Blocking the ACH does not start the default. The default started the moment the payment stopped getting taken out. Blocking the ACH is a tactical choice that buys time, protects working capital, and forces the funder to come to the table. It also kicks off a sequence of consequences that follow a fairly predictable timeline. Knowing the sequence lets you prepare instead of react.
Days 1 to 3: The Bounce
The funder’s automated system attempts the daily or weekly debit. It fails. The funder’s system flags the account as delinquent, usually within twenty-four hours. By day three, you will have received a first-notice email or letter and likely a phone call from the relationship manager assigned to your file.
Your bank may charge a returned-item fee, typically twenty-five to thirty-five dollars per attempt. Some funders retry the same debit multiple times, generating multiple fees. Revoke the ACH authorization in writing immediately to stop the retries. Send the revocation by certified mail and email to create a paper trail.
Days 4 to 14: The Outreach Phase
This is the negotiation window the funder hopes will not last. Calls increase, sometimes daily. The tone shifts from helpful to firm. The funder may offer a temporary modification, a paused payment, or a reconciliation under the contract’s reconciliation clause.
The first offer is almost never the best offer. Funders ramp up incentives as the file ages. A payment pause offered on day five is rarely the deepest concession available.
What to do during this window: do not agree to anything verbally. Ask everything to be put in writing. Document every call. If you have multiple MCAs, do not negotiate with any of them in isolation. The order of settlements matters.
Days 15 to 30: The Escalation Phase
The file typically moves from the relationship management team to a collections team or to in-house legal around day fifteen to twenty. The new contact will be less interested in modification and more interested in resolution, usually meaning either a settlement or a lawsuit.
A demand letter from the funder’s attorney is common around day twenty to twenty-five. This is usually a thirty-day notice before suit or before judgment by confession. If the contract includes a COJ, the entry of judgment can come without further warning.
Other things that commonly happen in this window:
- UCC notification letters drafted, sometimes sent to your customers
- The funder pulls your credit report or runs a skip trace on the guarantor
- Background check on personal assets and real estate
- Outreach to other MCA funders on your file to coordinate
- Possible referral to an aggressive collection firm
Days 30 to 45: The Pivot Point
By day thirty, the funder has decided whether to settle or litigate. Funders settle more files than they litigate, simply because litigation is slow and expensive. But the settlement is now happening on the funder’s timeline, not the friendly opening conversation timeline.
Settlement offers in this window typically run sixty to seventy-five cents on the dollar if no leverage has been applied. With proper negotiation, including itemized accounting challenges and contract review, the same offers often come down to forty to fifty-five cents.
If litigation has been chosen, the lawsuit gets filed, you get served, and the clock starts on your answer deadline. If a COJ has been used, the judgment may already be entered. The next thirty days will be about defending the file or unwinding the judgment.
What This Sequence Means
Move operating accounts to a bank with no funder ACH history.
Pull every MCA contract. Flag PG, COJ, and choice-of-law clauses.
Personal financial statement plus 13-week cash flow projection.
Rank funders by enforcement strength, not loudness.
One coordinated strategy across all funders, not five separate fires.
The thirty-day window from ACH block to escalation is not wasted time. It is preparation time. The borrower who uses it to build a personal financial statement, gather contracts, get an independent attorney’s review of COJ exposure, and engage a senior advisor for negotiation typically settles at a much lower number than the borrower who spends those thirty days hoping the calls will stop.
Things to accomplish in those thirty days:
- Move operating accounts to a new bank with no funder ACH history
- Pull and review every MCA contract for PG and COJ language
- Build a personal financial statement and cash flow projection
- Identify which funders have the strongest enforcement positions
- Engage advisors to handle the negotiation under one strategy
Senior advisors at Delancey Street handle the financial side. When the file needs litigation defense or COJ work, we refer you to an independent attorney from our network so the strategy is coordinated.
The Bottom Line
Blocking MCA payments is not a chaos event. It is the start of a defined sequence. Knowing the sequence means you can be three steps ahead of the funder instead of three steps behind.
Delancey Street is a business debt-relief company, not a law firm. When a matter requires legal work, we refer you to an independent attorney from our referral network; the attorney–client relationship is between you and that attorney.
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- Move quickly to stop daily ACH debits where reconciliation rights apply
- Vacate Confessions of Judgment in 72 hours
- Senior advisor, not a salesperson