Hey everyone,

Welcome back for another bite to chew on.

When we started Obvi, all everyone talked about was marketing - creative, copy, landing pages, and media buying. All the usual suspects.

But none of that matters if you don't have the cash to keep the lights on. 

The truth is, most DTC founders are terrible at managing cash flow. We certainly were in the beginning. Cash flow challenges almost killed Obvi multiple times in our early days - and we were growing fast.

It's the dirty little secret nobody wants to talk about, but it's time we did.

On the Menu:

• The Buy Now, Pay Later Strategy (For Your Business, Not Just Customers)

• How We Negotiated Better Payment Terms Without Losing Margin

• The Tools We Use to Extend Our Cash Cycle

• BONUS - How To Make this Work For Your Brand

The Buy Now, Pay Later Strategy (for Your Business)

You know what's funny about consumer brands? We offer our customers payment plans like Affirm, Afterpay, and Klarna, but we don't apply the same thinking to our own business operations.

Here's a typical DTC cash cycle 💸

→ Make a product order (PO) purchase
→ Pay for it (or 50% deposit)
→ Wait weeks/months for it to arrive
→ Start selling
→ Finally recoup your investment

This model is brutal on cash flow. And if you’re operating this way, you’re building with one hand tied behind your back.

So we flipped the script. Instead of using consumer BNPL services, we started looking at business versions of the same concept.

Here's what we did:

1. Identified our biggest cash outflows (inventory, advertising, overhead)

2. Found tools & tactics that could extend payment terms on each

3. Developed a systematic approach to cash flow cycling

The ultimate goal is to create a negative cash conversion cycle - where customers pay you before you have to pay your suppliers.

Brands like Apple build empires with this model. They collect money from customers in days but pay suppliers in weeks or months. This gives them a massive "float" of working capital.

And we've found ways to do the same (on a smaller scale.)

How We Negotiated Better Payment Terms

The first thing we did was approach our manufacturers differently.

Most brands just ask for a quote and then try to negotiate the price down. We asked for something different: two price points.

One with standard payment terms (50% deposit, 50% on shipping) and another with extended payment terms (50% down, 50% Net 30).

Here's an actual quote we received:

For about 3% more, we could get an extra 30 days to pay our balance.

Wait - is 3% worth it? Let's do the math:

If you're ordering $50,000 of inventory, that 3% premium is $1,500. 

But if that $1,500 lets you sell through a significant portion of your inventory before paying the remaining $25,000, the impact on your business is massive. Even more so if your margins are healthy.

🧠Think about it this way: If you can sell 30% of your inventory in those 30 days at a 50% margin, you've generated enough cash to cover that 3% premium several times over. 

And you've essentially made your inventory partially self-funding.

This simple negotiation tactic transformed our cash flow situation.

The Tools We Use to Extend Our Cash Cycle

Once we started thinking about cash flow cycling, we found several tools that can help DTC brands managing cash and extend payment terms:

1. Plastiq

Plastiq has been one of our cheapest options when it comes to working capital. This platform lets you pay vendors via credit card even when they only accept ACH or other payment methods.

Example: For a fee of only $30.22, we were able to float a $25,000 inventory payment:

• The supplier still received their payment via ACH on the invoice due date

• Our credit card was charged $25,750.99 by Plastiq

• We sold the inventory before our credit card payment was due

• We earned over $500 in credit card rewards 💎

• The Plastiq fee was written off as a business expense

2. Settle

When we need even more time, we send inventory invoices to Settle. For another 2-5% fee, we can buy another 30-120 days to pay.

This is a game-changer when launching new products. It allows us to see if products will sell before we're on the hook for the full payment. 

And unlike revenue-based financing, we're not giving up a percentage of daily sales - we're just extending payment terms.

3. Facebook Credit Line

Here's a hack most people don't know about: Facebook/Meta offers net-30 terms once you hit certain spending thresholds. 

We put this to work immediately.

Let’s say we spent $400K in the month of January on FB. Because we were on net-30 terms, we didn't have to pay this until the end of February. This gave us a 30-day window where ads were driving sales, but we hadn't paid for them yet.

We even took this a step further. 

We'd use Plastiq to pay our Facebook bill with a credit card, extending our terms by another 30 days. That means we'd run ads in January, get billed in February, and not actually have the cash leave our account until March or April.

By then, those January ads had generated enough revenue to more than cover their cost.

Let's Recap How Cash Flow Cycling Works 🔄

To sum up our approach:

1. Buy product but don't pay right away (negotiate Net-30 terms or better)

2. Run advertising but don't pay right away (use Meta's Net-30 billing)

3. Start selling inventory before you owe money for it

4. Nothing gets paid for 60-90 days from when you actually incur the expense

This creates a virtuous cycle where you're growing using your customers' money rather than your own capital.

The beauty of this approach is that it scales with your business. As you grow and place larger orders, the benefits of cash flow cycling grow too.

What This Means For Your Brand…

Now, we’re not suggesting you go into debt or overextend yourself. This isn't about spending money you don't have. It's about intelligently managing the timing of payments to optimize your working capital.

Here's how you can start implementing this approach:

1. Map your cash cycle: Understand exactly how long it takes from when you pay for inventory to when customers pay you.

2. Talk to your suppliers: Ask for better payment terms. Many are willing to negotiate, especially if you're a good customer or can commit to larger orders.

3. Look into B2B payment tools: Services like Plastiq, Settle, and others can help extend your payment timeline.

4. Prioritize inventory that turns quickly: Even with extended payment terms, slow-moving inventory will kill your cash flow.

5. Use credit card float strategically: Business credit cards can give you 30+ days of float, but be disciplined and never carry a balance.

The ultimate goal is to create a business that funds its own growth through smart cash management rather than constantly needing to run low on cash reserves or relying on external capital. This approach has allowed us to stay bootstrap-funded even as we scaled to 8-figures.

Sum it up

• Many brands die from cash flow problems, not from lack of sales

• Extending payment terms by just 30-60 days can transform your ability to scale

• A 3% premium for better payment terms is often worth it

• Tools like Plastiq and Settle can create additional payment flexibility

• Strategic use of credit terms from ad platforms and vendors creates a cash flow advantage

If you're looking to scale your brand in 2025, rethinking your cash flow strategy might be the most important thing you can do - even more than that shiny new creative or hot marketing channel.

Most founders would rather talk about sexy growth tactics than cash flow management. But the brands that master both are the ones that survive long-term.