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Future receivables
Also called future receipts, purchased receivables, future sales.
The money a business expects to collect from sales it has not made yet: the asset a merchant cash advance is documented as buying rather than lending against.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
An advance agreement recites that the funder purchases a specified dollar amount of the business's future receipts, at a discount, and that the daily remittance is the delivery of receipts already sold rather than repayment of a loan.
The framing carries real legal weight. A true sale of receivables is generally not a loan, and if it is not a loan, state usury statutes and lending licence requirements generally do not reach it. That is the entire architecture of the product.
Courts test whether the label matches the substance. New York appellate decisions, which matter disproportionately because so many of these agreements choose New York law, have weighed three factors in particular: whether the agreement contains a genuine and workable reconciliation provision, whether the term is indefinite rather than a fixed repayment period in disguise, and whether the funder truly bears the risk of the merchant's failure, including whether a bankruptcy or a simple decline in business is treated as a default. Results differ by state, by contract language, and by how the parties actually behaved, and the area is heavily litigated.
Where this one catches people
Both sides misread this. Merchants assume the purchase framing means there is nothing to challenge and no rate to question. Funders assume the label settles the matter. Neither holds. Courts look past the caption at reconciliation, at whether the term is really open-ended, and at who carries the loss if the business fails, and a personal guaranty covering ordinary business failure cuts against the sale characterization rather than supporting it.
Where you will meet this term
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Future receivables — common questions
What does future receivables mean?
The money a business expects to collect from sales it has not made yet: the asset a merchant cash advance is documented as buying rather than lending against.
Where does future receivables catch people out?
Both sides misread this. Merchants assume the purchase framing means there is nothing to challenge and no rate to question. Funders assume the label settles the matter. Neither holds. Courts look past the caption at reconciliation, at whether the term is really open-ended, and at who carries the loss if the business fails, and a personal guaranty covering ordinary business failure cuts against the sale characterization rather than supporting it.
Is future receivables the same as an interest rate?
Future receivables is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does future receivables apply to?
Merchant Cash Advance, Revenue-Based Financing.
Is there a worked example of future receivables?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside future receivables?
Daily remittance, Fixed payment, Personal guarantee, Recharacterization, Reconciliation.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.