The formula for daily payments
Monthly equivalent = daily payment x business days per month. Use 21 as a standard figure, or count your actual days.
Most daily debits come out on business days only, which is about 21 to 22 a month. Illustrative example: a $500 daily payment times 21 days is $10,500 a month.
If your debit also hits on weekends, or your business is closed some days, adjust the count. The aim is to match how many times the money leaves your account.
The formula for weekly payments
Monthly equivalent = weekly payment x 4.33. A year has 52 weeks, so one month averages 4.33 of them.
A $2,400 weekly payment times 4.33 is about $10,400 a month. Notice how close that is to the daily example. Two structures can cost the same each month while feeling very different on a given day.
For a deeper look at why the rhythm of payments matters, read daily versus weekly versus monthly payments.
Work backward from total payback
Divide the total repayment by the number of months in the term to get an average monthly figure.
Example: $80,000 funded at a 1.3 factor means $104,000 is repaid. If the term is 8 months, the average is $13,000 a month. Check it against the payment: $13,000 divided by 21 days is about $619 a day.
If the quoted daily payment does not match this math, ask why. Fees, a longer term or a different payment schedule could explain it. See total cost of a funding offer.
Compare the payment to your revenue
Divide the monthly equivalent by average monthly revenue. That share is the load on your cash flow.
Illustrative: payments of $10,500 against revenue of $60,000 is 17.5 percent of every sales dollar. If your gross margin is 30 percent, that leaves you 12.5 percent to cover rent, payroll and everything else. That is tight.
If the same payments sit against $120,000 in revenue, the share is under 9 percent, which is far easier. Our guide on how much revenue can go to loan payments gives a method to set your own limit.
Use a table to compare structures
Put each offer in the same columns: payment, frequency, monthly equivalent and share of revenue.
| Payment | Frequency | Multiplier | Monthly equivalent |
|---|---|---|---|
| $400 | Daily | 21 | $8,400 |
| $1,950 | Weekly | 4.33 | $8,444 |
| $4,200 | Twice monthly | 2 | $8,400 |
The three rows cost about the same each month. The difference is how often cash leaves.
Test it before you sign
Run the monthly figure against a slow month. If you could still cover costs, the payment is workable.
Take your weakest recent month and subtract the monthly equivalent. Is there enough left for payroll and rent? If not, ask for a smaller amount or a longer term. Stress-test the payments in your own numbers. ROI Funder shows the monthly-equivalent payment on each offer, and you can start with the application.
Worked example from an offer sheet
Reading an actual offer sheet shows how to turn its lines into monthly numbers.
Suppose an illustrative offer reads: funded amount $45,000, factor 1.32, daily payment $330, estimated term 8 months. Total repaid is $45,000 x 1.32 = $59,400. At 21 days a month, $330 daily is $6,930 a month. Over 8 months that is $55,440, which is less than $59,400, so the stated term is probably a bit longer than 8 months.
Divide $59,400 by $330 and you get 180 payments, which is about 8.6 months. That small mismatch is exactly why you should run the math yourself. The quoted term is an estimate, while the payment count follows from the payment.
Adjusting for seasonal and slow weeks
Monthly equivalents are averages. If your sales swing, check the payment against your weakest weeks as well.
A business that earns $90,000 in summer and $45,000 in winter should test the payment against winter. A $7,000 monthly equivalent is under 8 percent of summer sales but over 15 percent of winter sales.
If the winter figure is uncomfortable, ask about a smaller amount or a payment tied to sales. Our revenue-based financing page explains how payments flex with deposits.
Keep a simple spreadsheet with one row per obligation: payment, frequency, multiplier and monthly equivalent. Total the column and divide by your average monthly revenue. If you add a new payment later, you only need to add a row to see the new load. It takes minutes and prevents the surprise of discovering the total only when the account runs low.
Finally, remember that the monthly equivalent is a planning tool, not a bill. Your actual debits still come out daily or weekly, so keep enough in the account to cover the next several payments at all times. A good habit is to hold at least a week of payments as a floor balance.
Frequently asked questions
How many business days are in a month?
About 21 on average. Count the actual days your debit runs if you want a precise figure for a given month.
Why 4.33 for weekly payments?
There are 52 weeks in a year, and 52 divided by 12 is about 4.33 weeks per month.
Does the monthly equivalent include fees?
Only if the payment itself includes them. Check whether fees are taken up front or built into the payment.
What if my payment moves with sales?
Revenue-based payments rise and fall, so estimate the monthly figure using your average and your slow-month sales.
Can I convert a monthly payment to a daily one?
Yes. Divide the monthly payment by about 21 business days to estimate the daily equivalent.