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Reconciliation
Also called true-up, adjustment, reconciling.
Comparing what the funder actually collected against the percentage of receipts it was entitled to, and adjusting the payment where the two have diverged.
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
The mechanism exists because collection is administered as a fixed debit while the entitlement is a percentage. When receipts move away from the projection used to set that debit, the two figures separate, and reconciliation brings them back together.
Mechanically it usually works forward. The funder reviews the period's actual receipts, calculates the specified percentage of them, compares that to what was taken, and adjusts the next period's debit down - sometimes crediting or refunding the overcollection, sometimes simply applying it against future payments. The purchased amount does not change.
It also runs the other way. Where receipts rise above projection, many agreements permit the funder to increase the debit to match the percentage, and some do so automatically.
Reconciliation is a process. Whether you can compel it is a question about the clause, which is a separate entry.
Where this one catches people
Reconciliation is not a payment holiday and it does not reduce what you owe in total. In nearly every implementation it lowers the payment and lengthens the term - the same purchased amount collected over more days. It changes cash-flow timing, which can be the thing that saves a business, but nobody should sign expecting it to reduce the cost.
Worked through
Illustration. Specified percentage 10%. Projected monthly receipts $200,000, so the estimated daily debit is set at $950 across roughly 21 banking days - about $19,950 a month.
Receipts come in at $130,000. Ten percent is $13,000; the debits took $19,950. On reconciliation the funder credits the $6,950 overcollection and resets the daily debit to about $620. What was owed in total is unchanged - it will simply now take longer to collect.
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
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Reconciliation — common questions
What does reconciliation mean?
Comparing what the funder actually collected against the percentage of receipts it was entitled to, and adjusting the payment where the two have diverged.
Where does reconciliation catch people out?
Reconciliation is not a payment holiday and it does not reduce what you owe in total. In nearly every implementation it lowers the payment and lengthens the term - the same purchased amount collected over more days. It changes cash-flow timing, which can be the thing that saves a business, but nobody should sign expecting it to reduce the cost.
Is reconciliation the same as an interest rate?
Reconciliation 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 reconciliation apply to?
Merchant Cash Advance, Revenue-Based Financing.
Is there a worked example of reconciliation?
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 reconciliation?
Minimum payment, NSF fee, Percentage of receivables, 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.