Now the more common mechanism, because it works for businesses whose revenue is not predominantly card-based. Fixed ACH amounts that never vary with receipts are one of the features that invite recharacterisation arguments.
Related terms
Holdback
The percentage of daily card sales or bank deposits a funder takes until the advance is repaid.
Reconciliation
The contractual process by which a merchant can have their remittance adjusted when actual receipts fall short of what was projected.
Recharacterisation
A court or regulator determining that a transaction structured as an advance was, in substance, a loan.
NSF
A returned payment caused by insufficient balance in the merchant’s account.