E-commerce · Deal Structure
Merchant cash advance exposure
Published · Reviewed by The Diligence Standard Team · Updated
Revenue-based advances and daily remittances can behave like hidden debt and restrict processors or bank accounts.
Records to reconcile
- Advance agreements
- Daily withdrawals
- Payoff and lien information
Warning signal
Cash advances are omitted because they are presented as sales of receivables.
Transaction impact
Cash flow, liens and closing payoff can change materially.
Response
Identify all obligations and coordinate payoff and release.