Seeing an unfamiliar company name pulling money from your business account can be alarming. You might also receive a notice of assignment and wonder whether the transfer is real, your balance is correct or the collecting party can change your payment terms.
A merchant cash advance (MCA) assignment means another company now claims the right to collect under your original agreement. Assignments occur when a funder sells accounts, transfers servicing rights or merges. While most contracts allow this, you should not accept any demand without verification.
Confirm who is collecting your payments
Start by identifying the party now seeking collection. Ask for written proof of the assignment and other details, including:
- The name of the original funder
- The name and contact information of the assignee or servicer
- The date of assignment
- The current claimed balance
- A full payment history
- The bank account or processor account tied to future withdrawals
Compare these records against your own immediately to identify discrepancies before further withdrawals occur.
Compare the demand with your original MCA agreement
Remember, MCA funders usually structure these agreements as purchases of future receivables, not traditional loans with fixed monthly payments. Review the contract for the purchased amount, remittance schedule, reconciliation provision, default rules and any Uniform Commercial Code (UCC) filing clause. Be wary of new authorization forms. They may contain hidden changes to the withdrawal schedule or expanded collection rights that were not in your original deal.
Watch for aggressive collection tactics
In some cases, collectors or assignees may increase pressure by threatening UCC action or contacting your processors before proving they have the right to collect.
In New York, confession of judgment rules have changed. A confession of judgment generally must be filed in a county where you lived or, for a business, had a place of business. Still, lawsuits, UCC notices and bank withdrawals can move quickly once a funder claims default.
Take control before the pressure grows
By proactively verifying the assignment and holding the new funder to the original terms, you protect your business’s cash flow from unauthorized changes.