The last 20 months at Clearco have been filled with wide-ranging change. As the kids say, "it's been a lot." In fall of 2023, we announced a series of actions to recapitalize and reorganize our business, ensuring Clearco's stability and long-term growth. While those transactions were critical to putting Clearco in the best position to serve our ecommerce customers, they were preceded by another, more fundamental change: a shift to a streamlined capital solution, which we call Invoice Funding.
The decision to pivot to a simpler, friendlier, and easier-to-understand product was undertaken in September of 2022, a period of significant challenge for Clearco. 20 months later, that bold decision has made all the difference, not only for Clearco, but for our ecommerce customers.
Today's Invoice Funding product, which ecommerce businesses use to fund direct payments to suppliers and vendors, is still in the revenue-based finance (RBF) product category that Clearco created for ecommerce businesses. That said, our product offering differs in key ways from our prior product, the "cash-in-bank Merchant Cash Advance (MCA)" which we pioneered in 2018, and which our competitors later mimicked.
With Clearco, you know exactly what revenue you're sending us, your capital partner, each week, which makes financial planning easier and more manageable and predictable. What's more, when your revenue is growing rapidly, you're not giving up more revenue/cash each day. That means you retain more revenue and cash flow to grow your business and fund inventory and marketing spend at key points of the year (like the fall!).
All of the differences above should be important to any rapidly growing ecomm business. But it may be #5 that matters the most. In conversations with customers since the launch of our Invoice Funding product, we have heard again and again how critical the predictability of payment amounts are. “Fixed” payments allow businesses to plan better and to allocate precious financial resources to their most productive use. That's music to our ears at Clearco because it tells us our product is doing what we care most about: fueling ecomms’ growth in a capital-constrained macroeconomic environment.
There's one more nuance to “fixed” payments versus uncapped remittance rate-based products. We think of it as the dirty little secret of RBF products that take a percentage of your daily revenues regardless of your revenue growth. Stay tuned and we'll tell you all about it next week!
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Andrew Curtis is the CEO of Clearco. Andrew has over twenty years of experience working in finance in New York City, including roles at investment banks Merrill Lynch & Co. and Lazard Frères as well as several investment managers. Before joining Clearco as an advisor in July 2022, he served as an advisor to Annaly Capital Management, a real estate investment trust focused on housing finance and the residential mortgage market.
Andrew has an extensive background in leveraged credit, liability management and financial restructurings, asset-based finance and securitizations. He graduated from Brown University and subsequently earned master’s degrees from the University of Chicago Graduate School of Business and The Fletcher School of Law & Diplomacy at Tufts University.