The daily ACH debit is what kills businesses. A $750 debit pulled at 6 AM every business day is $15,000 per month that doesn’t care whether you sold a single thing yesterday. Stopping it without triggering immediate collection war requires three coordinated moves: a stop-pay letter to the bank, a reconciliation demand to the funder, and a parallel settlement track. Done in that order, you can halt the withdrawals while keeping the deal alive.
The Stop-Pay Letter
Your bank is required by Regulation E (for consumer accounts) and by NACHA rules (for business accounts) to stop processing ACH debits when you provide a written stop-pay order. The order needs the funder’s name as it appears on debits, the account number being debited, and the dollar range. A blanket “stop all ACH from this originator” is generally enforceable for six months and renewable.
Business account stop-pays usually require an in-person visit and a $30 to $50 fee. Most banks will execute the order within 24 hours. The funder will be notified of the stop-pay by the ACH network within two to three business days.
The Reconciliation Demand
Stopping the ACH without a reason is a default. Stopping the ACH because the contract entitles you to reconciliation is not. The right move is a written reconciliation demand sent to the funder the same day you implement the stop-pay, citing the reconciliation clause and attaching bank statements that show the revenue decline.
A typical reconciliation clause says the daily debit must be trued-up against actual receipts when revenue drops. If your daily debit is $750 based on 10 percent of average daily revenue of $7,500, and your revenue has dropped to $3,500 per day, you’re entitled to a debit of $350. The reconciliation letter spells this out and gives the funder seven business days to adjust.
Funders ignore informal reconciliation requests almost universally. A written demand with documentation and a deadline gets a response roughly 60 percent of the time. The other 40 percent of the time, the absence of response becomes evidence that the funder isn’t honoring the contract.
Moving Accounts: When and How
If the stop-pay doesn’t hold (and sometimes funders try to debit a different account they have on file, or push through multiple variations), the next move is changing operating accounts. Open a new account at an unrelated bank, move all incoming receivables to the new account via processor updates and customer notifications, and let the old account go dormant.
The funder will eventually notice and may serve UCC § 9-406 notices on your credit card processor demanding lockbox payment of receivables. That’s a separate fight, but the cash flow relief from getting daily debits off your active operating account is usually worth it.
What the Funder Will Do
Expect a call within 48 hours of the first stop-pay. The collection rep will demand reinstatement of the debit and threaten default. The right response is to refer them to the reconciliation letter and offer to discuss a structured workout. Don’t agree to reinstate the original debit. Don’t make a personal guarantee of any specific number on the call.
If a COJ is on file, expect threats to file it. Some funders bluff, some don’t. Independent counsel from our referral network can evaluate the COJ’s enforceability if filing actually happens.
The Settlement Track
Stopping debits without a path to resolution just delays the collection action. The same week you stop the ACH, you should be working a settlement number. Pre-default settlements when ACH has stopped typically land at 45 to 65 cents on the dollar over 12 to 18 months. The reconciliation paperwork you built becomes part of the hardship documentation.
Sequence matters. Here’s how the moves stack up day by day:
- Day 1: Bank stop-pay order in writing.
- Day 1: Reconciliation demand letter to funder via email and certified mail.
- Day 2-3: Open new operating account if not already done.
- Day 5-7: Senior advisor opens settlement conversation with the funder.
- Day 10-14: Move processor deposits to new account if no reconciliation response.
- Day 30-45: Negotiated settlement or formal workout in place.
Done in sequence, the daily debits stop, the legal exposure is managed, and you exit the MCA at a reduced number. Done out of order, you create defaults without protection.
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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