A UK eCommerce brand turning over £150,000 a month carries roughly £180,000 in stock at any given time. It pays its supplier 60 days before that stock sells, spends another £25,000 a month on Meta and Google before any of those customers convert, and waits up to 14 days for Shopify and Amazon to release the cash once they do. On paper the business is healthy. In the bank account, it is permanently short. That gap, between cash going out and cash coming back in, is what working capital exists to fund.
If you have funded a business through working capital before, the diagnostic side of this piece will be the most useful part. If you have used revenue-based capital and are wondering whether the playbook still holds, skip to how 2026 changed the picture. If working capital is a term you have heard but never properly engaged with, start at the top.
What working capital actually means in eCommerce
Current assets minus current liabilities is the textbook definition. It tells you almost nothing useful. The version that actually matters: working capital is the cash you need to fund the gap between paying for things and getting paid for things.
For an online brand the gap is structural, not a sign anything has gone wrong. Inventory is purchased weeks or months before a single sale. Payment processors hold settled funds for 2 to 14 days. Marketplace payouts add further lag, with Amazon disbursing every 14 days and Shopify Payments settling in 2 to 3 business days. Suppliers want paying upfront. Ad platforms charge daily. Staff need paying monthly. Money goes out on a faster clock than it comes back in.
The number that captures all of this is the cash conversion cycle: the days between paying for stock and collecting the revenue that stock eventually generates. For most consumer brands the cycle is positive, which is a polite way of saying the founder is funding the gap themselves. Fashion and apparel typically holds inventory for 30 to 60 days. Electronics, 45 to 80. Home and furniture, 75 to 145. Add processor lag and marketplace payouts on top and the cycle gets longer still. A brand showing £500k of monthly revenue on the P&L can have a fraction of that in the bank at any moment, because most of it is locked in stock, in pending payouts, or in ad spend that has not yet earned anything back.
Working capital is the answer to that gap. It is the external cash you bring in to keep buying inventory, paying suppliers and running marketing while the previous cycle's money makes its way back to you.
What it's used for in practice
Four use cases cover most of what UK eCommerce brands actually fund.
Inventory ahead of demand. The biggest single use of working capital, full stop. Brands need stock on hand before customers buy it, so the cheque to the supplier goes out weeks or months before any revenue lands. SS buying happens in October. AW in April. Christmas in August. Every cycle creates a cash gap that has to be funded somehow, and the bigger the brand grows, the bigger the gap gets.
Peak season build-up. Q4 is its own animal. Most UK eCommerce brands carry 2 to 3 times their normal inventory value through November and December, and for many of them peak accounts for up to half the year's sales. The capital required to build that position is materially larger than off-peak working capital, and you need it in August and September. Three months before any of that revenue actually lands.
Marketing and customer acquisition. Ad spend has to land before the customer it acquires generates revenue. With UK eCommerce CAC having risen roughly 40% between 2023 and 2025 and Meta CPMs up 20% in 2025 alone, the gap between the cheque to Meta and the revenue from a converted customer has widened considerably. Brands scaling acquisition need a meaningful cash position upfront, before LTV catches up.
Marketplace and processor float. Amazon disburses every 14 days. Shopify holds funds for 2 to 3 business days. PayPal and Klarna run their own holds. For a brand at any kind of volume, the cash sitting in those windows can run into six figures, and it is working capital you own but cannot get to.
The forms working capital comes in
There is no single working capital product. There are categories of facility, each suited to a different cash gap, and the right answer for most businesses is more than one of them.
Bank overdraft and SME term loan. The traditional answer, increasingly the wrong one for modern eCommerce. UK bank lending to SMEs reached £62bn in 2024, but the proportion of small businesses actually using external finance fell from 50% to 43% over the same period. SME overdraft usage has collapsed from roughly one in three businesses in 1998 to one in twenty today. Banks are slow, collateral-driven, and tend to favour businesses with physical assets to secure against. For an eCommerce brand without a warehouse on the balance sheet, the answer from the high street is usually no, or yes-but-six-weeks-late.
Revenue-based financing. A capital advance repaid as a percentage of future revenue, sized against trailing sales and repaid as you earn. The mainstay of eCommerce funding from roughly 2020 onwards, and still useful for the right cash gap. The structural appeal is that the repayment scales with the business: bigger when revenue is strong, smaller when it softens. The trade-off is cost. Flat fees of 6 to 12% on the advance translate to effective annualised costs of 15 to 35% on six-month terms. Where the model breaks is when CAC inflation eats the gross margin the repayment was supposed to come from, which is increasingly the situation brands are walking into without realising.
Inventory financing. Capital sized against the value of stock you hold or have on the water. Suited to product brands with real inventory cycles: fashion, homewares, beauty, anything with a meaningful lead time between order and sale. The lender takes a security position in the stock itself, which makes it well-suited to bulk buys, AW or SS purchases, or container-load orders where the cash requirement is large and the revenue lands months later. Less useful for ad spend or marketing scale-up, because the security model only works against physical stock.
Embedded and platform finance. Capital offered inside the tools you already use: Shopify Capital, Amazon Lending, 3PL-attached funding. The pitch is convenience. The lender already has the data, decisioning is fast, the capital arrives in days. The catch is concentration risk. Taking capital from the platform you sell on creates dependency, and the terms tend to be take-it-or-leave-it. Useful as one component of a broader capital structure. Risky as the only line you have.
Modern data-led working capital. Capital sized by reading multiple data sources at once: sales, accounting, banking, inventory. The facility reflects what the business actually does rather than what one metric shows. Faster than a bank, more accurately sized than a legacy revenue-based product, and built for the multi-channel, multi-currency, multi-marketplace shape of a modern eCommerce business.
How 2026 changed the picture
Four shifts are worth understanding before structuring any new facility.
CAC inflation has run roughly 40% over the last two years. The maths of revenue-based financing was built when the gross margin underneath comfortably absorbed the repayment. It does not, anymore, in most categories. The same facility on the same revenue can now eat the contribution margin alive.
The high street has stepped back. Specialist and challenger lenders now account for 60% of UK SME bank lending, the highest on record, and the SME funding gap has widened to roughly £22bn. For most eCommerce brands, the bank manager is no longer the right first call.
The EU de minimis exemption is closing on 1 July 2026, with a further €2 handling fee per consignment expected from November. The working capital implications for UK brands selling D2C into Europe are significant, and we walked through them in detail in our recent post on de minimis.
Underwriting got better. Modern lenders read four data sources at once. Brands whose Xero is six weeks behind, whose 3PL data lives in a spreadsheet, whose Shopify reports do not reconcile to their bank statements, look worse on paper than they actually are. The bar moved. Most operators did not notice, because nothing in the day-to-day told them it had.
How to think about it
The most useful reframe, whether you are new to working capital or rethinking it after a few years away, is this: stop asking "do I need funding?" and start asking "where is my cash actually getting stuck, and for how long?"
Three questions get you to a clear answer.
Where is the cash stuck? Stock on the water from China? Stock sitting in a 3PL? Marketing spend running ahead of revenue? Marketplace receivables waiting on disbursement? Each has a different shape and a different funding answer.
How long until it comes back? A 30-day gap on Meta is not the same problem as a 90-day gap on container-load inventory. The duration of the gap, more than its size, determines the right facility.
What is the cost of not funding it? A stockout in peak costs more than the funding to avoid it. A slow ad ramp at the start of Q4 costs the whole quarter. The cost of not having working capital is almost always larger than the cost of the capital, and that comparison is the one most worth running.
How this looks for a real brand
A UK food and beverage retailer we funded last year sells repeat-purchase consumables. Customers reorder every few weeks. Stock turn is fast. The restock cycle is tight and predictable. Run their situation through the three questions and the answer is the one most operators eventually arrive at: cash is stuck in the next manufacturing run, the gap is one restock cycle long, and the cost of being short is stockouts on best-selling SKUs.
The structural answer was not one big facility. It was four facilities over nine months, totalling £411,000, each one sized to fund a specific manufacturing run or 3PL replenishment. Each was underwritten on live data at the point of application, against actual sell-through at that moment, rather than the original deal or the previous quarter's accounts. Revenue is up 60% since the first facility. The story is unglamorous: with capital sized to the cycle, the brand could hold its best-selling SKUs in stock through every restock, instead of running out and ceding the repeat purchase to a competitor.
A second customer, a UK health and wellness brand, shows what happens when the strategy itself shifts. Three facilities, £1m disbursed, each underwritten against the projected blended ROAS of a specific marketing campaign rather than against trailing revenue. The first two campaigns drove 50% revenue growth. Then the founder pulled back on paid acquisition deliberately, choosing to run a leaner, higher-margin operation built on hero SKUs and repeat customers. Top-line growth has been flat by design since. Margin has materially improved. The facilities flexed with the strategy rather than against it, because each one was sized against what the business was doing now, not against a trailing twelve months that no longer described it.
The full case study is here.
The point both brands make is the same. The right answer is rarely a single facility covering everything. It is a structure: capital sized to where the cash is actually stuck, re-underwritten on live data at each point of application. The 2023 instinct, take one big advance and make it stretch, would have worked. Expensively. And the brand would have spent the next eighteen months paying down capital that was never sized correctly for the problem it was solving.
Most brands need more than one type of facility, layered. The point is structural fit, not lender shopping.
What good looks like
The bar has moved on what an operator should expect from a modern working capital lender. Five questions worth asking before signing anything.
How fast can you decision and fund, and what happens if I take more than 48 hours to respond to the offer? Days or hours, not weeks. And the offer should hold long enough for a considered decision. Artificial urgency is a sales tactic, not an underwriting position.
What data sources do you read? Sales alone is not enough. A lender reading live inventory, accounting, banking and sales data together will size the facility more accurately and price it more fairly than one looking at any single source. Worth asking which integrations they actually have and how current the data has to be.
How is the facility sized, and when does it re-size? Against what, on what basis, and how often. A facility set in January and unchanged in November is not built for a growing business. Modern lenders re-size as you do. Legacy ones make you start the application again every time you need more.
What does this cost, all-in, and what does it cost if I repay early? The headline rate is rarely the real number. What matters is total cost across the life of the facility, including fees, minimums and break costs. Some facilities are cheap to take and expensive to leave. The small print matters more than the front page.
What happens if revenue softens? The terms in a slow month tell you more than the terms in a strong one. If the answer involves personal guarantees triggering, fixed minimums kicking in, or punitive break fees, that is a facility designed for the lender, not the business.
Working capital is not a product you buy. It is the operational answer to a structural feature of running an online brand, that money goes out faster than it comes back in. The brands handling 2026 well are treating it that way: as a deliberate part of the capital structure, sized to where cash is actually stuck, reviewed when conditions change. The 2023 playbook is not the 2026 playbook. The brands who have already noticed are a long way ahead of the ones still working from the old map.
Brand names in case studies withheld for confidentiality. Figures and structure accurate as documented with each client.
CapRelease provides working capital for UK eCommerce businesses, underwritten against live inventory, revenue, accounting and banking data. £20k to £1m. Decisions in 48 hours, funding in 24. FCA Registered FRN 1013575.
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