Why Receivables Matter in MCAs
Many MCAs are structured as purchases of future receivables. The agreement may describe the funder as owning a portion of receivables until the purchased amount is remitted. This structure is why a funder may take an interest in who owes the business money.
Contractual Provisions That May Apply
Agreements may include security interests in receivables, assignments, “lockbox” or “lock-up” provisions, or directions to pay the funder directly. The specific language determines what the funder may do and what the merchant’s obligations are.
The Agreement Governs the Relationship
Whether a funder may contact customers, and on what basis, depends heavily on the contract. Some provisions are broad; others are limited. The actual agreement should be reviewed.
UCC and Security-Interest Considerations
A funder may file a UCC financing statement covering receivables to perfect a security interest. The UCC filing gives notice of the interest; it does not by itself authorize direct contact with customers. Enforcement of a security interest in receivables follows Article 9 of the UCC and applicable law.
Do Not Redirect Receivables to Defeat Lawful Claims
This website does not instruct merchants to hide customers, conceal receivables, or redirect payments to defeat a creditor’s lawful rights. Doing so may create separate legal exposure.
When Qualified Counsel May Be Appropriate
If a funder is contacting or threatening to contact your customers, qualified legal counsel may review the agreement, the validity of the receivables claim, and potential responses. Customer-facing communications can damage business relationships, so prompt review may matter.
Key Distinctions
Money owed to the business by its customers; often the asset at the center of an MCA.
A creditor’s collateral claim in receivables, perfected by a UCC filing.
A contractual transfer of specified receivables or rights to the funder.
Key Takeaways
- 01MCA structures often give funders rights related to receivables.
- 02Whether a funder may contact customers depends on the agreement and applicable law.
- 03A UCC filing gives notice of a security interest; it does not by itself authorize customer contact.
- 04Do not redirect receivables to defeat lawful creditor rights — it may create separate exposure.
Not a law firm. MCA Debt Attorney and MYMCAOPTIONS LLC are not law firms and do not provide legal advice. Submitting your situation through this website does not create an attorney-client relationship. Where appropriate, users may be connected with independent legal counsel through a separate engagement.