Merchant Cash Flow Analysis
Model merchant cash flow after MCA payments to verify deal sustainability.
Why Analyze Merchant Cash Flow?
A merchant cash flow analysis models the business's financial health after accounting for MCA payments alongside their existing fixed and variable costs. Revenue alone does not determine affordability -- a restaurant doing $100K/month with $90K in costs has only $10K of free cash flow, which means even a modest MCA payment could push them into the red. This analysis calculates the net cash position after all expenses including the MCA holdback, producing a sustainability assessment. A positive net cash flow with at least 5-10% margin indicates the deal is sustainable. Negative net cash flow is a red flag for default. For brokers, this analysis is the best pre-submission tool for avoiding deals that look good on revenue but fail on profitability.
How to Use This Calculator
Enter the merchant's monthly revenue
From bank statements -- total deposits excluding transfers and non-operating income. Use a 3-month average for stability.
Detail fixed and variable costs
Fixed costs include rent, payroll, insurance, and debt service. Variable costs are expressed as a percentage of revenue and include COGS, commissions, and volume-dependent expenses.
Set the proposed MCA holdback
The calculator shows how the holdback affects the merchant's net cash position and provides a maximum safe holdback recommendation based on their cost structure.
Key Concepts
Free Cash Flow
Revenue minus all operating costs (fixed and variable). This is the pool from which MCA payments are made. If free cash flow is $8K/month and the MCA payment is $10K/month, the deal is not sustainable.
Cash Flow Margin
Net cash after all expenses (including MCA) divided by revenue. A margin above 5% indicates a sustainable deal. Below 5% is tight. Below 0% means the merchant is losing money with the MCA in place.
Maximum Safe Holdback
The highest holdback percentage that still leaves the merchant with a positive cash flow margin of at least 5%. This is your ceiling for deal structuring.
Expert Insights
Bank Statements Tell the Real Story: Merchants will tell you their costs are lower than they are and their revenue is higher than it is. Bank statements do not lie. Look at ending daily balances -- if they are consistently under $2,000 for a business doing $80K/month in revenue, the merchant is running thin and an MCA payment will likely push them into overdraft. Ending balance trends are the best leading indicator of deal sustainability.
Seasonal Cash Flow Traps: A cash flow analysis using peak-season numbers looks great. The same merchant in off-season may have 40-60% lower revenue with nearly the same fixed costs. If you fund during peak and the term extends into off-season, the holdback becomes a much larger percentage of the reduced revenue. Always model the worst-case month, not the average.
Frequently Asked Questions
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.
Run These Numbers Too
Deal Structuring Calculator
Find the optimal funding amount, factor rate, and term to maximize merchant affordability and your commission.
Seasonal Adjustment Calculator
Model how seasonal revenue fluctuations affect MCA payments and merchant cash flow across 12 months.
Stacking Analysis Calculator
Analyze the risk and capacity for stacking additional MCA positions on an existing merchant.
Need Help With Business Debt?
Speak with a Delancey Street specialist — free consultation, no obligation.
Get Free ConsultationEconomic Snapshot
Source: Federal Reserve Economic Data (FRED). Indicators refresh daily.
Financial News & Regulation
Apr 12, 2026Holding Government Contractors Accountable for Wrongdoing
Jan 21, 2025Argus Information and Advisory Services, a subsidiary of TransUnion, has agreed in writing that it will not seek any government contract with the Consumer Financial Protection Bureau for three years.
Blog | Consumer Financial Protection BureauStrengthening Appraisal Oversight: Progress at the Appraisal Subcommittee
Jan 17, 2025CFPB Deputy Director Zixta Martinez discusses changes at the ASC since she became Chair in 2022, including enhanced state oversight, landmark hearings on appraisal bias, and improved collaboration with The Appraisal Foundation to create a more equitable and accountable appraisal industry.
Blog | Consumer Financial Protection BureauBack from the Dead: Zombie Second Mortgages
Jan 17, 2025Forgotten second mortgages may be coming back to haunt homeowners who haven’t received notices or account statements for years.
Blog | Consumer Financial Protection BureauFederal Reserve Board announces termination of enforcement actions with Crédit Agricole S.A. and Crédit Agricole Corporate and Investment Bank, Mega International Commercial Bank Co., Ltd, and the Goldman Sachs Group, Inc.
Apr 9, 2026Federal Reserve Board announces termination of enforcement actions with Crédit Agricole S.A. and Crédit Agricole Corporate and Investment Bank, Mega International Commercial Bank Co., Ltd, and the Goldman Sachs Group, Inc.
FRB: Press Release - All ReleasesHeadlines sourced from government agencies and legal publications. Updated every 12 hours.
Did You Know?
Fintech lending now accounts for nearly 50% of all unsecured personal loans in the United States.
The average credit card interest rate hit 22.76% in 2025 — the highest since tracking began in the early 1990s.
BNPL (Buy Now, Pay Later) usage tripled between 2020 and 2025, with over 40% of U.S. consumers having used it.
Cost of living varies dramatically: the same salary goes 30-50% further in states like Texas or Tennessee vs. California or New York.