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Clawback Risk Calculator

Estimate your expected clawback exposure based on deal volume, default rates, and clawback periods.

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What Is an MCA Commission Clawback?

A clawback is when a funder reclaims part or all of the commission they paid you because the merchant defaulted within a specified period after funding. Clawback provisions are standard in virtually every funder-broker agreement, with windows typically ranging from 30 to 180 days. If a merchant stops making daily payments within that window, the funder deducts the commission from your future deal proceeds. For brokers funding multiple deals per month, the clawback exposure can be substantial -- a broker earning $10K per deal with a 10% default rate and 10 deals in the window has $10,000 in expected clawback liability at any given time. This calculator puts a number on that exposure so you can keep enough cash in reserve and avoid getting blindsided.

How to Use This Calculator

Enter your average commission per deal

This is the upfront amount the funder pays you at funding. If your commissions vary significantly, use the weighted average across your recent deals.

Select your clawback period

Check your funder agreements -- each funder may have a different clawback window. Use the longest one for worst-case planning, or run the calculator separately for each funder.

Estimate your default rate

This is the percentage of funded deals that default within the clawback window. Industry-wide, first-payment defaults run 3-5% for A-paper and 10-20% for C/D-paper. If you do not track this, start immediately.

Key Concepts

Clawback Period

The window after funding during which the funder can reclaim your commission if the merchant defaults. Standard periods are 60-120 days. Longer periods mean more exposure.

First-Payment Default (FPD)

When a merchant fails to make the very first daily payment. FPD triggers an immediate full clawback and is a red flag for fraud or misrepresentation. Industry FPD rates average 2-4%.

Reserve Recommendation

The amount of cash you should hold in reserve to cover expected clawbacks without disrupting your operating cash flow. A safe reserve is 1.5x to 2x expected clawback.

Expert Insights

Clawbacks Are the Silent Killer of Broker Profitability: Many brokers calculate their income based on gross commissions and ignore clawback exposure. A broker earning $50K/month gross with an 8% clawback rate is actually earning $46K. But because clawbacks hit unpredictably and can cluster (a bad batch of merchants), a $10K clawback month can wipe out operating cash. Maintain a dedicated reserve account equal to at least 1.5x your expected monthly clawback.

Reducing Clawback Risk at the Source: The best way to reduce clawbacks is to improve deal quality. Verify bank statements thoroughly (look for NSF patterns, negative balances, and deposit consistency), confirm time in business independently (not just the merchant's word), and avoid stacking merchants who are already stretched. A 2% reduction in default rate on 10 deals/month at $10K average commission saves $2,400/month in clawbacks -- $28,800/year.

Frequently Asked Questions

Yes, but leverage matters. High-volume brokers (20+ deals/month) can often negotiate shorter clawback periods (30-60 days instead of 90-120), reduced clawback percentages (50% clawback instead of 100%), or clawback caps. Low-volume brokers have less negotiating power but can still ask -- funders want to keep good deal flow.

The funder will deduct from all future commissions until the clawback is satisfied. In extreme cases, they may send the balance to collections or terminate the relationship. This is why maintaining cash reserves is critical -- it prevents a clawback spiral from freezing your business.

Virtually all do. Clawback periods range from 30 days (rare, usually for premium brokers) to 180 days (common for new broker relationships). Some funders offer "earned commission" programs where the clawback percentage decreases over time (100% in month 1, 50% in month 2, 0% after month 3).

Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.