Glossary

Accounting & MCA terms, in plain language.

The vocabulary of merchant cash advance, syndication, bookkeeping, and small-business tax — defined clearly, the way we explain it to clients. Jump to a section or search the page.

MCA & Syndication

Merchant Cash Advance (MCA): A form of financing in which a business receives an upfront lump sum in exchange for a fixed payback amount, repaid as a percentage of future sales or as fixed daily / weekly remittances. Legally it's a purchase of future receivables, not a loan — which is why it's recorded as a liability with principal and financing cost split apart.; MCA accounting guide
Factor Rate: The multiplier — typically between about 1.1 and 1.5 — that sets the total payback on an advance. A $50,000 advance at a 1.4 factor rate repays $70,000. Unlike an interest rate, a factor rate doesn't account for time, so a short repayment term can mean a very high effective APR.; Factor rate vs. APR
RTR (Right to Receive): The total amount still owed on an advance — the agreed payback amount minus what has already been collected. RTR is the basis for measuring outstanding balance and one common way to evaluate defaults.; Measuring MCA defaults
Holdback: The fixed percentage of daily or weekly sales (or a set ACH amount) that a funder collects toward repayment of an advance until the full payback is satisfied.
Syndication: An arrangement where multiple funders share a single MCA deal — each funding a percentage of the advance and sharing the collections, and the risk, in the same proportion. It spreads risk for the originator and lets participants deploy capital into deals they didn't originate.; How syndication works
Participation: A single funder's percentage share of a syndicated deal, which determines its share of every dollar collected. Accurate books track funded amount, participation percentage, and the collection split for each participant on each deal.; How syndication works
Servicing / Management Fee: A fee the originator charges participants for servicing a syndicated deal — collecting payments and chasing defaults. It's recorded as income to the originator and an expense to the participant, separately from the principal split. Blending the two is a common syndication bookkeeping error.
Clawback: The reversal of a broker's commission when a funded deal unwinds early. The previously recognized commission income is reversed and a payable to the funder is recorded — which is why brokers keep reserves against clawbacks.
Revenue Recognition (Deferral / Accelerated): How and when factor income on an advance is recorded. Depending on the deal it's recognized on a deferral or an accelerated basis, always keeping principal separate from the financing cost so profit isn't overstated. We state the method in plain language rather than opaque jargon.

Bookkeeping & Accounting

Reconciliation: Matching your books to actual bank, credit-card, and payment-processor statements so every transaction is accounted for and nothing is missing or double-counted. Unreconciled accounts are the root cause of most untrustworthy financials.; Catch-up bookkeeping
Cash vs. Accrual Accounting: Two methods of timing. Cash basis records income and expenses when money actually moves; accrual basis records them when they're earned or incurred. Accrual gives a truer picture of profitability and is generally preferred by lenders and required above certain size thresholds.; Cash vs. accrual explained
COGS (Cost of Goods Sold): The direct cost of the products a business sells — materials, production, and fulfillment — subtracted from revenue to arrive at gross profit. Accurate COGS is what makes real margin visible, especially for eCommerce and retail.; eCommerce COGS
Job Costing: Tracking every cost — labor, materials, equipment, and subcontractors — against the specific job that incurred it, so each project has its own profit-and-loss. It's how contractors see which jobs make money instead of guessing from one company-wide P&L.; Construction job costing
WIP Schedule (Work in Progress): A report that lays out, job by job, costs incurred, amounts billed, and any over- or under-billing under percentage-of-completion. It's the report bonding companies and lenders ask contractors for first.; Construction job costing
Catch-Up Bookkeeping: Bringing neglected books current — categorizing every transaction, reconciling every account, and producing accurate financial statements for the period that fell behind, so you and your CPA can trust the numbers.; How cleanup works

Tax

1099-NEC: The IRS form used to report nonemployee compensation. For 2026 payments, the general federal threshold is $2,000 or more in reportable business-service payments per payee for the year; it was $600 for 2025 payments. Backup withholding and state rules can require reporting below that threshold. The usual IRS and recipient deadline is January 31 of the following year, adjusted for weekends and legal holidays.; 1099-NEC filing guide
Sales Tax Nexus: The connection — physical or economic — that obligates a seller to collect sales tax in a state. Economic nexus is commonly triggered around $100,000 in sales or 200 transactions per year, though the exact thresholds vary by state.; Sales tax nexus for sellers
Quarterly Estimated Taxes: Tax payments the self-employed and many business owners make four times a year (roughly April, June, September, and the following January) because no employer withholds for them. Skipping them can trigger penalties even if you pay in full at year-end.; Quarterly taxes guide

Books you don't have to think about.

Get a free books review. We'll tell you honestly where things stand and give you a flat monthly quote — no pressure.

Get a free books review Call (901) 446-4019

A Christmas tree with warm lights and gold and teal ornaments. A festive print surprise from I&S Accounting.

A little holiday cheer from I&S Accounting.

For our printable pricing guide: iandsaccountingsvcs.com/pricing