Understanding RTR: The Right to Receive in Merchant Cash Advance Structures

An educational illustration of the Right to Receive in a merchant cash advance, showing $100,000 funded and a $139,000 RTR at a 1.39 purchase multiple. Educational example only.

In commercial finance, a merchant cash advance is structured as the purchase of future business receivables rather than a traditional loan. The central term in this structure is RTR, which stands for Right to Receive.

What the Right to Receive Means in a Merchant Cash Advance

In a merchant cash advance transaction, the buyer is not lending money. The buyer is purchasing the contractual Right to Receive a specified dollar amount of the business's future receivables. The seller transfers that right in exchange for an upfront purchase price. Because the transaction is a purchase, it is defined by two figures: the purchase price, which is the capital funded, and the Right to Receive, which is the total receivables acquired.

How the Right to Receive Works: $100,000 Funded and $139,000 RTR

Assume a commercial finance provider funds $100,000 to a business. In exchange, the provider purchases $139,000 of the business's future receivables. The purchase price is $100,000 funded, and the Right to Receive is $139,000 RTR. The $139,000 RTR represents the total fixed dollar amount the buyer is contractually entitled to collect from the business's future revenue. The relationship between the funded amount and the RTR reflects a 1.39 purchase multiple applied to the receivables acquired.

Why the Right to Receive Is Not an Interest Rate

The 1.39 purchase multiple is a pricing term for the purchase of receivables, not an interest rate, and the transaction does not create a debt obligation. For accounting, compliance, and due diligence purposes, tracking the Right to Receive allows commercial finance entities and auditors to monitor the lifecycle of the purchased receivables and measure remaining exposure on the asset.