7 Steps to Take This Week If Your MCA Payments Are Bouncing

The bounced payment is not the problem. The bounced payment is the notification that the problem has arrived.

When an ACH withdrawal fails, the funder does not record it as a missed payment and wait patiently for the next one. The funder's system flags the failure, triggers a retry (sometimes multiple retries within the same business day), generates a record of each failed attempt, and forwards the account to a collections protocol that was designed to begin before you have finished reading the overdraft notification from your bank.

What you do this week determines whether the bounced payment becomes a negotiation or a judgment.

Stop the Overdraft Cascade

Each failed ACH attempt generates a fee from your bank. If the funder retries the withdrawal three times in a day, that is three overdraft fees. If you carry two MCAs with the same bank account, and both funders retry on the same morning, that is six fees. We reviewed a case last year where a business owner accumulated $420 in overdraft fees in a single week from failed MCA withdrawals alone. The fees did not pay down the debt. They simply reduced the balance available for the next attempt.

Contact your bank. Request that the account be placed on overdraft protection or that the bank decline rather than process insufficient-funds transactions. This does not stop the ACH attempts. It stops the fees.

Audit Every MCA Agreement You Hold

Pull every MCA contract. For each, identify the daily withdrawal amount, the remaining balance, the acceleration clause, the reconciliation provision, the confession of judgment (if present), and the personal guarantee. Arrange them by remaining balance, from largest to smallest.

This exercise takes an afternoon. It produces the document an attorney needs to assess your position. Without it, the attorney is working blind. With it, the first consultation yields actionable strategy.

Submit Reconciliation Requests to Every Funder

Send formal written reconciliation requests to every MCA funder simultaneously. Each request should cite the specific clause, attach documentation of your revenue decline, and request a payment adjustment. Send via certified mail and email.

The funder may deny the request. The funder may ignore it. Both responses are useful. A denied reconciliation request supports the legal argument that the provision was illusory, which is one of the factors courts examine when determining whether the agreement is a loan subject to usury limits.

Open a Parallel Bank Account and Redirect Revenue

If you have not already separated your operating funds from the account linked to MCA withdrawals, do it this week. New receivables flow to the new account. Payroll processes from the new account. The old account remains open, compliant with existing authorizations, but no longer the single reservoir from which the business operates and the funders withdraw.

The account that feeds the ACH is not the account that feeds the business. Not anymore.

Contact Your Payroll Provider

If your payroll is processed from the same account the funders are debiting, contact your payroll company and redirect the funding source to the new account. A bounced payroll causes damage that no settlement can repair: lost employees, lost trust, and potential liability for unpaid wages under state labor law. The funder's withdrawal is a contractual obligation. Payroll is a legal one.

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Retain an MCA Defense Attorney

This is not the last step. It is the step that makes the previous five steps effective. An attorney can convert your reconciliation requests into legal positions, your parallel bank account into a defensible strategy, and your knowledge of the contracts into a coordinated response.

In four cases this year, clients who retained counsel within the first week of bounced payments achieved settlements at forty to fifty cents on the dollar. Clients who waited until after a judgment was entered paid more, recovered less, and spent longer in the process.

Do Not Negotiate Alone

The funder will call this week. The tone will vary between conciliatory and threatening, sometimes within the same conversation. The representative will suggest arrangements, payment plans, partial payments, or new advances. Every suggestion serves the funder's interest. None of them were designed with yours in mind.

The attorney's fee is not the cost of representation. It is the cost of symmetry. The funder has a legal team. After this week, so do you.