Repayment
Some advances take a fixed percentage of daily sales. That percentage, the holdback, decides both the payment and how long repayment takes.
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Payment = daily sales × holdback percentage. Days to repay = total payback ÷ daily payment.
Daily card sales average $3,000. The holdback is 10%. The payback is $62,500.
Run your own numbers in the holdback calculator.
The sustainable holdback is a function of your margin. If net margin is 10% and the holdback is 10%, the payment consumes all profit on every sale it touches. A holdback comfortably below net margin leaves room for the business to keep growing while repaying.
A practical rule is to test the holdback at your slowest week's sales, not the average. If it still leaves enough to pay staff and suppliers, it is safe.
Because the payback is fixed, a lower holdback only stretches the finish date. If the business is seasonal, a lower holdback can mean the advance is still open when the next slow season arrives. Write the expected finish date on a calendar and compare it with your slow months before agreeing.
It flexes with volume, so it is gentler in a slow week. It also lengthens repayment when sales are low.
It is set in the agreement, balancing the payback against your sales volume.
Not on its own. Changes would require an amendment to the agreement.
Educational information only. It is not legal, tax or accounting advice.
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