£40,000 of monthly card sales can support a meaningful merchant cash advance discussion, but there is no universal advance amount attached to that turnover. The provider must assess the business and the receipts it can include. The business must separately decide how much it needs and what collections it can sustain.
Worked examples help show the relationship between funding size, total cost and cash deductions. They should not be mistaken for quotations. Use the calculations below to prepare questions and replace every assumption with the terms of a written offer before making a decision.
A provider benchmark needs context
Dojo’s funding page describes average funding of approximately 0.8 to 1 times average monthly card turnover. Applied arithmetically to £40,000, that would be £32,000 to £40,000. It is a provider-specific average, not a guaranteed range or a market-wide underwriting rule.
A provider may offer less, more under a different product, or no funding. Eligible channels, trading history, business performance and existing commitments need assessment. Do not use a headline multiple to commit to stock or building work before receiving a final offer.
Example one: a smaller stock requirement
Assume a retailer taking £40,000 in eligible monthly card receipts needs £20,000 for stock. A hypothetical offer provides £20,000 in net cash and requires £23,000 in total collections at 10% of eligible receipts. These are invented terms for illustration, not typical pricing.
At constant monthly receipts of £40,000, collections would be £4,000 and £36,000 would remain before operating costs and other deductions. Simple division suggests 5.75 months to collect £23,000. The real contract may include additional requirements that affect this calculation.
The £3,000 difference between net cash and total collections is the funding cost under these assumptions. Compare that cost with the expected cash contribution from the stock after purchase costs, selling costs and any additional overhead. Gross sales generated by the stock are not the same as profit available to pay for funding.
If some inventory will remain unsold beyond the expected collection period, include that in the forecast. A slow-moving product can tie up cash while the advance continues to collect from other sales.
Example two: a larger mixed-use advance
Now assume a business receives £35,000 and must deliver £42,000 in total, collected at 14% of eligible receipts. Again, these are hypothetical figures, not a provider offer.
| Eligible monthly receipts | Collection at 14% | Receipts remaining before other costs |
|---|---|---|
| £30,000 | £4,200 | £25,800 |
| £40,000 | £5,600 | £34,400 |
| £50,000 | £7,000 | £43,000 |
At £5,600 per month, the arithmetic collection period is 7.5 months. At £4,200 it becomes ten months. These estimates do not establish a permitted term, and any minimum payment or completion requirement must be modelled separately.
The larger advance provides £15,000 more cash than the first example, but the assumed total cost and monthly deduction are also higher. A business should identify a clear use for the extra cash and test whether its return arrives before the additional collections create pressure.
Example three: seasonal receipts
An average of £40,000 can conceal substantial variation. Consider this six-month hypothetical receipt pattern under the second example’s 14% collection assumption.
| Month | Eligible receipts | Collection |
|---|---|---|
| 1 | £55,000 | £7,700 |
| 2 | £50,000 | £7,000 |
| 3 | £40,000 | £5,600 |
| 4 | £35,000 | £4,900 |
| 5 | £30,000 | £4,200 |
| 6 | £30,000 | £4,200 |
| Total | £240,000 | £33,600 |
Average receipts are £40,000, but £8,400 of the assumed £42,000 total remains after six months. The business also experiences lower receipts in the later months. Its ability to trade through that period depends on the timing of expenses and the cash it retains from the stronger months.
Do not distribute annual revenue evenly when the business is seasonal. Put the actual quieter periods into the forecast and include stock purchases or staffing costs that arise before the next peak.
Example four: the margin constraint
Suppose a business with £40,000 of monthly card receipts has £3,500 of cash headroom after its normal operating commitments, before the proposed advance. In that simplified example, a £4,000 monthly collection would exceed the available headroom by £500.
The business may expect the funded investment to improve cash generation, but that improvement needs a timetable and evidence. If it takes three months to appear, the initial shortfall must still be covered. Include a delayed-return scenario instead of assuming immediate success.
Revenue-linked collections can fall when sales weaken, but fixed costs may not. If receipts fall from £40,000 to £30,000 under a 10% collection assumption, the deduction falls by £1,000 while receipts fall by £10,000. Assess the full cash effect rather than focusing only on the smaller payment.
Separate three different percentages
A funding quotation may contain percentages describing different things. The collection rate is the share of defined receipts allocated to the funder. A fixed fee expressed as a percentage describes a cost relative to a stated amount. An annualised measure considers time and the pattern of cash flows.
In the hypothetical £35,000 example, a £7,000 funding cost equals 20% of net proceeds. It is not an APR. The 14% collection rate is a separate calculation. Neither percentage should be substituted for the other when comparing offers.
Ask for the total cost in pounds, the calculation basis and the collection mechanism. If a quotation uses a factor, obtain the corresponding net cash and total contractual collection amount so that the figures are clear.
Use eligible receipts consistently
A till report, processor report and bank statement can show different numbers for valid reasons. Refunds, fees and settlement dates may explain the difference. Reconcile them before building the funding forecast.
Confirm which card channels the provider includes. If £40,000 is split between two processors, or between separate companies, the full amount may not be assessed as one receipt stream. Explain the structure rather than assuming aggregation is permitted.
Ask how chargebacks, taxes and refunds affect collection calculations. Build the forecast using the same definition as the agreement and avoid deducting a cost twice if it is already reflected in the bank receipts used as the starting point.
Consider existing finance and net proceeds
If £6,000 of a new £35,000 advance settles prior funding, the fresh cash is £29,000 before any other deductions. Compare that with the spending requirement, not the headline £35,000.
Record the old balance, settlement figure, new total obligation and revised collection percentage. The new arrangement may change both the cost and the cash retained from sales. A renewal should be assessed as a fresh commitment.
Check whether existing agreements restrict additional funding or the sale of receivables. Explain all current facilities to the provider and model their combined collections. Do not assume separate approvals mean the combined commitments are manageable.
Questions that turn an illustration into a decision
Before accepting an offer, confirm:
- The exact cash arriving in the account after all deductions.
- The total amount the business must deliver and every applicable charge.
- The eligible sales definition and collection percentage.
- Any minimum collections, completion date or other payment obligations.
- Guarantee, security and default provisions.
- Early settlement calculations and any processor-change restrictions.
Request a written explanation of anything unclear. Ask whose credit record is checked and what type of search applies. Obtain independent advice where the agreement creates obligations you do not fully understand.
Compare the project with alternatives
For stock, examine supplier credit or staged deliveries alongside funding quotations. For equipment, consider an appropriate asset-finance offer. For a recurring short-term gap, compare the cash pattern of a revolving facility if one is available.
The alternative should be assessed on the same project and forecast. Include deposits, charges, guarantees and the combined effect of any facilities used together. A different product label does not automatically mean a lower cost or a better fit.
Common questions
Does £40,000 of monthly card sales mean £40,000 of funding?
No. A published provider average can give context, but the final amount depends on the applicant and product. It is not a guaranteed one-to-one conversion.
Are the examples quotations?
No. Apart from the explicitly identified provider benchmark, the amounts and rates are hypothetical calculations designed to show cash-flow effects.
Can the same average produce different outcomes?
Yes. The timing and stability of receipts, operating costs, existing commitments and the proposed terms all affect the practical result.
Prepare a comparison using your own figures
Bring recent processing records, existing finance details and a dated spending plan. Replace the examples with actual offer terms, then compare normal, seasonal and weaker trading scenarios.
Contact Mehmi Financial Group to discuss your funding requirements and the information needed to assess the options for your business.