Glossary · Underwriting
Average daily balance (ADB)
Average daily balance (ADB) is the mean of a bank account's end-of-day balances over a month. Funders use it to judge whether a merchant can carry daily payments.
Also called ADB, average daily balance
Take the ending balance for every calendar day of the month (carry the last balance forward over days with no activity), add them up and divide by the number of days. Some banks print an average balance; check whether it uses the same method.
Funders often set a minimum ADB, either a dollar amount or a multiple of the proposed payment. A merchant with strong deposits but a thin ADB spends everything that comes in, which is risky with a fixed daily debit.
Formula
ADB = sum of end-of-day balances in the month ÷ days in the month
Example
End-of-day balances in a 30-day month add up to $447,600. ADB = $447,600 ÷ 30 = $14,920.
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Related
- FeatureBank statement analysisEnter each month's deposits, ADB, NSFs and negative days per bank account and get averages, revenue trend, holdback and an affordability check on the deal.Read
- FeatureLender matchingStore every lender's criteria once and see which lenders each deal qualifies for, with the rule behind every pass, warning and fail. Built for MCA and business lending.Read
- GlossaryNSFNSF means non-sufficient funds: a payment bounced because the account was short. In MCA underwriting, NSF counts per month are a core risk signal.Read
- GlossaryNegative daysNegative days are the days in a month when a merchant's bank account ends below zero. Funders cap them because each one risks a returned debit.Read
- GlossaryTrue revenueTrue revenue is a merchant's real monthly sales on the bank statements: total deposits minus transfers, loan and MCA proceeds, refunds, reversals and owner money.Read
- GlossaryMTD statementAn MTD (month-to-date) statement shows a merchant's bank activity from the start of the current month to today, so funders see what happened after the last full statement.Read