How to Build A Resilient Financial Stack

Another fintech lender serving consumer brands went down last week.

This is not an essay about that company. The people who built it were trying to solve a real problem, and that mission was genuine. This is an essay about a pattern. And about the infrastructure that protects you when the pattern repeats.

Over the last few years, the non-bank, non-dilutive capital ecosystem has experienced repeated disruptions. Banking partners have failed. Credit platforms have frozen lines overnight. Lenders have sold off their books mid-cycle. Each time, founders were left rebuilding their capital stack in real time, often under duress, often without options.

This keeps happening because the space is structurally difficult. Most of these platforms are not banks. They raise venture to build the technology, then raise warehouse lines or debt facilities to fund the actual credit. When portfolio performance shifts, or the equity story weakens, or covenants get triggered, the credit contracts faster than the brands on the receiving end can react. The mechanics are tough. They are worth understanding.

The lesson here is about dependency. These products serve a real function. The operators who build single-source reliance on any one platform carry risk that is avoidable.

My team and I have the privilege of advising companies across the startup and mid-market ecosystem, from startup to M&A. We get exposed to over $2B+ in GMV annually. As a result, I see many ways companies build (or fail to build) their financial infrastructure. The best operators I work with treat financial architecture with the same seriousness they bring to product development or retail strategy. The ones who struggle tend to have built their financial stack reactively, adding tools and accounts and credit products as problems arose, without an underlying design.

This essay is my attempt to lay out what that design looks like. A founder’s guide to building the financial infrastructure that holds up regardless of what happens around it.

Every company that raises outside or institutional capital should have 2 banks and at least 2 accounts per bank. This is the baseline. The structure serves specific purposes, and each component earns its place.

2 banks: 1 Neobank and 1 GSIB.

The first bank should be a neobank or fintech bank. These platforms are built for speed. The integrations with accounting software are clean. The UX is modern. API connectivity with tools like QuickBooks, Shopify, and payroll platforms works well. For day-to-day operations, treasury visibility, and fast movement of money, neobanks are genuinely excellent.

The second bank should be a GSIB. There are 4 in the US: Chase, Bank of America, Citi, Wells Fargo. These institutions move slowly, and that is exactly the point. They provide the kind of stability that keeps your operations running when other parts of the stack are in flux. A GSIB relationship is also the foundation for future credit. When you need an LOC, an SBA loan, or a commercial banking relationship at scale, the history matters. Start early.

The structural reason for 2 banks is simple. If one goes down, freezes access, or experiences a disruption (and we have seen all of these happen), you have a functioning banking relationship that can absorb operations immediately. This is not theoretical risk management. Founders in our network experienced this firsthand during the SVB collapse in 2023. The ones with a second banking relationship were operational within hours. The ones without spent days in uncertainty.

Account structure: separate the flows

Within each bank, the account structure should be purposeful.

One checking account for AR. This is where money flows in. Customer payments, retail remittances, marketplace settlements. Keep a minimal operating balance here. The purpose is collection and routing.

One checking account for AP. This is where money flows out. Vendor payments, payroll, rent, insurance. Funding this account on a scheduled cadence from your AR account or savings creates a natural cash management discipline. You always know what’s committed, what’s available, and what’s in transit.

One high-yield savings account. This is where excess cash sits and earns yield. In the current rate environment, high-yield business savings accounts and money market funds are generating 3-4% annually. On meaningful float, this adds up. Do not let capital sit idle in a non-yield checking account. E.g. 4% on $2M is $80K a year in risk-free return. That money funds a hire, a marketing test, or a buffer you’ll be grateful for during a soft quarter.

One important note on yield: interest income is considered ordinary income. If you’re a partnership or flow-through entity like an S-Corp, this requires careful planning with your CPA; especially if you’re profitable and growing.

FDIC coverage: know where your deposits sit

Many neobank and fintech platforms sweep funds across partner banks to extend FDIC coverage well beyond the standard $250K per depositor, per institution. This is genuinely useful for companies holding significant cash balances. Verify this by understanding which partner banks hold your deposits, and know your aggregate coverage. This is one of those quiet details that matters most when things move quickly.

For companies holding $5M+ in cash, the FDIC math becomes meaningful. A sweep program that distributes deposits across 20 partner banks can provide up to $5M in coverage. Combined with your GSIB relationship, you can architect full FDIC protection across your entire cash position. Most operators I speak with have not mapped this. It takes an afternoon. And it’s worth the time.

Treasury management sounds like something for Fortune 500 companies. It applies to any company doing $10M+ in revenue with multiple bank accounts, credit products, and payment flows.

The goal is simple: know your liquidity position at all times. Not just when something forces you to look.

Our goal is to automate this. Tools exist that consolidate balances across accounts, flag threshold breaches, and move money on rules you define. When your AR account exceeds a target balance, excess sweeps to savings automatically. When your AP account falls below a minimum, it gets funded from the designated source. When a credit line draw is approaching a covenant threshold, the system flags it before the lender does.

This infrastructure eliminates one of the most common failure modes I see in growing companies: cash surprises. A payroll that hits harder than expected because a retail remittance was delayed. A credit card payment that overdrafts an account because nobody reconciled the timing. An inventory deposit that goes out the same week as a quarterly tax payment. These are infrastructure problems. They consume an extraordinary amount of leadership attention when the infrastructure is absent.

Cash management policy should be explicit and documented. What is operating cash vs reserve cash vs investment cash? What are the minimum balance thresholds by account? Who has authority to move money, and under what conditions? These policies feel administrative until the quarter where they save you.

Our CFOs and leadership team think about this constantly in our advisory work. The companies that compound well over multiple years are the ones where the CFO or controller can answer the question “where is our cash and what is it doing?” within a few minutes, at any point in the week. That capability is downstream of infrastructure. Build the system and the visibility follows.

I obsess over the concept of float. My team will confirm this. Whether it’s in reviewing debt documents or discussing net working capital with a client, float is the concept I return to frequently.

Float is the temporal gap between when cash comes in and when cash goes out. It is the delta between customer receipts and supplier disbursements. In a DTC model, the customer pays at checkout and the vendor gets paid on net 30 or net 60 terms. That gap creates float through the company’s working capital structure. It is non-dilutive, cost-free capital that the business generates through its own operating cycle. When managed well, float reduces your reliance on external financing and funds organic growth.

The metric that captures float is the cash conversion cycle.

Cash Conversion Cycle = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO)

DIO measures how long inventory sits before it sells. Lower is better. DSO measures how quickly you collect cash after a sale. For DTC, this is essentially zero. For wholesale, it can be 30-90 days. DPO measures how long you can wait before paying suppliers. Higher is better.

The goal is straightforward: shorten DIO and DSO. Lengthen DPO. This shortens your CCC and increases your float. This is much easier said than done.

In real terms, here is what this looks like. A DTC brand with approx 0 DSO, 60 days of DIO, and 30 days of DPO has a CCC of 30 days. That’s solid. A wholesale-heavy brand with 30 days of DSO, 90 days of DIO, and 30 days of DPO has a CCC of 90 days. That requires careful cash management.

The second brand has to fund the working capital gap thoughtfully.

Now consider two brands growing at the same rate. One has a CCC of 30 days and the other 90 days. The first brand turns its cash over 12x per year. The second turns it 4x. The same dollar works significantly harder in the first business. That is why float is so powerful.

Tactical levers to improve float

Negotiate better payment terms with vendors and suppliers. This is the most direct lever. Push for net 30, 45, or 60. The larger your order volume and the stronger your track record, the more leverage you have. As your purchasing power grows, extend terms progressively. Every additional day of DPO is a day your cash remains in your business.

Accelerate inventory turnover. Rapid inventory movement is a critical component of float maximization. When items sit idle, capital is tied up. Enable smart merchandising and demand planning that avoids overbuying. Measure inventory turns monthly, by SKU and by category. Identify slow-moving SKUs early. Institute liquidation protocols before holding costs erode margin and capital becomes permanently trapped.

Get paid faster. Wholesale brands should explore invoice factoring and AR financing to reduce the impact of long collection cycles. DTC inherently supports a healthier CCC because cash arrives at checkout. The channel mix decision is an indirect float decision, whether founders and operators frame it that way or not.

Leverage credit cards and payment platforms. Good credit cards can provide 30-60 days of float on expenses like digital ad spend, packaging, and freight. Used wisely, they are interest-free working capital. Pick cards with high limits, long payment cycles (ideally rolling), and rewards that align with your spend categories. Manage payment cycles to align with revenue seasonality.

Float as competitive advantage

Brands that master float have more optionality. They can invest aggressively in growth without diluting equity. They can weather downturns, supplier delays, or unexpected costs. They can negotiate from strength with retailers, investors, and acquirers.

In an M&A context, a brand with strong float and a tight CCC can command a higher multiple versus a brand constantly raising capital to cover its cash cycle. Investors see it. Cash-efficient growth is more valuable than high-burn growth. Float is a signal of operational excellence.

The largest companies in the world understand this intuitively. Buffett used insurance float as the foundation of Berkshire Hathaway’s growth. Insurance companies collect premiums today and pay claims months or years later. That float, invested into stocks and businesses, compounded over decades into hundreds of billions of dollars. Amazon operates with negative working capital. Customers pay immediately. Amazon pays suppliers 30-90 days later. That float funds logistics, technology, and pricing power without external capital. Costco collects membership fees upfront and sells inventory faster than it pays suppliers. Strong free cash flow. The ability to compete on price without crushing margins.

These are massive companies. The principle scales down to a smaller brand. The mechanics are the same. The compounding is the same.

Equity financing and retained earnings should fund growth. Debt should finance working capital gaps. This is the principle I keep returning to with founders and operators across our network, and it is the principle most often overlooked.

Debt is a tool in the toolbox. It can be powerful. But power without fluency is a liability. The biggest mistake I see is companies using the wrong type of debt for the wrong job. Using term debt for working capital gaps. Using revenue-based financing to plug structural burn. Using LOCs to fund long-term initiatives. Each of these errors creates silent fragility. They don’t always surface immediately. They quietly compress flexibility until the next macro shock or the next bad quarter forces your hand.

ABL and LOC: the working capital buffer

An LOC is a revolving facility designed to bridge the timing mismatch between cash out (to suppliers) and cash in (from customers). Draw, repay, redraw. An ABL is a secured LOC collateralized by your short-term assets, typically calculated on a borrowing base. Standard advance rates today are 85% on qualified AR and 50% on eligible inventory.

I generally recommend ABLs for companies that have the borrowing base to support them. The facility scales as the balance sheet expands. When it works well: you ship wholesale POs with 30-90 day terms, you buy inventory ahead of seasonal demand, and your business has a recurring but lumpy cash flow pattern. This is working capital financing designed to smooth cash timing.

Where it breaks: the demand curve shifts, revenue slows, and cash tightens while the facility is fully drawn. Or the company misuses the funds, deploying working capital dollars toward marketing, fixed costs, or other purposes outside the facility’s intent, and trips a covenant. Both scenarios compress your availability at exactly the moment you need it most. The signal to watch is whether the balance is revolving. A healthy LOC draws and repays in rhythm with your cash cycle.

Term loans: long-term capital for long-term use

A term loan is a lump sum repaid over a fixed period, typically 24-36 months. It comes with a set amortization schedule and often requires hard or soft collateral. The use case is capex, acquisitions, or debt refinancing. Building a warehouse. Buying a smaller brand. Replacing expensive or misfit debt with cheaper, longer-duration capital.

Where it breaks: you use it to cover losses, hoping growth solves the problem. Revenue is seasonal but payments are fixed. The ROI from the investment lags, and you are servicing debt off your base business rather than from the intended return. Duration mismatch is the fastest route to a refinancing problem.

Revenue-based financing (RBF): short-term flexibility

RBF gives you upfront cash in exchange for a share of future revenue until a fixed cap is hit, usually 0.5x-1.5x the amount borrowed. Payments flex with sales, which provides flexibility.

The right way to evaluate RBF is through a cost-of-capital lens, not a traditional APR framework. APR is designed for amortizing debt with fixed terms. RBF is short-duration capital designed to move with revenue velocity. The economics look different depending on how quickly revenue comes in and how fast the cap is met. When used well, the cost of capital can be reasonable relative to what the product delivers: speed, operational agility, and non-dilutive access to cash.

RBF works well when deployed for specific, short-duration use cases with clear ROI. A seasonal inventory restock with rapid sell-through. A high-ROAS marketing campaign with proven LTV/CAC. A bridge to fill a timing gap while waiting on a larger facility. RBF also works well as a subordinate layer under an ABL for special situations, since it is non-dilutive and doesn’t encumber the senior collateral package.

Where the product gets misused: brands take multiple tranches and layer repayment obligations without mapping the aggregate impact on cash flow. Or they use RBF to cover structural opex gaps that require a different type of capital entirely. When 3-4 RBF products are running simultaneously, 10-15% of revenue can flow to aggregate repayment, and that drag shows up in operating cash flow even when the P&L looks fine. The product can be sound. The implementation requires discipline and strong forecasting from the internal team.

If you are qualified for bank debt or standard ABL products, those should anchor the capital stack. Layer additional credit instruments thoughtfully, with clear use cases and a liquidity plan that accounts for the full repayment schedule across all facilities.

Credit diversification: apply the same logic as banking

The same principle that applies to banking applies to credit. Build optionality across your credit relationships. A fintech card or working capital line is one tool. Pair it with a bank line, an SBA loan, or a relationship with a regional lender who understands your industry. The companies building fintech credit products are solving problems traditional finance has ignored for decades. That work matters. The job of an operator is to build the kind of credit architecture that holds up regardless of what happens to any single provider.

Be selective with your credit partner. Understand how they are funded. A lender backed by a stable warehouse facility from a major bank operates differently than one running on venture equity and a thin credit line. The stability of your lender’s capital structure directly affects the reliability of your credit access. This is a diligence exercise most companies skip. It takes a few conversations and it’s absolutely worth doing.

The best time to secure and negotiate access to capital is when you emphatically do not need it. This sentence is worth reading twice. When your business is performing well, your balance sheet is clean, and your cash position is strong, you have maximum leverage in every credit conversation. Build those relationships in periods of strength.

Most founders equate liquidity with their ending cash balance. That single figure, while necessary, is a snapshot. It does not tell you how resilient your cash position is under stress. It does not tell you how quickly you can access additional capital. It does not tell you whether the cash you see today will still be there after next month’s inventory deposits, payroll, and vendor payments clear.

Real liquidity is a system. It is the ability to fund essential inventory cycles while awaiting receivables, to meet payroll and opex without diluting equity, and to hold pricing or production schedules when external pressures arise.

The companies my team works with that exhibit strong liquidity share common operating practices.

AR discipline as a core function. Collections are not paperwork. For high-growth consumer brands, AR management demands the same rigor as sales or product development. Cash does not flow organically. It must be actively pulled through the system. Explicit payment terms communicated in advance with retail partners. Proactive pre-aging escalation before invoices hit 30, 60, or 90+ days. Weekly AR reviews with clear ownership, detailed aging analysis, and collection action plans. AR is part of your borrowing base. Treat it as a strategic asset.

AP optimization as a cash management lever. Every day you extend your payment terms is a day your cash remains in your business. Systematically transition key suppliers from upfront payment to credit terms. As your volume and track record grow, negotiate progressive extensions. Decouple payment schedules from delivery schedules for large production runs. Explore trade credit and supply chain finance solutions to extend terms without damaging vendor relationships.

Cash flow forecasting as an operating cadence. A rolling cash forecast, updated weekly, tied to ground-level inputs from sales, ops, and inventory. Layer on a monthly 12-month outlook for strategic planning. Build robust scenario analysis. What happens if wholesale shipments slip by 2 weeks? What if a key supplier PO is delayed by a month? What if your return rate increases by 8% on a new product launch? Quantifying these impacts on cash runway is what gives leadership the ability to make proactive decisions.

Make the forecast visible across the leadership team. When sales, operations, and marketing leaders can see how their decisions directly impact cash runway, accountability builds naturally into the system.

Inventory as a capital allocation decision. For many consumer brands, inventory is often the largest single sink for liquidity. Every pallet of product sitting in your warehouse or 3PL is cash that cannot be deployed elsewhere. Align POs to channel-level forecasts, not broad top-line revenue goals. Overbuying for one channel can trap capital that was needed for another. Manage MOQs with discipline. Do not overbuy to hit an MOQ unless the realized cost savings outweigh the holding costs. Model it out.

Brands that prefer not to discount due to brand positioning should be even more cautious about demand planning and channel alignment. The margin for error is thinner when liquidation is not an option.

Here is the financial stack, laid out as a single architecture. Each layer builds on the one below it.

Layer 1: Banking. 2 banks. One neobank for speed and integrations. One GSIB for stability and relationship building. At least 2 accounts per bank. AR collection account. AP disbursement account. High-yield savings for excess cash. FDIC coverage mapped and verified. This is the foundation.

Layer 2: Treasury. Automated cash visibility across all accounts. Threshold alerts. Rules-based sweeps. Documented cash management policy. Operating cash vs reserve cash vs investment cash, defined and maintained. This is the nervous system.

Layer 3: Float optimization. CCC measured and managed. DIO, DSO, DPO tracked monthly. Vendor terms negotiated progressively. Inventory turns monitored by SKU. Channel mix evaluated through the lens of cash efficiency. This is the circulatory system.

Layer 4: Credit architecture. Debt instruments matched to their intended purpose. ABL or LOC for working capital gaps. Term loans for long-term capital needs. RBF deployed thoughtfully for specific short-duration use cases with clear ROI. Credit diversified across at least 2 providers with different funding structures. Relationships built during periods of strength. This is the structural support.

Layer 5: Liquidity system. AR managed as a core operating function. AP optimized as a cash management lever. Rolling cash forecast updated weekly and monthly. Scenario planning built into the operating cadence. Inventory planning treated as capital allocation. Forecasting made visible across the leadership team. This is the immune system.

When all 5 layers are functioning, the business has something that is rare and genuinely valuable: structural resilience. The ability to absorb a bad quarter, a lender disruption, a supply chain delay, or a macro shock without it becoming existential. The ability to make decisions from a position of strength.

The first observation is about optionality. The companies that command premium multiples in M&A, that negotiate from strength with retail partners, that attract the best talent and the best capital, share a common trait underneath the revenue and the brand equity: their financial infrastructure works. The plumbing is clean. The cash position is strong. The liquidity system generates confidence, internally and externally. This infrastructure is invisible when it is working. It is painfully visible when it is absent.

The second is about the fintech ecosystem. The companies building credit products, banking tools, and treasury software for consumer brands are solving real problems that traditional finance ignored for decades. That work matters. The operators who use these tools while maintaining diversification and structural independence are the ones positioned well. The lesson from repeated fintech lender disruptions is about dependency. Single-source reliance in any part of your capital stack is a design flaw.

The last is about timing. There is no bad time to examine your financial infrastructure. There are only expensive times to discover it was insufficient. The companies that build this architecture during periods of growth, when there is time and capital to do it well, are the ones that do not have to rebuild it under duress. The ones that wait until a lender freezes their line or a bank goes down or a quarter misses and the balance sheet suddenly matters, those companies pay the cost in urgency, in leverage, and in options they no longer have.

This is a good time to take a close look at your capital stack and make sure the foundation is where you need it to be.

Build the system and let the system compound.