How do I reconcile a merchant cash advance?

Hi there, LAZY641.

You can record your merchant cash advance as a retainer. We'll have to create a liability account and a liability item. For more details, you can click this page and refer to the Pay customer expenses with money held in the liability account section: Record a retainer or deposit.

If you need more help you can always mention me in your reply. Take care!

I read over the procedures for creating a liability item to record a retainer or deposit, but it still leave me with questions.  How does using that account for the extra amount that I have to pay them back, plus the fees that are tax deductable?  For example with one of the MCAs they gave me $20792 and they take back $31050.  They also deducted almost $1900 in various fees from the amount they initially advanced to me.  Additionally the help item talks about deducting money from the liability account using invoices or sales receipts.  The MCAs automatically deduct a set amount from my account each business day.  In the example I used about they deduct $297 a day.  There is no receipt or invoice for it.  How do I record this?

Hi there, LAZY641.

Let me share some information about the retainer account in QuickBooks Online. This method of creating retainer account will temporarily holds the money on the Balance Sheet in a separate deposits received other current liability account. You can easily see all the money that is being held. Double-click on the Deposits Received liability account on the Balance Sheet report.  

Then, when setting up this new Service be certain to use the new Liability Account as the Income account. This way, when using this Service on an Invoice or Sales Receipt, the money will be held in this Account on the Balance Sheet. 

You can read through this article about how the workflow of recording retainer or deposit account in QuickBooks: Record a retainer or deposit.    

I also recommend you to consult an accountant. This way, they can offer you some advice on the correct accounts to use. If you don't have any, I encourage checking out this link to find one: https://quickbooks.intuit.com/find-an-accountant/.

Drop a comment below if you have additional questions in managing your account in QuickBooks. Doing so helps us to assist you further. Have a great day!

I too have the same question as well. If I found it out then I'll let you know Target EHR

I also have trucking company and have the same question. How to I create and account and record a the payments if this is considered merchant cash advance? My bank also does not consider this a loan, so therefore they do not consider the fees interest? My accountant said not to record as retainer. Can someone please help!

I appreciate you for joining the thread, @Trucking Company.

One option is to record the transaction as a deposit as suggested above. If you don't want to record it that way, I suggest seeking help from a professional accountant. This way, they can help you select the account and record the amount accordingly.

For more tips, while processing credit cards and eChecks in the Merchant Service Center, you can check out this link: Process payments in the Merchant Service Center.

If you have any other questions, please let me know in the comment section below. I'm always here to answer them. Take care and enjoy the rest of the day!

@Regina_Lend_A_Hand_Accounting, as clear as your answer was, I am a little confused still as to how to do it, would it be possible for you to draw it out?  Thank you in advance

Merchant Credit Advances are not loans and do not carry interest.  They are the sale of future receivables and have origination fees.  I am seeking advice of a CPA to clarify the accounting of such advances.  I suggest others do the same.