Glossary · After funding
Clawback
A clawback is a funder taking back an ISO's commission because the merchant defaulted or stopped paying within a set window after funding, often 30 to 90 days.
Also called commission clawback, chargeback
The ISO agreement sets the window and how much is clawed back: the whole commission, a pro-rated share, or nothing after a number of payments. Funders usually net clawbacks against future commission payments rather than invoicing.
If the ISO already paid a rep or sub-ISO their split, the clawback has to be passed down too, or the house absorbs it. Track clawback exposure on every deal still inside its window.
Formula
exposure = commissions received on deals still inside their clawback window
Example
A deal funded on March 1 paid $4,500 of commission under a 60-day clawback. If the merchant defaults on March 30, the funder can recover the $4,500, and the 40% the rep received ($1,800) has to come back from the rep or be written off.
Track it on every deal
Statements, offers, positions and commissions with the math worked out, in one CRM for lending companies.
Related
- FeatureCommissions and reconciliationTrack expected versus received commissions per funded deal, split them with reps and partners, handle clawbacks, and reconcile lender commission statements line by line.Read
- Free toolISO commission calculatorCalculate an ISO's commission on a merchant cash advance: base points, upsell from the buy and sell rate, commission basis, rep and partner splits and clawback exposure.Read
- GlossaryCommission splitA commission split divides the commission a funder pays on a deal between the house, the closer and any sub-ISO or referral partner, by agreed percentages.Read
- GlossaryDefaultIn an MCA, a default is a breach of the contract, such as blocking the funder's debits, switching banks, diverting receipts or stacking against terms.Read
- GlossaryISO agreementAn ISO agreement is the contract between a broker and a funder that sets commission rates, clawbacks, submission rules and restrictions before any deal is sent.Read
- GlossaryPointsPoints are ISO commission expressed as a percent of the funded amount: base points paid by the funder plus upsell points from selling above the buy rate.Read
- GlossarySub-ISOA sub-ISO is a smaller broker or agent that sends deals through a larger ISO instead of contracting with funders directly, and splits the commission.Read