What average monthly deposits means to an underwriter, and how they compute it

What comes out before anything is averaged

The total credits line on your statement is the starting point, not the answer. Removed from it:

• Transfers from your own other accounts. The most common source of inflation, usually accidental — see do transfers between my own accounts count as revenue.
• Loan or advance proceeds. A $40,000 credit from a funder is not a sale, and it also identifies a position they will look for.
• Owner injections and shareholder loans.
• Refunds, reversals and returned debits coming back in.
• One-off receipts. An insurance settlement, an asset sale, a grant, a tax refund.
• Chargeback reversals on card volume.

What remains is true revenue or adjusted deposits. On files with meaningful transfers, the adjusted number can sit well below the gross one, and the offer follows the adjusted number.

Then the method, which varies

Illustrative only. Suppose three months of gross deposits of $82,400, $61,900 and $74,300.

• Straight average of gross: $72,866.67.
• Strip a $15,000 internal transfer in month one and $9,000 of advance proceeds in month three, giving $67,400, $61,900 and $65,300. Average: $64,866.67.
• Lowest of the three adjusted months: $61,900.
• Weighted toward the most recent month, say 50/30/20 from newest back: $64,510.

One set of statements, four defensible figures, and roughly $11,000 a month between the highest and the lowest. Offer sizing is typically expressed as a multiple of whichever figure the funder uses, so that spread flows straight into the amount you are offered.

They also read deposit count and deposit rhythm alongside the value. Forty deposits a month from forty customers is a different risk from two deposits from one buyer.

What seasonality does to this

A three-month window is a snapshot, and where you take the snapshot decides the picture.

A retailer doing $180,000 in December and $40,000 in February has an annual average nothing like either. Pull statements in January and the three-month figure is inflated by the peak. Pull in March and it is deflated by the trough. The business has not changed; the window has.

The distortions run both ways and both are damaging. A peak-window reading can produce an offer sized against revenue that will not exist when the remittance is being collected — a daily debit set against December cash flow is a very different burden in February. A trough-window reading produces an offer too small to be useful, or a decline against a revenue floor the business clears comfortably on an annual basis.

What to do about it:

1. Submit twelve months unprompted, even where three are requested. It costs nothing and it removes the argument.
2. State the seasonal pattern in one line with the month-by-month figures behind it.
3. Ask which window is being used and whether a trailing twelve-month figure can be used instead.
4. Push the structure, not just the amount. A remittance expressed as a percentage of daily deposits flexes with the season; a fixed daily debit does not. See specified percentage vs fixed daily debit and how a seasonal business should borrow.
5. Check the reconciliation terms. Where a contract allows the remittance to be adjusted to actual receipts, that clause is what protects you in the trough — see MCA reconciliation rights and how to use them.

What to do generally

Compute your own adjusted figure before you submit. List the transfers and one-offs with dates and amounts on a single page, and attach it.

Two benefits. The underwriter's version of your revenue matches yours, so the conversation is about price rather than about arithmetic. And any large deposit you have already explained cannot later be treated as something you were hoping they would miss.

What that spread does to the offer

Illustrative only — sizing at one times monthly deposits on the four figures above gives $72,867, $64,867, $61,900 and $64,510. About $11,000 of difference from the same three statements, before anyone has said a word about price.

You cannot choose the method. You can make sure the adjusted figure is the right adjusted figure, which is the only one of the four you can influence, and you influence it by identifying the transfers and one-offs yourself instead of letting an analyst guess.

Two bank accounts, one business

This is the most common way a file understates a business, and it is entirely self-inflicted.

Illustrative only — Account A takes $41,000 a month, Account B takes $28,000, and you move $12,000 a month from A to B to cover payroll.

• Submit A only: the file reads $41,000.
• Submit both without explanation: gross credits are $69,000, the $12,000 transfer is stripped from one side, and the file reads $57,000 — with a question attached about why money is circulating.
• Submit both with one line identifying the transfer: $57,000, agreed, nothing hanging over it.

Submitting one account to keep the picture simple costs $16,000 a month of visible revenue. Submitting both without explaining the transfer invites the assumption that you were hoping it would be counted twice.

The same logic applies to a business running card settlement into one account and everything else into another, and to any account the funder will find anyway because the statements you did submit show transfers heading into it.

The deposit-count question

Value is half the read. The other half is what the deposits look like.

• Count. Forty deposits a month from forty customers is a diversified receipts stream. Two deposits from one buyer is a single-customer exposure wearing a revenue figure.
• Rhythm. Deposits landing on the same weekdays in a consistent band read as trading. Irregular lumps read as transfers, financing or one-offs until proved otherwise.
• Negative days. Days the account closed below zero. These are counted rather than averaged, and a handful inside a three-month window will change the offer or end it regardless of the deposit figure.
• Existing debits. Any recurring daily or weekly debit is identified immediately and treated as a live position.

None of that appears on the total credits line, and all of it is obvious in about ninety seconds to someone who reads statements for a living.