Glossary · contract

Percentage of receivables

Also called specified percentage, split percentage, purchased percentage.

The share of the business's receipts a funder has bought and is entitled to collect - the operative obligation in an advance, even where collection happens as a fixed daily debit.

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

This is the legal core of an advance. The funder has not lent a sum repayable on a schedule; it has bought a stated percentage of receipts until a fixed dollar amount has been delivered. Everything else in the payment mechanics is administration built on top of that.

The fixed daily or weekly debit is an estimate: the specified percentage applied to projected receipts derived from historical bank and processing data. When receipts match the projection, the estimate and the entitlement coincide. When they do not, only reconciliation brings them back together - which is why the percentage and the reconciliation clause have to be read as a pair.

A high specified percentage looks aggressive but is not necessarily bad: if reconciliation is mandatory and workable, a high percentage on falling receipts still produces a falling payment. A modest percentage with a discretionary reconciliation clause and a payment floor produces a fixed payment regardless.

Where collection is by card split, the percentage is applied literally at settlement, and the mechanism is self-adjusting without any reconciliation request.

Where this one catches people

The fixed debit is not the deal - the percentage is. But the percentage is only real to the extent the contract makes the funder honour it. A specified percentage paired with a discretionary reconciliation clause is a fixed payment wearing a percentage costume, and the sales conversation will describe the percentage.

Worked through

Illustration. Specified percentage 12%. Historical receipts $150,000 a month, so 12% is $18,000, estimated at about $857 per banking day over 21 days.

Receipts fall to $90,000. The contractual entitlement is 12% of $90,000 - $10,800 for the month, about $514 a day. The fixed debit is still taking $857, roughly $18,000 against an entitlement of $10,800. Whether the $7,200 difference comes back depends entirely on the reconciliation clause.

Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.

Where you will meet this term

Merchant Cash Advance Revenue-Based Financing

Read next

HoldbackMoney withheld from what a business would otherwise receive and applied to an obligation — the daily slice of… Merchant cash advance (MCA)A purchase of a fixed dollar amount of a business's future receipts at a discount, collected as a percentage … Minimum paymentThe smallest amount that must be paid in a period to stay current - on revolving credit a percentage of balan… Purchased amount (RTR)The total dollars of future receipts the funder has bought and is entitled to collect - a fixed figure set at… Reconciliation clauseThe contract provision setting out whether, when and how the fixed payment gets adjusted back to the agreed p… Revenue-based financing (RBF)Funding repaid as a fixed percentage of revenue until an agreed multiple of the amount advanced has been paid… Split fundingRepayment taken by the card processor at settlement, which diverts an agreed share of each day's card batch t…

Percentage of receivables — common questions

What does percentage of receivables mean?

The share of the business's receipts a funder has bought and is entitled to collect - the operative obligation in an advance, even where collection happens as a fixed daily debit.

Where does percentage of receivables catch people out?

The fixed debit is not the deal - the percentage is. But the percentage is only real to the extent the contract makes the funder honour it. A specified percentage paired with a discretionary reconciliation clause is a fixed payment wearing a percentage costume, and the sales conversation will describe the percentage.

Is percentage of receivables the same as an interest rate?

Percentage of 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 percentage of receivables apply to?

Merchant Cash Advance, Revenue-Based Financing.

Is there a worked example of percentage of receivables?

Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.

What else should I read alongside percentage of receivables?

Holdback, Merchant cash advance, Minimum payment, Purchased amount, Reconciliation clause.

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.