Amazingly, you can sometimes have too much cash. And sometimes maybe you don’t have too much, but you have all you need.
dash.fi focuses on cash back cards for brands and have built some interesting products for this.
This is not a sponsored post. I just find capital products fascinating.
Let’s say you are a brand generating solid free cash flow and spending a bunch of money each month on ad spend among other things. Maybe you are cranking out $5 million a year in ads. If you could increase your ad budget by a couple percent, you would do it. 2% on that budget is an extra $100K. Your CAC is $100 and you just got 1,000 more customers for free.
Or let’s say you are a C Corp and you aren’t paying yourself very much. You would like to distribute more cash, but don’t want to pay taxes on it twice. An extra $100K per year sounds about right. Instead of taking the cash back into the company, you have it flow to your personal account or a debit card. You still pay your personal taxes on it of course, but don’t take the company taxes on it. Sounds good.
I am definitely not a tax advisor. So check with your tax person about this!
The above describes the original dash.fi cash back card. Because their cash back program is based on interchange, there is some nuance to how this works in practice.
- dash.fi looks at your vendors and determines whether they are ‘standard’ interchange or ‘discount’ interchange. Meta, Google, TikTok are standard. Some large retailers are discount. I am not sure how one becomes the other, but I assume it’s because some companies have the volume to negotiate lower interchange rates.
- Standard interchange receives 2% cash back and Discount receives 1.5%. So your actual cash back percentage will be somewhere between those numbers.
- The card is a one day charge card. So, pay Meta with it today and pay dash.fi tomorrow.
- There is no fee for using the card.
- Your daily spend limit is typically 2X your biggest spend day i.e. if Black Friday was your biggest spend day, then your daily limit would be 2X Black Friday.
- And at the end of 12 months, dash.fi adds up all the charges on the card and then gives you an additional 20bps on that total as a loyalty reward. So, on $5 million of charges, that would be an additional $10K
Let’s say you have a lot of cash lying around. Maybe you raised a big round or are generating lots of FCF. dash.fi has an interesting product for that.
- You deposit that cash in an affiliated account with either Wells Fargo or Schwab. Let’s say $1 million.
- You get a monthly ‘spend cap’ which is 50% of the amount deposited. In this case, $500,000.
- You now receive 3% cash back on your monthly spend up to the spend cap i.e. $15,000 in this example.
- Spend above the spend cap earns 1.5% (this may be negotiable to get somewhere between 1.5% and 2%.
- And you earn a 4.5% annualized ‘rebate’ on the deposited amount which is paid quarterly. So, in this example, after a year you would have received $22,500 in rebates. The math is super simple. It’s deposited amount * 4.5% / 12 for the monthly amount earned * 3 for the quarterly payout. In this example, $5,625 per quarter.
Like their original card, cash back and rebates can go back to the corporate account or a personal account. If you need it, you can pull your deposited cash back with 5 business days notice.
dash.fi also offers a Net 60 card for US domestic spend. This works like other cards with a fee of 1% to 1.5% which is applied to the amount charged and then the total amount (charge + fee) is due in 60 days.
dash.fi products are definitely nichey. Most brands are cash strapped and looking to borrow money to extend out payments, match their usage with borrowing and shorten their CCC. But that niche is what makes dash.fi interesting. For founders who have the FCF and cash to utilize these products, the combination of maxing cash back and flexibility of where that cash is distributed is compelling.
Important Considerations
- dash.fi products are unsecured and without Personal Guarantees
- Definitely check with your tax advisor about tax implications of receiving cash back to your personal accounts.
Reach out to Andrew Murphy at dash.fi for more info.
This is not a sponsored post. I just find capital products fascinating.
I help brand leaders maximize wealth creation through better finance. If that sounds helpful, reach out!