daily remittance moves through the ACH network, the same rails that handle payroll direct deposits and most recurring vendor payments. At funding, the merchant signs an ACH authorization specifying the routing number, the account number, the dollar amount per debit, and the schedule. The funder then submits a batch debit file to its bank each evening, which clears the next business day. A debit initiated on Monday evening shows on the merchant's statement Tuesday morning — usually with a 6 AM or 8 AM posting time.

ACH debits do not pull on weekends or federal banking holidays. A "daily" MCA therefore really runs about 21 to 22 debits per month, not 30. A $250 daily debit becomes roughly $5,250 to $5,500 in monthly outflow, not $7,500. The total payback amount is fixed by contract; the cadence determines how quickly it retires. A 1.30 factor on a $50,000 advance is $65,000 total, regardless of whether the debits are daily, weekly, or biweekly.

Holdback percentage: the underwriting math

When an underwriter structures an MCA, they're solving for a daily debit amount that represents a reasonable share of the business's daily revenue. The target — industry-wide — is between 8% and 18% of trailing average daily revenue. Below 8%, the term gets too long for the funder to accept the risk. Above 18%, the merchant can't survive the daily haircut without cash flow stress.

The arithmetic works like this. A business with $90,000 in monthly deposits has about $3,000 in average daily revenue across a 30-day month, or roughly $4,300 across the 21 business days in a typical month. A 10% holdback on the business-day number puts the daily debit at $430. Multiply by 21 business days and the monthly outflow is about $9,000. If the total payback on the advance is $65,000, the term lands at roughly 7.2 months. The funder then quotes the offer with that term and dollar amount in the contract.

Some funders calculate holdback against gross deposits; others use net of chargebacks and returns. A few use only credit card processing volume rather than all deposits — a structure called a "split-funded" or "lock-box" MCA that's now less common than it was a decade ago. The contract will specify which method governs the holdback. Read it.

Fixed daily vs revenue-flex daily

The two dominant MCA structures behave very differently in a slow week. A fixed daily MCA sets the daily debit at a dollar amount at origination — say $400 per business day — and pulls that exact amount every business day for the life of the deal, regardless of what revenue is actually doing. The merchant's obligation is the same on a $5,000 day and a $1,500 day.

A revenue-flex daily sets the daily debit as a percentage of recent revenue and recalculates the dollar amount at intervals — daily on the most flexible structures, weekly or monthly on common structures. If revenue softens, the dollar debit drops. If revenue accelerates, the debit climbs. The merchant's monthly cash flow stress moves with the business rather than against it.

Most "MCA" contracts on the market today are fixed daily. Revenue-flex products are usually marketed under a different name — revenue-based financing or a "pay-as-you-earn" facility — but they share the underlying mechanic. Fixed dailies are operationally simpler and tend to carry slightly lower factor rates. Flex dailies cost a touch more but absorb seasonal and short-term revenue volatility without triggering NSFs. The right choice depends entirely on how steady the underlying revenue actually is.

True-up reconciliation

The true-up clause is the merchant's safety valve on a fixed daily MCA. Most modern MCA contracts — especially those signed since 2020 — include language allowing the merchant to request a monthly reconciliation. The reconciliation works as follows. The merchant submits one month of bank statements. The funder calculates what the debit should have been at the contracted holdback percentage against actual revenue. If actual revenue ran below projection, the funder either refunds the overage or reduces future daily debits until the running balance is back in alignment.

True-up rights are real, contractual, and routinely underused. We see operators on fixed dailies experience three or four genuinely soft months without ever submitting a reconciliation request — because they didn't know they had the right, or because they assumed it would trigger negative attention from the funder. In practice, funders process true-ups as administrative routine. There's no penalty to filing one and no negative impact on the file. Operators who exercise their true-up rights regularly maintain better cash flow during seasonal dips and almost never see their accounts overdraft.

The contract should specify the true-up frequency, the documentation required (usually the most recent bank statement plus a brief written request), the turnaround time for the funder to respond (typically 5 to 10 business days), and whether the reconciliation results in a refund, a debit adjustment, or both. Read those clauses before signing. If the contract has no true-up language at all, the daily debit is locked for the term — and that's a different deal than most operators believe they're signing.

Weekly debit structures

Weekly MCA debits consolidate the daily pulls into a single weekly ACH, usually scheduled for a Tuesday, Wednesday, or Thursday. The total weekly amount is the same as five daily debits — a $400 daily becomes a $2,000 weekly — but the cash flow texture changes meaningfully. The merchant holds the cash longer between pulls, has a clearer view of the weekly net, and has time to reconcile a slow Monday before the debit hits.

Weekly structures are particularly well-suited to businesses with weekend-concentrated revenue (restaurants, entertainment venues, retail) or B2B businesses that collect on invoice cycles rather than daily transactions. Many funders will allow a daily-to-weekly conversion mid-deal on performing files. The conversion request typically costs nothing and takes about 48 hours to process. Operators who feel daily debit pressure should always ask.

What happens during a slow week

On a fixed daily MCA, a genuinely slow week looks like this: deposits run 30% below the trailing average, the daily debit continues at full strength, the account balance drops sharply, and by Friday the merchant is staring at a potential overdraft on Monday's pull. The honest move is to call the funder's account manager Friday morning, request a one-week pause or a temporary reduction, and provide a brief explanation. Most funders will accommodate one such request per quarter on a performing file — they prefer a managed conversation to a bounced ACH.

On a revenue-flex MCA or a true-up-eligible contract, the soft week is already built into the math. The debits adjust down automatically, the reconciliation captures the difference at month-end, and the merchant's account doesn't take the full hit. This is the principal operational advantage of the flex structure and the principal reason businesses with variable revenue should pay the slightly higher factor for it.

Reverse consolidations

A reverse consolidation is a specialized restructuring used when a merchant is carrying multiple MCA positions and needs daily cash flow relief immediately without paying off the existing advances. The reverse consolidator funds a single new position whose daily debit is approximately equal to the combined daily debits of the existing advances. The merchant then makes their daily payment to the consolidator, who in turn services the original funders. The structure removes the cash flow chaos of multiple competing ACHs without forcing a payoff of the underlying positions.

Reverse consolidations are expensive and structurally complex; they exist as a stabilization tool for files too distressed to qualify for a standard consolidation but still recoverable. They are not a first-line option, and we generally recommend a true consolidation that actually pays off the existing positions whenever the file supports it. The mechanics, though, are useful to know — particularly for any operator already carrying two or more advances and feeling the cash flow squeeze.

Daily remittance mechanics are not glamorous. They are also not optional knowledge for anyone signing an MCA contract. The difference between a fixed and a flex structure, the existence and routine use of a true-up clause, the cadence options available, and the funder's posture during a slow week — these are the variables that determine whether the advance funds a healthy growth phase or starts a slow slide into stacking and default. Read the contract, ask the questions, and insist on understanding the answer before signing.