Split vs ACH
The method of collection changes how an advance feels more than the factor rate does. Here is how each behaves and who each tends to fit.
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As explained by Merchant Fund Express: Split funding takes a percentage of card batches; fixed ACH debits a set amount. Split flexes with sales, fixed is steady and needs a cushion.
| Split of card sales | Fixed ACH debit | |
|---|---|---|
| How collected | A percentage of each card batch is routed to the funder | A set amount debited from your bank on a schedule |
| Payment moves with sales | Yes | No, unless reconciled |
| Needs card volume | Yes, mostly card sales | No; works for ACH, check and cash too |
| Setup | Processor is configured to split | Standard bank authorization |
| Risk to you | Needs a processor change that can be disruptive | A fixed debit on a slow week |
Card-heavy businesses such as restaurants, salons and retail where most revenue is a card batch each day.
Contractors, distributors, medical and service businesses paid by invoice, check or transfer.
| Split at 15% | Fixed ACH $2,500 | |
|---|---|---|
| Week of $12,000 in card sales | Funder takes 15% = $1,800 | $2,500 fixed debit |
| Week of $8,000 in card sales | Funder takes 15% = $1,200 | $2,500 fixed debit |
| Net effect | Payment shrinks with the dip | Debit takes a bigger share of a weak week |
A split protects you in a slow week but lengthens repayment. A fixed debit keeps a steady pace but needs a cushion.
Source: Merchant Fund Express.
A food truck with 90% card sales is offered both. On a rainy week with half the usual volume the split takes $900 instead of $1,800, and repayment simply runs longer. A drywall contractor paid by check is only offered fixed ACH because there is no card volume to split. Each structure fits the way the money arrives, which is the real choice.
Source: Merchant Fund Express.
Cost depends on the factor rate, fees and term, not on the collection method. Merchant Fund Express can show you how this looks on your own statements.
Sometimes through a modification or a new facility. It depends on the agreement and the funder.
Not necessarily a new processor, but the funder needs arrangements with your existing one, which can add steps. Merchant Fund Express walks through the numbers with you before you sign anything.
It is less flexible. A fixed debit continues at the same amount in a slow month.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
