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What is the reconciliation clause in my merchant cash advance agreement?
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The reconciliation clause is the provision that lets you adjust your daily or weekly payment to match your actual revenue — for example, paying less when sales dip — because the funder bought a percentage of receivables, not a fixed sum. A genuine, usable reconciliation right is central to a merchant cash advance being a legitimate purchase rather than a disguised loan; if the clause is illusory or the funder refuses to honor it, that can support an argument that the agreement is actually a loan. Knowing whether your agreement has a real reconciliation right is both a practical tool and a legal one.
The first clause to check when payments hurt
Many merchants never invoke reconciliation simply because they don't know it exists. Reviewing this clause is often the first thing to check when payments become unaffordable — a real reconciliation right can lower your payment immediately without breaching the agreement.