Month-End Close for MCA Funders: Five Reconciliations That Keep a Portfolio Honest
By the I&S Accounting teamReviewed by a licensed U.S. CPA
Why a Funder's Close Is Its Own Discipline
A typical small business reconciles a bank account and calls it a month. An MCA funder closes a portfolio: hundreds of deals collecting daily, ACH returns and re-presentments, syndicate participants owed a share of every dollar, and income that has to be released by rule rather than by feel. The close is where the portfolio's story gets proven instead of estimated — and where problems surface while they're still one month deep instead of six.
Here's the close we run for funder clients, reduced to its load-bearing parts.
The Five Reconciliations
1. Bank to ledger
Every deposit and withdrawal matched — including the unglamorous traffic that breaks funder books: returned ACH payments, re-presentments, and processor sweeps that bundle many deals into one line. A collection that bounced two days after month-end isn't a collection; books that miss the returns overstate both cash and income.
2. Processor reports to deals
Each collection has to land on the right deal, not just in the right account. The working test is the unapplied-cash list: money received but not yet attributed to a deal should reconcile to zero — or to a short, named list someone is actively clearing. A growing unapplied balance is deferred chaos.
3. The RTR rollforward
The spine of the close:
Beginning RTR + new fundings − collections − write-offs = ending RTR
Run it per deal and in total, and tie the deal subledger to the general ledger. When the rollforward doesn't balance, something real happened that the books don't know about — a missed funding, an unrecorded settlement, a write-off someone took in a spreadsheet but never booked.
4. The unearned-income rollforward
The same discipline applied to margin: beginning unearned income, plus margin added by new fundings, minus income recognized, minus unearned income cleared by write-offs, equals the ending balance. The income released this month has to agree with your method — under deferral, it should reconcile directly to collections (how the methods work) — and every write-off has to clear its deal's remaining unearned margin (the entries).
5. Syndication tie-outs
A rollforward of due-to-participant balances — capital received, share of collections owed, payouts made — plus the statement each participant will see, produced from the same records as the ledger. Servicing fees stay booked separately from the principal split. When statements come out of a different system than the books, they will eventually disagree, and participants notice.
Then the Judgment Work
With the mechanical tie-outs done, the close turns to judgment: the monthly bad-debt reserve against portfolio history, specific write-offs for deals that are done (how to measure defaults), and cleanup of renewals so the old advance's balance and unearned margin are fully cleared rather than netted into the new wire.
A Close Calendar That Works
- Days 1–2: bank matched, processor files ingested, unapplied cash cleared.
- Days 3–4: RTR and unearned-income rollforwards tied out; reserves and write-offs booked.
- Day 5: participant statements and the financial package out — after review, including a licensed U.S. CPA's eyes on what leaves the building.
The exact days matter less than the sequence and the deadline: cash first, rollforwards second, statements only from books that already tie.
Red Flags Your Close Should Catch
- Unapplied cash or suspense balances that grow month over month
- A deal with a negative balance — collections exceeding its RTR
- "Plug" entries forcing the subledger to match the GL
- Income still accruing on deals that stopped paying
- Participant statements produced outside the accounting system
- A close that finishes after mid-month, every month
Any one of these is survivable. The pattern of them is how a portfolio's numbers stop being believed — by you, by participants, by anyone doing diligence.
What a Clean Close Buys You
Renewal and concentration decisions made on current numbers instead of last quarter's. Participant statements nobody has to argue about. A tax season that's an export, not an archaeology project. And when an investor or auditor asks "can you support this?" — a yes that takes minutes.
The Bottom Line
A funder's month-end close isn't a heroic act; it's a system — five reconciliations, two judgment passes, one calendar, every month. If your close still ends in a spreadsheet at midnight (there's a reason), or you couldn't produce last month's RTR rollforward today, we should talk — this is the exact work our practice was built around.
Frequently asked questions
Five things: the bank to the ledger (including returned ACH), processor or servicer reports to per-deal collections, an RTR rollforward that ties the deal subledger to the general ledger, an unearned-income rollforward that matches the revenue recognition method, and syndication balances — what's owed to each participant and the statements they receive.
A schedule proving the portfolio's right-to-receive moved only for explainable reasons: beginning RTR, plus new fundings, minus collections, minus write-offs, equals ending RTR. Run deal by deal and in total, it's the fastest way to catch missed collections, unbooked deals, and silent write-offs.
With a deal-level subledger and a defined checklist, a funder close is a first-week-of-the-month job. When it routinely runs to mid-month or later, the cause is almost always tooling — spreadsheets standing in for a subledger — rather than effort.
Usually one of three causes: statements produced from a different system than the books, servicing fees blended into the principal split instead of booked separately, or timing differences in when collections post. The durable fix is structural — one source of truth that produces both the ledger entries and the participant statements.