Welcome to Delancey Street. If you've missed a payment on your merchant cash advance and someone just told you about "reconciliation," you're probably Googling this at 11pm wondering if it's a lifeline or a trap. Let's break it down.

What Reconciliation Actually Is

Every MCA agreement has a "specified percentage" — the percentage of your daily revenue the funder is supposed to collect. That's the number buried on page 3 or 4 of the contract you signed. It's usually somewhere between 10% and 25%.

Here's what's supposed to happen: if your revenue goes down, your daily payment goes down proportionally. That's the deal. That's what makes an MCA different from a fixed loan payment. The payment is supposed to flex with your business.

Here's what actually happens: the funder sets a fixed daily ACH debit based on your projected revenue at the time you took the advance. And that number doesn't move. Ever. Not when your revenue dips 30%. Not when you lose your biggest client. Not when your slow season hits. The payment stays the same, every single day, regardless of what's coming in.

Reconciliation is the process of going back to the funder and saying — hey, my revenue dropped, the daily debit needs to come down to match the actual specified percentage in my contract. That's not a favor. That's the terms of the agreement.

Why This Matters If You've Already Missed a Payment

If you've missed a payment, you're probably in one of two situations. Either the ACH bounced and your bank hit you with an NSF fee (and the funder hit you with a returned payment fee on top of that), or you deliberately blocked the debit because the payments were draining your operating account dry. Both of those put you in technical default territory.

But here's where reconciliation becomes your leverage — if the funder has been pulling a fixed daily amount that exceeds the specified percentage of your actual revenue, they've been overpaying themselves. That's not you defaulting. That's the funder not honoring the terms of their own contract.

This is the part your funder will never explain to you. They don't want you to know this.

How to Request a Reconciliation

You can't just call the funder and say "lower my payments." That gets you transferred to collections. Here's what actually works:

  • Pull 3 months of bank statements. You need to show your actual daily deposits versus what the funder has been pulling. The gap between those two numbers is your entire argument.
  • Find the specified percentage in your MCA agreement. It's in there. Every contract has one. If your specified percentage is 15% and your daily revenue averaged $2,000 but the funder was pulling $500 a day (that's 25%), you've been overpaying by a significant margin.
  • Send a formal reconciliation request in writing. Not a phone call. Not a text to your rep. A written demand that references the contract, the specified percentage, your actual bank deposits, and the amount of the overpayment. You want a paper trail for this.
  • Request a retroactive credit. If the funder has been overcharging you relative to the specified percentage, you may be owed money back. At minimum, they owe you an adjusted payment going forward. Some funders will apply the overpayment to the remaining balance. Some will fight you on it. But you can't get what you don't ask for.

What Most Funders Will Do When You Request This

Let's be direct — most funders will stall, ignore, or deny your reconciliation request. This is standard. They're not in the business of lowering your payments voluntarily. The fixed daily ACH is more predictable for them, and it pays off the advance faster. Your reconciliation rights are an inconvenience to their cash flow model.

Some funders will tell you reconciliation "doesn't apply" to your agreement. Some will tell you to send documentation and then never respond. Some will offer you a marginal reduction (dropping from $500 to $475 a day) that doesn't reflect the actual math. And some will use your reconciliation request as a reason to accelerate the balance and claim you're acting in bad faith.

This is why having an attorney involved matters. A properly drafted reconciliation demand — one that cites the contract language, shows the revenue data, and references the applicable state commercial law — gets treated differently than a phone call from a panicking business owner.

The Reconciliation Trap You Need to Know About

Here's where business owners get burned. You request a reconciliation, the funder asks for 3 to 6 months of bank statements and tax returns as "supporting documentation," and then they use that information to assess whether you're a collections risk. They're not reviewing your reconciliation request. They're building a file.

If they see you've taken on additional MCAs (stacking), moved bank accounts, or have declining revenue across the board, that reconciliation request just became the trigger for an acceleration of your full balance. You handed them the evidence. This happens more often than you'd think.

Do not send financial documentation to your funder without understanding what they'll do with it. Get advice first. Not after.

What Reconciliation Won't Fix

Reconciliation adjusts your daily payment. It does not reduce what you owe. The total purchased amount stays the same. If you owe $80,000 and your daily payment drops from $500 to $300, you're still paying back $80,000 — it just takes longer.

And if you're already in default, reconciliation alone may not be enough to get you back into good standing. Some funders will require a lump sum "cure payment" before they'll even discuss adjusting the daily ACH. Others will agree to a reconciliation but tack on default fees, legal fees, and penalty interest that wipe out any savings.

Reconciliation is a tool. It's a good one. But it's not a settlement, and it's not forgiveness. If you're deep in the hole — multiple MCAs stacked, daily debits from 3 or 4 funders, revenue cratering — reconciliation is one piece of a larger conversation you need to be having.

What You Should Do Right Now

If you've missed a payment and you're reading this, here's the move:

  • Don't block the ACH without a plan. That triggers default and everything that comes with it (UCC enforcement, balance acceleration, frozen bank accounts).
  • Pull your MCA agreement and find the specified percentage. That number is your leverage.
  • Compare that percentage to what's actually being pulled from your account. If there's a gap, you have a reconciliation claim.
  • Talk to someone before you contact the funder. Seriously. The way you approach this matters more than you think.

At Delancey Street, we handle MCA reconciliation requests, restructurings, and settlements for business owners who are behind on payments or heading there. We're attorney-owned, we know how these funders operate, and we've seen every version of this situation. If your payments don't match your revenue, that's a conversation worth having.