Can I revoke the ACH authorization unilaterally?

Under NACHA rules (the network rules governing US ACH), you can revoke ACH authorization at any time by notifying your bank. But the MCA contract typically makes revocation a default event — so revoking the ACH triggers acceleration, allowing the funder to declare the full balance due immediately. NACHA gives you the right to revoke; the contract gives the funder the right to retaliate.

What's the difference between a one-time and recurring ACH authorization?

MCAs use recurring (continuous) ACH authorization — the funder is authorized to debit your account on a schedule indefinitely until the contract is satisfied. This is different from one-time authorization (a single payment) and from variable recurring (where amount can change). MCA recurring authorization typically allows the funder to adjust the daily amount based on the contract terms (e.g., reconciliation adjustments) without separate authorization for each variation.

Can the funder debit accounts I didn't explicitly authorize?

Generally no, but the contract may include language authorizing debit of 'any account maintained by Merchant at any bank.' This is broader than most merchants realize. If you open new accounts later, the contract may still apply to them under broad sweep language. Always read the specific account authorization carefully.

What happens if my bank rejects an ACH debit?

NSF (non-sufficient funds) is the most common rejection. The funder is notified by the ACH network and typically tries again 1-2 business days later. Multiple NSFs in a short window (often 2-3 NSFs in a rolling 30-day period) trigger default under most MCA contracts. The bank may also charge you NSF fees per attempt — these add up quickly.

Can I switch banks to stop the ACH?

Mechanically yes. Practically, switching banks to evade ACH is treated as a default event under most MCA contracts (often explicitly named — 'evasion of payment'). The funder can accelerate, and the conduct may also be cited as bad-faith in any subsequent litigation. Always notify the funder in writing if you change banks for legitimate reasons.

Are there time-of-day rules for when ACH debits hit?

Yes. Standard ACH settlement happens overnight; debits typically hit early morning on the scheduled day. Same-day ACH (faster settlement) is increasingly common — these debits can hit the same business day if initiated before specific cutoff times. For cash-flow planning: assume the debit hits the morning of the scheduled date, not the end of day.

MCA ACH Debit Authorization: What You're Actually Authorizing

The ACH authorization is the operational mechanism behind every MCA daily debit. What the contract actually authorizes is broader than most merchants realize. Here's the language, what's enforceable, and the timing rules that determine whether NSFs become defaults.

The typical contract language

Anonymized aggregate of ACH authorization language we've reviewed:

"Merchant authorizes Funder to initiate electronic ACH debits against Merchant's designated bank account (and any other account maintained by Merchant at any financial institution) in the amounts and at the frequency specified in this Agreement, including any adjustments pursuant to reconciliation. This authorization shall remain in effect until all obligations under this Agreement are fully satisfied. Merchant's failure to maintain sufficient funds shall constitute a default."

Key phrases to notice:

"And any other account" — broader than just the named account
"And the frequency specified" — daily, weekly, depending on contract
"Including any adjustments pursuant to reconciliation" — the amount can change
"Failure to maintain sufficient funds shall constitute a default" — NSF is a default event under the contract

NACHA rules vs the contract — your revocation rights

The National Automated Clearing House Association (NACHA) operates the rules for US ACH transactions. Under NACHA, you have an unconditional right to revoke ACH authorization at any time by notifying your bank in writing. The bank is required to stop allowing further debits.

The contract, however, makes revocation a default event. So you have two competing frameworks:

NACHA: you can stop the ACH whenever you want
Contract: stopping the ACH is a default that triggers the full balance being due immediately

In practice: NACHA revocation is a tactical option in distress situations (often immediately before a bankruptcy filing or as part of a coordinated legal defense), not a casual cost-saving measure.

NSF cascade — how missed debits become default

Most MCA contracts define NSF thresholds explicitly:

Single NSF: typically not a default by itself but triggers funder collections contact and NSF fees ($15-35 from your bank per failed attempt)
2-3 NSFs in 30 days: typical default trigger under most contracts
5+ NSFs in any 90-day window: almost always default under any contract

The funder's response to NSF varies:

First NSF: collections call. Funder wants the cure (replenish account, make-up debit).
Second NSF in 30 days: escalation to formal collections, threat of default declaration.
Third NSF: default declaration, potential acceleration. If the contract has a COJ clause, this is when COJ filing typically happens.

The "sweep" authorization — what most merchants miss

Some MCA contracts include language authorizing the funder to debit ANY account you maintain at ANY bank — not just the designated account. This is the "sweep" authorization, and it's buried in many contracts.

The practical implication: if you open a new business account at a different bank to manage cash flow, the funder may be contractually authorized to debit that account too. They typically only do this when default occurs, but the right is there.

What to do:

Read the specific authorization language carefully. Look for "any account" language vs "the designated account".
If the contract authorizes any account, the contract gives the funder broader authority than NACHA alone would. This is contractually negotiable — some funders will narrow to specific accounts if asked.
Operating cash management — keep working capital in accounts at banks not specifically authorized. This isn't evasion of payment; it's defensive cash management. Confirm specifics with an MCA defense attorney.

Same-day ACH and timing rules

Standard ACH settlement is overnight — initiated one business day, settles next business day. Same-day ACH (faster settlement) processes within hours.

For cash-flow planning:

Standard ACH debits typically hit your account early morning on the scheduled date.
Same-day ACH initiated before the morning cutoff hits same business day.
Holidays and weekends shift the schedule — debits land on next business day.
Account balance at end-of-day on the day before is what matters for clearing the morning debit.

What you can negotiate

Specific account naming instead of "any account" sweep authorization. Limits the debit to the designated account only.
Cure period explicit in contract. Some funders agree to a 3-5 business day cure window for NSFs before default is declared.
Weekly debits instead of daily. Some funders accept a weekly consolidated debit instead of daily. This reduces NSF risk but increases per-debit amount.
Limit on same-day ACH. Negotiate that the funder uses only standard ACH (next-day settlement) so you have a full business day to ensure funds are available.

Frequently asked questions

Can I revoke the ACH authorization unilaterally?: Under NACHA rules (the network rules governing US ACH), you can revoke ACH authorization at any time by notifying your bank. But the MCA contract typically makes revocation a default event — so revoking the ACH triggers acceleration, allowing the funder to declare the full balance due immediately. NACHA gives you the right to revoke; the contract gives the funder the right to retaliate.
What's the difference between a one-time and recurring ACH authorization?: MCAs use recurring (continuous) ACH authorization — the funder is authorized to debit your account on a schedule indefinitely until the contract is satisfied. This is different from one-time authorization (a single payment) and from variable recurring (where amount can change). MCA recurring authorization typically allows the funder to adjust the daily amount based on the contract terms (e.g., reconciliation adjustments) without separate authorization for each variation.
Can the funder debit accounts I didn't explicitly authorize?: Generally no, but the contract may include language authorizing debit of 'any account maintained by Merchant at any bank.' This is broader than most merchants realize. If you open new accounts later, the contract may still apply to them under broad sweep language. Always read the specific account authorization carefully.
What happens if my bank rejects an ACH debit?: NSF (non-sufficient funds) is the most common rejection. The funder is notified by the ACH network and typically tries again 1-2 business days later. Multiple NSFs in a short window (often 2-3 NSFs in a rolling 30-day period) trigger default under most MCA contracts. The bank may also charge you NSF fees per attempt — these add up quickly.
Can I switch banks to stop the ACH?: Mechanically yes. Practically, switching banks to evade ACH is treated as a default event under most MCA contracts (often explicitly named — 'evasion of payment'). The funder can accelerate, and the conduct may also be cited as bad-faith in any subsequent litigation. Always notify the funder in writing if you change banks for legitimate reasons.
Are there time-of-day rules for when ACH debits hit?: Yes. Standard ACH settlement happens overnight; debits typically hit early morning on the scheduled day. Same-day ACH (faster settlement) is increasingly common — these debits can hit the same business day if initiated before specific cutoff times. For cash-flow planning: assume the debit hits the morning of the scheduled date, not the end of day.

ACH debit authorization — what your signature actually authorizes.