How to Optimize Your Finstack

Hi everyone, 

Welcome back for another bite to chew on. 

We’re going to talk about the other side of the coin today. Not making money, but borrowing it. 

You know what's funny? Even Apple, sitting on hundreds of billions in cash, still uses debt. Wild, right? Here's the truth: every business needs a robust financial stack. 

But most founders we talk to are either scared of debt or just putting it off until they "really need it."

Truth is that's exactly when you shouldn't start building your FinStack. 

Today we’ll share how to build your finstack and how you should leverage debt to grow your business.

On the Menu

• First - When to borrow

• Second - The 3 credit card buckets 

• Third - The Truth About Revenue-Based Financing

But first, let's talk about the easiest win in e-commerce right now.

Aftersell's Network Offers. 

They serve up high-value offers from premium brands to customers on your thank you page. 

If the person opts in, you get paid.  

Here's why they're a no-brainer → 

• Setup takes 5 minutes

• Personalized to ensure high engagement and opt-in rates 

• Free, incremental profit

We added Network offers to our post-purchase experience this year.

Our results? 

• +$0.50 average earned per transaction

• 5-figures of pure profit added every single month

• Zero impact on brand perception & conversion rate

With no extra work required.

Don't leave the only easy money in DTC on the table. 

Find out how much you could be adding to your bottom line with Aftersell's Revenue Calculator. 

The Perfect Time to Borrow? When You Don't Need It 

Here's a story that might sound familiar. 

Our board recently questioned why we were looking for a new line of credit when we were in a healthy cash position. Their logic seemed solid on the surface – why pay fees when we don't need the money?

But here's what we learned the hard way: The best time to build your FinStack is when your business is CRUSHING it. 

We're talking about that sweet spot when you're able to pay most things in cash and keep those finance fees low. That's exactly when you should be building relationships with lenders.

Here’s why:  

• You'll qualify for the largest credit lines (we're talking 2-3x what you'd get in tough times)

• You can negotiate better terms and lower fees (we've gotten some lenders to drop their rates by 30%)

• More lenders will actually want to work with you (especially traditional asset based lenders who are typically risk-averse)

• You're underwriting from a position of strength

Pro Tip → When approaching traditional lenders, always go through referrals. 

We've had lenders who typically don't touch the supplements industry take our calls just because of board member introductions. One referral can literally change everything about your underwriting process.

The Three Credit Card Buckets You Need 💳

Let's break down your ideal credit card strategy into three distinct buckets. 

Think of these like different tools in your financial toolbox – each has its specific purpose and a time to use it.

The Cash Back Champions 🏆

These cards are focused on getting you the highest possible cash back with minimal float time. Take Dash, for example – they offer 3%+ back on ad spend, which can translate into serious savings when you're spending millions on Meta ads.

Here's how to maximize them: Look for expenses you're already paying in cash, especially large, predictable costs like advertising. 

At Obvi, we actually switched from Meta's net-30 terms to daily charges on our cash back card. Why? Because that 3% cash back on a million dollars in monthly ad spend equals $30,000 straight to our bottom line. 

The Hybrid Heroes (Our Most-Used) 🦸🏽

This is where the magic happens. These cards offer both decent cash back (usually 1-2%) and significant float time. Something like The Capital One Spark card fits here – 2% back on everything plus 30-net-25 terms, giving you up to 55 days of float if you time it right.

Strategic timing is crucial with these cards. 

Here's our playbook: We maintain 3-5 cards in this category and stagger their billing cycles. This lets us create a rolling float strategy. 

For example, let's say you have three cards with cycles starting on the 1st, 10th, and 20th of each month. You can strategically place charges on each card at the start of its cycle to maximize float time while maintaining steady cash flow.

The Float Kings 👑

These are your heavy lifters for pure float time. Cards like Parker (rolling 60) or Ramp Flex (60-net-14) don't offer rewards, but they give you something potentially more valuable: time. 

With these cards, you can get 60-74 days of float, which can be game-changing during growth phases or seasonal inventory builds.

We use these cards specifically for large inventory purchases or when we're planning a major marketing push. 

The key is to time these purchases with your cash flow cycle. For instance, if you're buying inventory for Q4, you might use a Float King card in late Q3, knowing that holiday sales will help cover the payment when it comes due.

Keys to Success: 🔑

• Track your billing cycles religiously (we use a dedicated calendar)

• Always know which expenses go on which cards

• Time large purchases with the start of billing cycles when possible

• Keep utilization under 30% on each card to maintain good credit

• Build relationships with card issuers for limit increases

The Truth About Revenue-Based Financing 💰

Early on at Obvi, we thought we’d never use revenue-based financing. 

Now? We're believers. 

Let’s go over why RBF can work for DTC brands.

Think of RBF as a partnership where the lender bets on your future success. Instead of fixed monthly payments like a traditional loan, you pay back a percentage of your daily sales. 

When sales are up, you pay more. When they're down, you pay less. It's financing that breathes with your business.

The basics are simple: you get capital upfront (anywhere from $10K to $20M), and in return, you agree to share a percentage of your daily revenue until you've paid back the principal plus a fee. 

Most terms run 2-6 months, making it perfect for quick-turn opportunities like inventory buys or marketing campaigns.

Unlike traditional loans, there's usually no personal guarantee required. The lender is betting on your business performance, not your personal assets. Plus, you're not giving up any equity. In the DTC world where every founder wants to keep control of their brand, that's huge.

One of the biggest advantages of RBF is also speed. While a traditional bank might take weeks or months to approve you, RBF providers can often get you funded within days. 

We've seen approvals come through in 24 hours when we needed capital for a flash sale opportunity. That kind of speed can be the difference between capturing or missing a growth moment.

The Good Stuff:

• Quick access to capital when opportunities arise

• No equity dilution (keep that ownership!)

• No personal guarantees needed

• Payments that match your sales cycles

• Flexible terms based on your business needs

But let's be real about the watch-outs too… 

The revenue share (usually 10-15% of daily sales) can take a bite out of your cash flow. 

You  need to be doing at least $20-25K in monthly revenue to even qualify. And while the fee structures might seem simple, they can get expensive if you're not strategic about how you use them.

So when we use RBF at Obvi (and yes, we still do), we follow some strict rules. 

First, we only use it for specific, revenue-generating opportunities. Think inventory for a proven product or ad spend for campaigns with historical ROAS data. 

We NEVER use it for operating expenses or unproven initiatives.

Here's where it makes the most sense:

1. Inventory Purchases → Especially when you're scaling up for a known sales period or restocking best-sellers. The quick payback period aligns perfectly with inventory turns.

2. Marketing Campaigns → If you know your numbers and have a proven ROAS, using RBF to scale ad spend can be a no-brainer. The daily revenue share model works well with the immediate returns from good ad campaigns.

3. Bridge Financing → Sometimes you need a bridge between larger funding rounds or while waiting for traditional financing to come through. RBF can be perfect for this - quick to get, quick to pay back.

Pro Tips →  Watch the term length like a hawk. 

A 30-day term might have a 0.8% fee, while a 120-day term could cost you 3-4x that. We've learned to segment our funding needs and match them to the shortest possible terms. 

Also, pay attention to how different providers calculate their fees. Some charge on the initial amount, others on the outstanding balance - it makes a huge difference in your effective cost.

Remember: RBF isn't meant to be a long-term financing solution. 

It's a tool for growth opportunities with clear payback paths. Use it strategically, and it can be rocket fuel for your business. Use it carelessly, and it can eat into your margins faster than a hungry customer at a product sampling.

Sum It Up 

Your FinStack is like your business's safety net and rocket fuel combined. 🚀

Start building it when times are good, diversify your credit sources, and don't be afraid of some of the "expensive" options if they help you capture growth opportunities.

Remember: The goal isn't to use every tool all the time. It's about having options when you need them. Build the stack before you need it, and you'll thank yourself later.

Credit can be an accelerant or it can be quicksand, depending on how you use it. Wielded properly, it can unlock growth opportunities and ensure you always have the money you need to survive and thrive. 

All the best,

Ron & Ash