How can payments adjust, and why is called reconciliation?
Reconciliation is the process for adjusting remittances, or payments, when appropriate. The terms are set in the funder agreement before funding.
It is called reconciliation because actual business revenue is compared against the agreed payment structure.
In practice, if the business slows down, remittances (payments) may be reduced. If revenue increases, remittances (payments) may also adjust. The total purchased amount remains unchanged.
The exact process is specific to the agreement terms set by the funder, but common mechanics include:
- Forward adjustment
The business requests reconciliation, provides required documentation, and future remittances are adjusted based on reviewed revenue or deposit activity. - True-up or credit
If payments collected were higher than the agreed percentage would support, the funder may apply a credit, issue a refund, or adjust future remittances, depending on the agreement.
Promised Land reviews reconciliation language before funding to provide clarity for business owners and referral partners on how payment adjustments are handled.
During the relationship, we also monitor reconciliation questions and coordinate with the funder when revenue changes may support an adjustment.