Clearco is a leading provider of non-dilutive working capital solutions for ecommerce businesses, helping them thrive without the burden of excessive debt. Invoice Funding allows brands to take only what they need, when they need it, enabling them to fund inventory and marketing without sacrificing ownership. Unlike traditional capital providers, we prioritize our customers’ financial health by ensuring they are not overloaded with capital they don’t need, which can lead to unsustainable repayment challenges. This sets us apart in a landscape where many providers incentivize excessive borrowing.

The Challenge of Excess Capital 

Too much of a good thing? When it comes to funding working capital for ecommerce companies, the answer is a resounding ‘maybe.’ It’s true that ecommerce entrepreneurs need access to capital to fund critical parts of their business plan and to fuel growth. Stores can’t make sales without product in stock, nor can they reach customers without marketing. However the brand chooses to spend, funds are critical for many components of the ecommerce pipeline. 

Working capital is especially tricky for ecommerce brands, which often have healthy revenue and great sales, and want to continue this growth. But to do so, these businesses must foot the bill for marketing and inventory expenses well in advance of when the products will sell – while maintaining operations (and growth) in the meantime. 

Why Unlimited Funding Can Be Problematic 

The inventory cycle in ecommerce is a unique financial situation, and often requires an alternative solution to address. A number of capital providers exist to offer more “wiggle room” to the ecommerce brand, since businesses tend to have trouble getting loans they need quickly from traditional lenders, and SBA loans or personal credit cards often suboptimal

Funding options like Invoice Funding, Shopify Capital, or a Merchant Cash Advance (MCA) have become a popular way to fill the gaps – and these options serve ecommerce businesses well. However, sometimes more money really is more problems.

Funding constraints can be a challenge, but in the earliest days of a business model, challenge might be a good thing! A 2019 article from the Harvard Business Review reviewed 145 empirical studies on creativity and innovation. Its authors found that businesses, teams, and individuals all benefited from some constraint. Only when constraints are so high that they become unmanageable do they stifle this innovation. Six years earlier, another Harvard Business Review author suggested constraints help “move you toward clarity of purpose” in innovation. 

While having access to cash seems advantageous, stretching repayment periods over daily terms can create financial strain, especially when the items being funded have longer life cycles. In the end, your ideas can end up being bigger than your budget! 

In a recent 2X eCommerce podcast with the leadership team of HatLaunch, CEO Robert Hamm spoke to the fact that being customer-funded or able to reinvest the company’s free cash flow (and using Clearco’s Invoice Funding!) is what led to the company’s success: “I think it makes us a stronger business. We have to be scrappy. We have to execute. We have to use our capital in a do or die fashion and not waste it.”

Another Clearco customer, Raffi Arslanian, Owner of Thomson Ferrier, said taking only what you need puts oft-needed brakes on spending. “Entrepreneurs [always] say they can do it,” he says, “But we’re doing you a favor.” 

To quote Brene Brown, “clear is kind” – and uncapped payment structures, zero spending limits, or deep pocketed investors can actually strip away discipline and positive constraints that businesses need. 

 Clearco's Unique Approach

At Clearco, we intentionally avoid the pitfalls of offering excess capital. We don’t mindlessly fill our customers with debt. Instead, we focus on providing the right amount of funding at the right time, based on their specific needs. Our Invoice Funding allows businesses to fund receipts up to $1,000,000 in a sustainable manner, ensuring they maintain control over their financial health.

By taking a measured approach to funding, ecommerce brands can avoid the constraints of unnecessary debt, focusing instead on strategic growth and operational efficiency.

Navigating ecommerce funding is complex, but by implementing smart restrictions and leveraging the right capital solutions, businesses can thrive without being weighed down by excessive debt. Let’s transform funding into a growth catalyst, not a hurdle.