[JustInCase]

Was thinking if a merchant is dead set on activating mandatory reconciliation clause immediately after funding how will that work?

Because technically they can if deposits drop day right after according to the i's and t's of law if fully explored. Defaults do not truly exist as MCA is not a loan and risk leans on funders not merchants according to new case law. With that;

#1 - If a seasoned merchant does this from the gate, how would that affect commission "PAID OUT" if at all? As old rules it is considered a "default" or "lowered-payment". Future commissions could be % like reverses I assume.

#2 - If this catches on and merchants employ this as a regular strategy for savings it would basically produce denials for future funding limiting stacking which is a cure as per old system.

#3 - And if no such thing as a default how will funders classify or recognize reconciliation for what it is vs default or lowered-payment?

Some questions I have...

[abfunders]

Fundkite does this, as do all MCAs that are credit card splits. The broker gets paid, the funder has to realize that the deal might go sideways for a bit, but there is no true default if the revenue drops. The only challenge would be the client who commits fraud and opens a second bank account and deposits certain deposits into that account and slowly depletes the other one without the funder noticing. You can probably catch that, since it's not so easy just to change bank accounts.

You case is not a "default out of the gate", it's a drop in revenue. We pray underwrite assuming the past performance is indicative of future results.

There's no "seasoned" merchant who can really do this. They'd have to lie to get away with it, and then prove it. How would they make it a "regular strategy" without actually losing their own revenue? That seems counterproductive to reduce their income. How could they control that?