By 2026, working capital for ecommerce is everywhere. Your inbox knows it. Your founders know it. Your board definitely knows it.
And still, hidden fees are still taking brands down in the exact same way. Quietly. Predictably. Usually right when you're trying to scale.
Traditional lending was built for factories and equipment. Ecommerce is asset-light. It lives and dies on timing.
So when I say "avoid hidden fees," I'm not talking about one sneaky line in a contract. I'm talking about anything in the capital structure that forces you to break your operating rhythm.
And if you're a CFO at a $5M - $50M brand, rhythm is the job.
Hidden fees don't look like fees
Hidden fees rarely show up as "Fee: $X" on a statement.
They show up as pressure.
You feel it when repayment pulls cash out earlier than your payout cycle. You feel it when you're forced to take more money than you can deploy. You feel it when the lender only underwrites Shopify, ignores Amazon and wholesale, and pushes you into stacking lenders just to function.
By then, the cost isn't just financial. It's operational. Your team starts managing debt instead of managing growth.
This matters more now because ecommerce is no longer "a channel." It's a big chunk of retail. By 2022, ecommerce was roughly 16 - 17% of U.S. retail, up meaningfully from 2019. That means more volume moving through digital rails, with faster feedback loops and faster failure modes.
When capital doesn't match that reality, hidden fees show up as chaos.
The gap I saw in banking (and why it still matters)
In banking, I kept seeing profitable consumer brands get declined. They weren't failing. They just didn't fit an outdated underwriting template.
One example I've shared before was a DTC beverage brand doing over $3M in annual revenue. Customers loved the product. Margins were healthy. Cash flow was steady. The bank still said no.
Why? No hard assets because manufacturing was outsourced. Seasonal swings because summer demand was real. And marketing spend looked like "expenses," not growth. Traditional models tend to treat marketing as burn. Ecommerce treats it like an investment engine, measured in ROAS and contribution margin.
That's the systemic lending gap.
If you're a CFO evaluating funding today, the lesson is simple: choose a capital partner that understands your cash flow cycle. If you're forced to fit your business into someone else's rigid template, you'll pay for it. Maybe not on day one. But you'll pay.
The hidden fee you feel first: paying for idle money
Let's talk about the most common trap: paying for capital that's not doing anything.
A lot of financing products push you toward taking a lump sum up front. It feels safe. It also creates unnecessary drag. If that cash sits in your account while inventory is still in production, you're paying to "hold" money.
That's why I use a simple analogy: taking the full loan amount immediately can look a lot like maxing out a credit card personally. You can do it. You just added pressure to your daily cash.
This isn't theory. A U.S. Treasury survey found roughly one-third go unused when small-business credit lines are approved, while lenders still often charge fees on the full amount. That's a hidden cost that slowly eats liquidity.
The fix is structural and practical. Align draws to real milestones. If your manufacturer requires a deposit, draw the deposit. If you owe the balance when goods ship, draw closer to shipment. You avoid "renting" idle money during a 30 - 90 day production window.
I care about this so much that Paperstack was built around it. Our Capital Wallet issues a larger commitment, and brands draw in tranches as they need it. The goal is simple: your capital should move when your business moves.
"Factor rate" isn't your cost of capital
CFOs don't get fooled by marketing. But even experienced finance teams can get stuck on the wrong number when offers come in fast.
You'll see a factor rate. A flat fee. An "effective APR." Sometimes all three, sometimes none. What matters is what you actually repay, and how quickly you repay it.
Here's why the headline can be misleading: many merchant-cash-advance and "revenue-based" products stack costs inside short durations and aggressive holdbacks. A Bank for International Settlements paper highlighted that some structures can land at APRs well over 100% once all mechanics are included.
You don't need a spreadsheet the size of a novel to pressure-test this. You need three questions.
First, what is the total payback amount on dollars deployed?
Second, what is the expected time to repay under normal performance?
Third, what happens to repayment speed if you have a strong month?
That last one is where CFOs get burned. The business performs, cash comes in, and the product "sweeps" too much of it. Now you're repaying fast and starving growth at the exact moment demand is telling you to lean in.
Cheap capital on paper can become expensive capital in motion.
Repayments: minimums, maximums, and cash flow whiplash
If you want to find the real hidden fee, ignore the marketing deck. Read the repayment section and ask how it behaves in a bad month and a great month.
In retail finance interviews compiled by the Risk Management Association, about 60% impose minimum payments even when sales dip. That's one of the fastest ways to turn a normal seasonality lull into a cash crisis.
Minimums matter because ecommerce isn't smooth. You know this better than anyone. Holiday season alone can represent 20 - 25% of annual sales for many retailers, which means you're often paying suppliers and placing inventory bets well before the cash shows up.
Now flip to the other side. What happens in a great month?
Some lenders sweep a fixed percentage with no cap. You do a huge month, and repayment accelerates. You get punished for success. Then you're underfunded for restock, freight, and marketing while demand is still hot.
At Paperstack, we use monthly repayment caps to protect cash flow. I'm sharing that because it's a concept every CFO should demand in some form: repayment should be predictable enough that you can plan around it.
The core question is always the same. Does this structure protect your liquidity when revenue dips? Does it protect your momentum when revenue spikes?
Multi-channel brands pay a "complexity tax"
One of the most expensive hidden fees is operational overhead.
A big chunk of ecommerce brands end up juggling multiple lenders because each lender only understands one slice of the business. One underwrites Shopify. Another underwrites Amazon. Another offers factoring on wholesale invoices.
According to an FFIEC small business credit report, nearly half use multiple lenders to cobble together the capital they need. Nobody charges you a line item called "complexity." But you pay it anyway.
You pay it in forecasting noise. You pay it in repayment collisions. You pay it in the finance team's time, and in the executive team's attention.
I've seen this directly with a CPG brand we worked with. Their revenue was spread across Amazon, Shopify, and wholesale. Other providers tried to underwrite one channel at a time. The result was pressure to stack lenders and manage three different repayment schedules.
When we underwrote the business as a whole, they consolidated financing into one source based on total performance. That gave the team clarity. It also gave them the freedom to make a real operating decision: pursue strategic retail partnerships while still supporting DTC inventory and marketing.
That's the real win. Not "more capital." Cleaner execution.
Working capital is a timing problem (inventory + marketing + payouts)
Most ecommerce cash crunches don't come from weak demand. They come from bad timing.
Inventory requires cash early. Marketing requires cash constantly. Platforms pay you later. When those cycles drift out of sync, a healthy business starts behaving like a stressed one.
This is also why the "marketing spend is just an expense" mindset is so damaging. Growing online brands often spend 15 - 25% of revenue on marketing. If your financing structure forces you to repay aggressively, marketing is one of the first levers teams pull. And they often pull it at the worst time.
I want you to think about your calendar. When are your biggest launches? When does inventory land? When do payouts hit? If those three aren't aligned, you get the classic doom loop: inventory sits too long, storage costs climb, then you discount hard to free cash, and margins take the hit.
There's also a second version of the same failure: selling out.
I say this a lot because it's counter to the founder instinct. It shouldn't be celebrated when the product is sold out. Selling out often means you just created a new cost you can't see still. You drove a customer to purchase and then couldn't fulfill. Now you have to rebuild the relationship with the customer.
I've seen a brand hit an unexpected viral moment and stock out during the holidays. The attention was real. The trust damage was real too.
If you're facing delays, the disciplined move can be slowing demand on purpose. That can mean lowering marketing spend and removing promotional discounts for a period. You're managing sales velocity to protect long-term value.
And yes, it feels wrong in the moment. This is where CFO leadership matters. You're protecting LTV by preventing a short-term stockout win from turning into a long-term CAC problem.
One more working capital point that doesn't get enough respect: aligning inventory buys to real sales forecasts can shorten your cash conversion cycle. A McKinsey working capital study found companies can reduce cash conversion cycle 20 - 30% with better alignment. Financing that pressures you to pull inventory forward too early can erase that advantage fast.
Scenario planning is how you keep moving in volatility
My leadership philosophy includes "unapologetic optimism." People sometimes misread that as "always positive."
Unapologetic optimism isn't about blind positivity - it's about discipline.
Volatility is part of ecommerce. Freight rates can surge, tariffs can change, payout cycles can shift, and consumer demand can turn on a dime. UNCTAD reported container freight rates surged over 500% from 2020 into mid-2021. When landed costs move like that, your working capital model has to stay flexible.
A real example from our world: one of our brand partners was hit by new import tariffs that raised landed costs overnight. Margins tightened immediately. The default reaction in finance is to freeze inventory orders and cut marketing to preserve cash.
We took a different approach. We ran scenarios. We modeled outcomes if tariffs held, dropped, or expanded. Then we built a capital plan that could adjust. That gave the team confidence to keep ordering at scale and protect supplier relationships while competitors hesitated.
Harvard Business Review research found firms that do rigorous scenario planning were twice as likely to survive sudden shocks. I'm not surprised. Scenario planning gives you options. Options keep you moving.
If you want a simple way to run this internally, pick the variables that actually break your cash flow. Landed cost. Lead times. Contribution margin. ROAS. Marketplace payout timing. Then decide, in advance, what you'll do when each one moves against you.
That's how you stay calm when the market isn't.
The 15-minute due diligence script I'd use in 2026
You don't need weeks to spot a bad structure. You need the right questions, asked early, and answered in writing.
Start with total cost. Ask for the full payback amount on deployed capital, including any origination, underwriting, admin, platform, processing, wire, or "maintenance" fees. Then ask if they charge fees on unused commitments. If they do, you're paying for idle money.
Next, go straight to remittance. Ask if there is a minimum payment and how it behaves in a slow month. Ask if there is a maximum payment or a cap, and how they prevent the penalty of success. Ask what the remittance is based on: online sales, daily bank deposits, or something else. Then match that to your payout reality. Wholesale-heavy and Amazon-heavy brands often live in different cash timing than pure DTC.
Then press on underwriting coverage. Ask if they include all channels in the model. If Shopify is 30% of your revenue, underwriting only Shopify misses most of the business. Ask how they treat wholesale revenue. Some providers count it too early, others too late. That difference can wreck predictability.
Finally, ask about control and support. Find out where the money goes. Do they send it to your bank account, or do they pay suppliers and ad platforms directly? That detail changes your operational control. Ask who supports you after closing. If you're handed off to a separate department, you'll waste time re-explaining your business every time you need help.
You're not just buying capital. You're buying a relationship and a structure you'll live inside.
What we built at Paperstack (and what you should demand from any partner)
Paperstack started as a CFO analytics platform. We built it to give brands real-time visibility into their numbers. Founders kept telling us the same thing: the insight was great, but they needed capital to act on it.
That's why we pivoted. Data alone doesn't move a business forward - capital does, when it's deployed with insight.
Today, Paperstack is a direct lender, based in New York and Toronto. We built the Capital Wallet because we didn't believe ecommerce brands should be stuck in a cycle of small one-off advances. We issue larger commitments, often $1M - $3M, and let brands draw in tranches as needed. Many teams draw $100K - $500K every 45 - 60 days, with a minimum draw once the line is active.
Each draw has its own payback period, often in the 3 - 9 month range, and the facility can extend if you're drawing regularly. We charge a flat fixed fee on deployed capital. We don't charge origination fees, processing fees, or fees on unused capital.
Repayment is tied to revenue, and we use monthly caps to protect cash flow. We also underwrite the full business across channels, and we focus on cash flow quality: predictability, timing, and sustainability.
We're strict on who we can support. We typically look for $2M+ in annual revenue, at least two years in business, and a U.S.-based entity. We also usually need to sit senior in the debt stack. That discipline protects everyone involved.
The bigger vision is what I've called a Stripe-style OS for commerce capital. It's a capital foundation that grows in rhythm with your brand, not a one-time transaction.
Final thought: make capital serve your operating rhythm
If you're reading this as a CFO, you already know the truth. Working capital isn't a "finance problem." It's an operating system problem.
Hidden fees don't just increase cost. They change behavior. They force rushed inventory decisions. They cut marketing when it should be steady. They make you manage lenders instead of managing growth.
So here's the standard I want you to hold, whether you work with Paperstack or not. Demand a structure that matches your cash cycle, sees your full channel mix, and keeps repayment predictable enough for real planning.
When that happens, capital starts working with your business, not against it.
And when the market gets volatile, stay unapologetically optimistic. Do the disciplined thing. Model scenarios. Create options. Keep moving.
FAQs
Why do traditional banks often decline profitable e-commerce brands?
Banks rely on outdated underwriting templates built for factories, not digital commerce. While you view marketing as a growth engine (often consuming 15 - 25% of revenue), traditional lenders view it as 'burn.' Without hard assets to collateralize, healthy brands are frequently flagged as high-risk despite strong contribution margins.
What is the hidden cost of drawing a full loan commitment upfront?
You end up 'renting' idle money. If you draw funds before inventory ships, you pay fees on capital that isn't generating returns. With U.S. Treasury data showing one-third of small-business credit lines go unused despite accruing fees, this structural inefficiency quietly erodes your liquidity reserves.
How do fixed repayment minimums impact seasonal cash flow?
They create liquidity crises during natural sales lulls. Since the holiday season can comprise 20 - 25% of annual sales, revenue naturally fluctuates. Fixed minimums - present in roughly 60% of alternative finance agreements - force you to service debt at peak rates even when sales dip, draining the cash needed for restocking.
How does aligning inventory purchases with sales forecasts impact liquidity?
It significantly shortens your cash conversion cycle. A McKinsey study found that tight alignment can reduce this cycle by 20 - 30%. Financing structures that pressure you to pull inventory forward too early destroy this advantage, effectively penalizing you with higher holding costs.
Why is scenario planning essential for modern working capital strategy?
It is your primary defense against volatility. Whether facing freight surges or tariff hikes, firms that perform rigorous scenario planning are twice as likely to survive shocks (Harvard Business Review). Instead of reacting by freezing spend, modeling outcomes allows you to maintain your operating rhythm with discipline.
