Remittance: daily, weekly, split and lockbox

Every MCA needs a way for receivables to reach the funder. The methods fall into two families: a fixed amount debited on a schedule, or a percentage of sales taken as they settle. The choice changes the merchant's cash flow far more than most merchants expect, so it belongs in the offer conversation.

Most MCAs today are remitted by ACH. The funder sets the payment by dividing the payback by an expected number of payments, then debits the merchant's account under an ACH authorization signed with the contract. It is simple for the funder and works with any business that deposits into a bank account, card sales or not.

Daily debits hit every business day, including the slow Monday after a rainy weekend. Weekly debits give the merchant a few days to build the balance but are a bigger single hit, and a missed weekly payment is a bigger NSF. Watch the merchant's average daily balance: if it sits below a few days of payments, returned debits are likely whatever the frequency.

Split funding is the original MCA structure. The merchant's card processor holds back the agreed percentage of each batch and sends it to the funder; the merchant receives the rest. On a $2,000 day at a 10% split, $200 goes to the funder and $1,800 to the merchant. On a $600 day, $60. The payment moves with sales automatically, which is the cleanest expression of a true receivables purchase.

The limits are practical. Not every processor supports splits, switching processors to one that does takes time, and the method only captures card sales, so a business paid mostly by check or ACH is a poor fit. A lockbox arrangement achieves the same effect with a controlled bank account when the processor cannot split. Both are less common than they were, but card-heavy merchants and some funders still prefer them.

A fixed payment is set from expected revenue. The contract typically states a specified percentage of receipts that the fixed payment is meant to approximate, and gives the merchant a right of reconciliation: if receipts fall, the merchant can ask for the payment to be brought back in line with that percentage.

expected revenue        = $82,000 a month
daily payment           = $410  ->  $410 x 21 = $8,610 a month
specified percentage    = $8,610 / $82,000 = 10.5%
actual revenue drops to   $60,000 a month
reconciled monthly      = $60,000 x 10.5% = $6,300
reconciled daily        = $6,300 / 21     = $300

1. The merchant asks the funder in writing, the way the contract says to, as soon as revenue drops.
2. The funder asks for proof, usually recent bank statements and sometimes processing statements.
3. The funder recalculates and either lowers the payment going forward or credits back what was over-collected, depending on the contract.
4. The merchant keeps paying while the request is reviewed. Stopping debits or switching accounts on their own can be treated as a default.

Offers in the offer calculator take daily, weekly, biweekly, monthly or split schedules, and the accepted offer locks the repayment method (ACH or credit card split) into the deal's pricing block. After funding, each funded deal has a remittance ledger for payments, balance snapshots and returned debits with their return codes, plus a servicing status such as performing, behind, NSF returns or modified, so you know which merchants are struggling before the renewal call (renewals).