The first failed debit, and what to do in the next 48 hours

The debit is presented, the balance is not there, and the entry comes back. Your bank charges a returned item or NSF fee. The agreement almost certainly allows the holder to charge one too, and to re-present the entry — Nacha's rules limit how many times a returned debit may be retried, and most agreements authorise the retries.

That is the mechanical layer. The contractual layer runs underneath it, and it is the one that matters.

The contractual position after one bounce

Most short-term funding agreements define a failed payment as an event of default, sometimes immediately and sometimes after a stated number of occurrences. Check your own default section for the number. Two consequences follow from the way these clauses are written.

First, the holder does not have to act. A default can sit unexercised for weeks. Most agreements contain a no-waiver clause saying that accepting a late payment, or not enforcing a right, does not waive it — so the fact that nothing happened on Tuesday is not evidence that nothing can happen later.

Second, other rights can switch off. Where a reconciliation clause is conditioned on the merchant not being in default, one returned debit can remove the mechanism you most need. That sequencing is the reason to act early rather than after a third bad week.

Call them, and call the right people

Call the servicing or account management number, not the broker. The person who sold the deal generally has no authority over the file after funding and no ability to change anything.

What to say, in this order:

1. What happened, factually and briefly. A customer paid late, a chargeback landed, a seasonal dip. One or two sentences, no narrative.
2. What you can pay, in numbers and dates. "I can cover $X on Friday and resume the normal debit on the 15th" is a workable statement. "I'll get back on track soon" is not.
3. A request for the contract mechanics. Ask whether the agreement has a reconciliation clause, what section it is, what documents are required and where they must be sent. Ask for the current balance and a payoff figure in writing.
4. A question about their process. What does a temporary reduction require here, who approves it, and how long does it take?

Then send an email the same day summarising what was said, what you committed to, and what they said they would do. Keep a log with dates, times and names. If a restructuring conversation happens later, that record is the most useful thing you will own.

Two things not to say. Do not commit to a number you cannot make — a broken promise costs more credibility than the original bounce. And do not announce that you are working with a settlement company or planning to stop paying unless that is true and considered, because it usually moves the file to a different desk.

Making the reconciliation request properly

If the agreement gives you an adjustment right, use it in the form the document specifies rather than in a phone call, because a clause that requires a written request supported by documents is not satisfied by a conversation with whoever answered.

Send, in one email, on the day you call:

1. A sentence stating that you are requesting reconciliation under the named section of the agreement dated whenever.
2. The period you are asking to be reconciled, with specific dates.
3. Complete bank statements for that period, and processor statements where the deal is card-based.
4. The remittance figure you believe the contract's percentage produces on those receipts, with the arithmetic shown.
5. A request for a written response by a specific date, and for confirmation of what else they need.

Then diary the date. If the clause gives the funder a response window, note when it expires. If it does not, ask for one in your email and note that you asked.

Know your own floor before the conversation

The gap is $3,050 a week, and that is the whole negotiation. Going in with "$4,200 a week is what exists" is a position. Going in with "I need some relief" is not.

What not to do this week

Get your paper straight the same week

Put these in one folder: the funding agreement, the personal guarantee, the security agreement, any confession of judgment, the full payment history, every email since funding, and three months of bank statements. Find the default section, the remedies section, the notice clause and the reconciliation clause, and read those four.

Then work out one number honestly: what can this business pay per week, sustainably, for the next eight weeks. Every useful conversation from here — reconciliation, restructuring, refinance, settlement — starts from that figure, and none of them work if it is wrong.

Nothing here is legal advice. What one failed payment means under your agreement, and what the holder may do next, depends on the document you signed and on the governing state's law, so a lawyer licensed in that state is the right person to review it.