What Is True-Up?
A true-up is a periodic adjustment applied when a merchant's actual remittances deviate from the agreed percentage of real sales, reconciling what was collected against what should have been collected under a true percentage-of-sales holdback, so the merchant ends up paying the agreed rate rather than a fixed amount regardless of revenue.
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A true-up is a periodic adjustment applied when a merchant's actual remittances deviate from the agreed percentage of real sales, reconciling what was collected against what should have been collected under a true percentage-of-sales holdback, so the merchant ends up paying the agreed rate rather than a fixed amount regardless of revenue.
True-Up explained
A true-up only applies to structures actually built around a percentage of sales, not every MCA. In a fixed-payment structure, the merchant pays the same daily or weekly amount regardless of how revenue moves, so there's nothing to reconcile. In a genuine percentage-of-sales holdback, the amount collected is supposed to track real revenue directly.
Because card and ACH revenue can be estimated or averaged between full reconciliations, actual collections can drift from the true agreed percentage over a given period. A true-up corrects that drift: if the merchant was overcharged relative to actual sales, the difference gets credited back; if undercharged, it gets caught up.
It's a mechanical, contract-level detail, but it matters for a merchant trying to understand exactly how much they're really paying relative to their revenue in a given month, versus a fixed-payment merchant, where the number is the same every remittance no matter what sales looked like.
Why it matters when you're buying
A merchant comparing a percentage-of-sales offer against a fixed-payment offer should ask directly whether a true-up mechanism is actually in the contract, since a "percentage of sales" pitch without a real true-up process behind it can, in practice, function much closer to a fixed payment.
Frequently Asked Questions
What does a true-up mean in an MCA contract?
Does every merchant cash advance include a true-up?
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