What Does 'Reconciliation' Mean — and Why You Need It
Reconciliation is a clause that requires the MCA provider to adjust your payments based on your actual sales. If your revenue drops, your payments should drop proportionally — that's the whole premise of a "purchase of future receivables."
What reconciliation means
In theory, an MCA buys a percentage of your daily receipts. When sales are low, you pay less. When sales are high, you pay more. That's reconciliation.
Fixed payments vs. true reconciliation
But many MCA providers collect fixed daily payments regardless of your sales volume. If your contract doesn't have a reconciliation clause — or if your lender never actually reconciles — you may be paying a fixed amount that doesn't reflect your real revenue.
The legal shift
Courts have found that MCAs without true reconciliation may actually be loans, which subjects them to usury laws and interest rate caps. Upload your contract to see whether yours includes a real reconciliation clause.
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FundingWatch Research Team
Our team analyzes MCA contracts, regulatory actions, and borrower rights so small business owners have the facts they need to make informed decisions.