Reconciliation

The logic follows from what an advance is. A funder buys a share of your future receivables, so the amount collected is supposed to move with those receivables. When collection happens through a fixed ACH remittance rather than a percentage holdback, that link breaks: the debit stays flat while your revenue falls. A reconciliation clause is the contractual repair for exactly that gap.

Mechanically it is a request, not an automatic adjustment. Where the clause exists, you notify the funder in writing, provide the documentation it names, usually bank statements and processing statements for the period, and ask that the remittance be trued up to the agreed share of what you genuinely collected. Many agreements set a cadence, often monthly, and many allow the amount to be adjusted back up when revenue recovers. Overpayment during the period is typically credited or refunded rather than kept.

The honest caveat is the important part: whether any of this is available to you depends entirely on your agreement. Some clauses are meaningful and workable. Some are narrow enough to be decorative, hedged with funder discretion, short notice windows, or documentation requirements no operating business can assemble in time. Some agreements contain no reconciliation language at all. Pull your contract and read the actual words before you need them.

That reading is also useful before you sign. What a funder's reconciliation language looks like tells you a great deal about the funder, which is why it sits on the list of questions to ask before signing any funding agreement and why its absence shows up among predatory funder warning signs. If any of the language is unclear to you, that is a question for an attorney rather than for the sales rep who sent the paperwork.

The confusion that causes the most disappointment is reconciliation versus hardship relief. Reconciliation exists for revenue that fell. If your sales are flat and the payment simply does not fit, you are in restructure territory instead, where nothing is contractual and everything depends on the funder's willingness. Both conversations go better early, with statements in hand, and anything agreed should be in writing before the next debit date. What happens when you cannot make MCA payments walks the whole order of operations.

A smaller confusion: this is not the bookkeeping sense of the word. Reconciling your books against your bank statement is a monthly accounting chore. Reconciliation in a funding agreement is a right you invoke. The safest habit is to test any proposed payment against your weakest recent month in the payment affordability checker before signing, so you are never relying on a clause you have not read.