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