What a True-Up Request Requires
Per MCA Directory’s own broker guide to the reconciliation clause, a merchant becomes eligible to request a true-up, or reconciliation, when deposits drop meaningfully against the baseline set at origination, commonly cited around 20% or more. From there, the process itself is fairly mechanical: the merchant contacts the funder’s servicing team, provides 1 to 3 months of recent bank statements, sometimes with a short letter explaining what changed, and the funder recalculates the dollar amount being debited each period. The holdback percentage itself does not move, only the dollar figure it is being applied against.
Funders typically respond within 3 to 5 business days once the request and documentation are in, a fast enough turnaround that a merchant sitting on a genuine reconciliation case should not be waiting weeks for relief.
The Timeline a Merchant Should Expect
Standard practice is monthly or quarterly reconciliation for most merchants, with weekly reconciliation reserved for businesses with genuinely volatile revenue, where a monthly or quarterly lookback would let a real cash-flow problem run too long before the debit adjusts. Setting that cadence expectation up front, before a dispute happens, is worth more than explaining it defensively after a merchant is already upset.
Why “I Was Overcharged” Usually Means One of Two Things
The first, and more common, situation is not an overcharge at all: revenue went up, so the dollar amount debited against a fixed holdback percentage went up with it. That is the mechanism working exactly as designed, not a funder taking more than agreed, but it can genuinely feel like an overcharge to a merchant who is only watching the dollar figure leave their account and not tracking the percentage it represents.
The second situation is a real gap: deposits have dropped enough, often past that 20% threshold, to qualify for a true-up, and nobody has requested one. That merchant has a legitimate claim, and the fix is procedural, not a negotiation, gather the recent statements and file the request.
Walking a Merchant Through Their Own Numbers
- Pull the current bank statements alongside the statements from origination, side by side.
- Calculate the percentage change in deposits alongside the dollar change in the debit.
- If deposits have dropped meaningfully, roughly 20% or more, file the true-up request with 1 to 3 months of statements attached.
- If deposits have risen, show the merchant that the debit moved with revenue, not against an unchanged holdback percentage.
- Set the expected 3 to 5 business day response window up front, so the wait itself does not become a second dispute.
That sequence turns an emotional conversation about being overcharged into a numbers conversation, which is a materially easier conversation to resolve.
Why This Is Worth Getting Right, Beyond Getting Through It
The true-up clause is not a customer-service nicety layered on top of an MCA agreement, it is, in practical terms, one of the features that keeps the agreement looking like a genuine purchase of future receivables rather than a disguised fixed loan. Per Herrin Law’s own summary of how courts evaluate whether an MCA agreement is really a disguised loan, a genuine reconciliation right is one of three factors weighed alongside a non-fixed repayment term and who bears the risk if the business fails, and a functioning true-up clause is exactly what demonstrates that payments stay contingent on revenue rather than fixed regardless of what the business is doing.
Beyond good service, handling a true-up dispute well, with real numbers and a clear process, protects the legal footing the whole product structure depends on, one merchant conversation at a time.
Sources
The external data in this article draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- MCA Directory, MCA Reconciliation Clause: Broker Guide 2026
- Herrin Law, MCA Loan vs. Sale Recharacterization