Managing cash flow is one of the biggest challenges for small and growing businesses. Even profitable companies can face short-term financial gaps when expenses arrive before revenue is collected. Because of this, many businesses rely on financing solutions to maintain operations, invest in inventory, or fund expansion.
However, traditional financing often comes with rigid repayment schedules that do not always match real business performance. Fixed monthly repayments can become a burden when sales fluctuate, especially for businesses that rely heavily on daily transactions.
This is where automatic repayment financing offers a smarter alternative. Instead of requiring fixed instalment payments, automatic repayment allows businesses to repay financing gradually through a percentage of their sales.
For merchants using CHIP Collect, this repayment method is built directly into the platform. Repayments are automatically deducted from daily settlements, removing the need for manual transfers and making financing easier to manage.
This article explains how automatic repayment works, why it benefits businesses, and how merchants can take advantage of flexible financing solutions through CHIP Advance.
What Is Automatic Repayment?
Automatic repayment is a financing structure where repayments are automatically deducted from a merchant’s sales settlements rather than being paid manually through fixed monthly instalments.
In this model, a percentage of sales revenue is allocated toward repayment until the full financing amount is settled.
This means businesses do not have to worry about scheduling payments or remembering due dates. Instead, the repayment process runs automatically in the background.
For example, if a merchant selects 20% of sales as repayment, then 20% of their daily sales settlements will be deducted until the financing balance is fully repaid.
Because repayments are tied directly to sales performance, businesses can repay financing at a pace that matches their revenue flow.
Why Automatic Repayment Works Better for Many Businesses
Traditional financing models usually rely on fixed repayment schedules. While this structure may work for companies with stable revenue, it can be challenging for businesses that experience fluctuating sales.
Automatic repayment offers a more flexible approach that adapts to business performance.
1. Repayments Adjust with Sales Performance
One of the key advantages of automatic repayment is that repayment amounts adjust based on actual sales.
When sales are strong, repayments increase automatically. When sales slowdown, the repayment amount decreases.
This ensures that businesses are not forced to make large payments during slower periods.
2. No Manual Payment Required
Another benefit of automatic repayment is convenience. Since repayments are deducted directly from settlement collections, merchants do not need to manually transfer funds.
This eliminates administrative work and reduces the risk of missed payments.
3. Better Cash Flow Management
Cash flow is essential for daily operations. With automatic repayment, businesses retain greater control over their cash flow because repayments scale with revenue.
Instead of being locked into fixed monthly instalments, repayments naturally adjust to the company’s financial activity.
4. Reduced Financial Pressure
Because repayments depend on sales performance, businesses avoid the stress of meeting strict payment deadlines during slow periods.
This makes automatic repayment particularly suitable for businesses that experience seasonal demand or fluctuating transaction volumes.
How Automatic Repayment Works with CHIP Advance
CHIP Advance is a financing solution designed for merchants who use CHIP Collect to receive customer payments.
Once approved, merchants can receive funding and repay it automatically through their sales settlements.
The process is designed to be simple and efficient.
Step 1: Eligibility Assessment
To qualify, merchants must collect payments using CHIP Collect and maintain a consistent sales history.
Businesses typically need at least four months of transaction history to be eligible for financing.
This allows the system to analyse historical sales data and determine a suitable financing limit.
Step 2: Choose Advance Amount and Repayment Percentage
Merchants can choose:
- Their advance amount
- The percentage of sales used for repayment
This flexibility allows businesses to select a repayment structure that fits their operational needs.
Step 3: Fund Disbursement
After approval, funds can be disbursed within 48 hours, allowing businesses to quickly access working capital.
This fast turnaround helps merchants respond to urgent financial needs such as inventory purchases or operational expenses.
Step 4: Automated Repayment
Once financing is disbursed, repayments begin automatically.
A selected percentage of sales transactions is deducted from daily settlements until the full repayment amount is completed.
Because the process is automated, businesses do not need to manage repayment schedules manually.
Example of Automatic Repayment Structure
To better understand how automatic repayment works, consider the following example.
Financing Details
Selected advance amount: RM100,000
Additional fees:
- One-time fee (6%): RM6,000
- Legal fee (0.5%): RM500
- Processing fee: RM24
Total Repayment Amount
RM100,000 + RM6,000 + RM500 + RM24 = RM106,524
If the merchant chooses 20% of sales as repayment, then 20% of daily sales settlements will be deducted automatically.
These deductions will continue until the total repayment amount has been fully settled.
This structure ensures repayments remain directly linked to the merchant’s revenue activity.
Another Example of Financing Repayment
Here is another example to illustrate how the repayment structure works.
Financing Amount
RM50,000
Fee Breakdown
One-time fee (6%)
RM50,000 × 6% = RM3,000
Legal fee (0.5%)
RM50,000 × 0.5% = RM250
Processing fee
RM24
Total Repayment Amount
RM50,000 + RM3,000 + RM250 + RM24 = RM53,274
The repayment amount of RM53,274 will be deducted gradually from sales settlements based on the agreed repayment percentage.
For example, if the merchant selects 20% of sales, then 20% of daily transaction revenue will be used to repay the financing.
Repayment Duration
The repayment period depends on the merchant’s sales volume and the repayment percentage selected.
Typically, repayment duration can extend up to 28 weeks.
Because repayment is tied to sales performance, the exact timeline may vary.
If a business experiences higher transaction volumes, the financing may be repaid faster. If sales are slower, repayment will take longer but remain manageable.
This flexible structure allows businesses to maintain operational stability while repaying financing.
How Financing Limits Are Determined
Financing limits are based primarily on historical sales performance.
Merchants may qualify for financing equivalent to:
- Up to 10 weeks of historical sales, or
- Up to RM300,000, depending on eligibility.
The platform evaluates transaction data to determine an appropriate advance limit that aligns with the merchant’s business activity.
Advance limits are also refreshed weekly, meaning businesses with increasing sales performance may qualify for higher financing amounts over time.
Eligibility Requirements
Businesses must meet several criteria to qualify for CHIP Advance.
Merchant Requirements
Eligible merchants must:
- Use CHIP Collect for payment processing
- Maintain consistent sales activity on the platform
- Have at least four months of transaction history
These requirements ensure the system has sufficient data to evaluate the merchant’s business performance.
For newer businesses that do not yet meet these requirements, merchants may contact the CHIP support team for further assistance.
Transparent Fee Structure
Transparency is an important part of modern financing solutions.
CHIP Advance applies a clear fee structure without hidden charges.
Fees Applied
The financing includes:
- One-time fee: 6%
- Legal fee: 0.5%
- Processing fee: RM24
These fees are applied once when the financing is issued.
There are no recurring interest charges and no late payment penalties.
This allows businesses to clearly understand their repayment obligations from the beginning.
What Happens If Sales Slow Down?
One of the key advantages of automatic repayment financing is its ability to adapt to changing business conditions.
If sales decrease, the repayment deduction automatically becomes smaller because it is calculated as a percentage of revenue.
This helps reduce financial pressure during slower periods.
In contrast, traditional loans require businesses to continue paying the same fixed instalment regardless of their revenue.
Automatic repayment offers a more flexible solution that adjusts naturally with business performance.
Common Ways Businesses Use Financing
Access to working capital can help businesses operate more efficiently and pursue growth opportunities.
Many merchants use financing for purposes such as:
1. Purchasing Inventory
Businesses often need additional inventory to meet growing customer demand.
Financing allows them to purchase stock without disrupting cash flow.
2. Expanding Marketing Efforts
Merchants can invest in advertising campaigns or promotional activities to attract more customers.
3. Upgrading Equipment
Businesses may use financing to purchase new equipment or upgrade existing tools to improve productivity.
4. Managing Operational Expenses
Financing can help businesses cover operational costs such as supplier payments, rent, or staffing expenses.
Because repayment is tied to sales performance, businesses can invest in growth while maintaining financial flexibility.
The Role of Sales-Based Financing in Modern Business
Sales-based financing is becoming increasingly popular among digital merchants.
Unlike traditional financing models that rely heavily on credit history or collateral, sales-based financing evaluates real transaction data.
This allows platforms to offer financing solutions tailored to actual business performance.
By integrating repayment directly into payment systems, platforms like CHIP simplify both financing access and repayment management.
Automatic repayment is a key component of this modern financing approach.
Conclusion
Automatic repayment offers businesses a flexible and efficient way to repay financing.
Instead of dealing with fixed monthly instalments, businesses can repay funding gradually through a percentage of their sales transactions. This approach ensures repayment aligns naturally with revenue performance.
With automated deductions, transparent fees, and flexible repayment timelines, automatic repayment simplifies financial management for merchants.
For businesses using CHIP Collect, CHIP Advance provides a practical way to access working capital while maintaining control over cash flow.
By linking repayments directly to sales activity, automatic repayment helps businesses grow confidently while keeping their financial commitments manageable.
