Published: 05/05/2026
Last updated: 05/05/2026
Most D2C founders who run out of cash think they have a funding problem. According to Dan Major, fractional CFO to fashion, footwear and apparel brands, they're usually wrong.
"A lot of the time they come on saying, I need more cash to grow," Dan told Peter Beckman on a recent Treyd Secrets episode. "And actually when you look into that, they don't know their own business. They don't know where their cash is."
That gap — between what founders believe about their finances and what's actually happening — is the thread running through everything Dan does. After close to 20 years in clothing and retail finance, he sees the same autopsy over and over: a brand that looks healthy on the top line, quietly bleeding cash in ways no one can see. Before we go in to what he's found, here's a short introduction of Dan Major.
This is Dan Major: Dan is a fractional CFO working exclusively with D2C fashion, footwear and apparel brands. He shares insights on LinkedIn, and runs a weekly newsletter for DTC brand owners including a unit economics profit margin calculator with channel benchmarks.
The real problem is visibility, not capital
When Dan opens the books of a new client, the starting point is almost always the same: out-of-date financials, often six months old, not set up for how a DTC brand actually works.
"There'll be out of date financials. They maybe won't be monthly. It won't be set up to be aligned for a DTC brand. So they won't have the right margins and the pieces in the right place for them to actually make improvements."
That lagging operations problem turns into a cash flow problem. Not because there's no cash — but because nobody knows where it is.
The fix, in most cases, isn't a loan. It's a clearer picture. Monthly financials. A proper stock revaluation. Unit economics that are actually set up for a product brand. "It's probably a fairly simple fix that could be done over a handful of months," Dan says. "And then they would be able to make a proper decision."
Understand your cash conversion cycle
The cash conversion cycle is the number of days between paying your supplier for inventory and getting that cash back from customers. How long stock sits in your warehouse, how long customers take to pay you, minus the payment terms you get from your supplier. The net of those three.
The shorter the cycle, the less capital you need to run the business. The longer it is, the more cash is permanently locked up — sitting somewhere on your balance sheet, unavailable when you actually need it.
What does good and bad look like? Dan is direct: "A well-run brand could easily be 30, 40 days. A lot of brands I see are in the 65 to 100 days area."
On an $10 million brand, the difference between 100 days and 30 days is roughly $500,000–$600,000 locked up in cash. Not gone. Just stuck. "It's your cash. You just haven't collected it." says Dan.
Where the cash usually gets stuck
For DTC brands, cash rarely disappears at the customer end — Shopify pays out in three to four days. The problem is further back in the system.
Too many SKUs, overbought. Founders have to be ambitious. They have to believe every new style will work. But when every test product has a minimum order quantity of 1,000 pieces across three colors and a full size range, you're placing a $25,000–$125,000 bet on every new style. Most of those bets don't pay off. The dead stock sits in the warehouse for 14 months and no one revalues it.
Supplier terms that never got renegotiated. A lot of brands are still paying on the same terms they agreed when they were doing $500,000 a year — sometimes upfront. Now they're doing $3–4 million and nothing has changed. "There's always negotiations," Dan says. "They've not actually pushed those terms."
The wrong kind of debt at the wrong time. Revenue-based loans have their place — especially early on, when you have no history and need access to cash to get going. But if your cash conversion cycle is 120 days and you've borrowed over 90, you've still got 30 days of gap left when the repayment kicks in. "Then you're just buying another loan to cover the next gap," Dan explains. "You end up almost borrowing to cover that payment."
The ABC analysis every founder should be running
Shopify has a built-in product ABC analysis report. Most founders have never opened it.
The principle is simple: your A products are your core SKUs — the ones making up 70–80% of your sales. You should never be out of stock on these. You can forecast them, fund them, buy in bulk, and negotiate better terms because you have data showing they continuously sell.
Your B products make up around 10% of sales. Keep them if they're complementary to an A product or act as a gateway to one. Otherwise, remove them.
Your C products — typically 5% of your sales but 30–40% of your stockroom — are the bets that didn't pay off. The new styles, the experiments, the trials you were excited about that never took off.
"They're very quick to add a new product, but very, very slow to remove them," Dan says. "You kind of press 'see more, see more, see more' on the website and you just keep rolling down."
The instruction is blunt: cut the C products. Turn them back into cash. Use that cash for ad spend behind your A products — or to make sure you're never out of stock in every size and color of the things that actually sell.
Why Black Friday destroys more margin than founders realize
For most e-commerce brands, November and December should be the bulk of annual profit. It often isn't — because of how they discount.
The rule of thumb Dan uses: every 10% discount removes around 30% of your contribution margin. A sitewide 20–30% off means you're likely selling at zero contribution margin or worse. On your A products. The ones you're going to have to reorder next month at full price.
"Everyone's high-fiving and taking photos of the account," Dan says. "And you've got the largest clearing account you've ever had, and the largest bank account. But then January comes and you've also got the largest VAT bill you've ever had, the largest Meta bill you've ever had and the largest supplier bill you've ever had."
When he looks at November, December, and January together as a quarter, he regularly finds brands that are loss-making or breaking even — in what should be their most profitable period of the year.
The smarter approach: run the discount on your C and slow-moving B products, the ones you're never going to reorder anyway. The sunk cost is irrelevant — all that matters is turning them back into cash. Keep your A products at full price, or close to it. High-demand season means customers will buy anyway.
Share forecasts with your suppliers
Most brands never do this. Their suppliers make pricing decisions based entirely on looking backwards at what's been ordered.
Dan's argument is that sharing a 12-month forward forecast — not your whole P&L, just units and cost of sales — changes the relationship. Your supplier can plan ahead. They can hire, place bulk orders on materials, buy machinery. And because they can borrow against hard assets at single-digit interest rates, they can often offer you better terms or lower minimum order quantities on new styles.
"I wouldn't even push for the discount," he says. "The focus should be on improving the terms or improving the minimum order quantities. That is actually a lot more beneficial to a brand than taking half a percent off COGS. Because if you're still buying the wrong minimum order quantity, you're gonna end up having to discount it all at 30–40% off anyway."
Trial products on reduced minimum order quantities. Prove the product before committing. If it joins the A-list, go back to full quantities. If it doesn't, you've lost far less.
The CFO take on marketing that surprises most people
You'd expect a CFO to want to cut marketing spend. Dan's view is the opposite.
"Most brands are underspending on marketing."
The logic: if you've got a 60% gross margin and 10% operating costs, you have 50% in the middle. If you can get to 10% net profit at the bottom, that leaves 40% available for ad spend. A brand with that structure can outbid its competitors on Meta and still make money. A brand running at 40% gross with bloated OPEX might only have 5–10% available, and simply won't win the auction.
"Your job is to have such good operating margins that you can afford to outspend your competitors," Dan explains. "You're not just competing against your category on Meta. You're competing against anyone that will appear in your avatar's feed."
The implication for founders: the margin work — buying better, clearing dead stock, renegotiating supplier terms, fixing your discounting — isn't just housekeeping. It's what creates the headroom to spend more on growth than anyone else in your space, sustainably. Get the visibility first. Then use it.
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💜 Want to hear the full conversation? This episode of Treyd Secrets is available on Spotify and Apple Podcasts.
💡 Find Dan Major on LinkedIn
→ Curious how brands manage the cash gap between paying suppliers and getting paid? That's exactly what Treyd is built for. Learn more about Treyd's inventory financing.
