When Josh Thompson and his brothers founded FreeTheRoots in 2018, their goal was to celebrate their Jamaican heritage and serve their community with products that promote natural hairstyles. They built a strong following on social media, prompting them to create an online store with Shopify to properly address the growing market demand for their products.
But while FreeTheRoots promoted freeform locs and natural hair, the growth of the business was being restricted by some of the financial services they were using at the time. The company often had to wait up to six days to access their payouts from sales, which made it harder to buy ingredients in bulk. This led to higher costs and lower margins. Adding to their challenges, FreeTheRoots needed access to more capital to help them manage inventory and expand their operations.
To address these challenges, FreeTheRoots used numerous financial solutions, including Shopify Balance, Shopify Capital, and Shopify Credit. Since then, FreeTheRoots has seen the following results:
- Gained faster access to sales revenue: from up to six days to as little as six hours1
- Improved profit margins by up to 3% due to bulk purchase discounts
- Saved up to eight hours per week managing transactions and financial reconciliations thanks to Balance’s ease of use
- Obtained funding needed to increase sales capacity and make strategic investments, including larger warehouse and higher employee headcount
The Challenge: Freeing up cash flow to fund expenses
Over the first three years of their business, FreeTheRoots’ customer base steadily grew. However, even as they made more sales, Josh and his brothers found it difficult to access their funds. Their bank was taking five or six days to post the money from their sales. As a result, the company’s sales margins shrunk as they were unable to buy in large enough quantities to obtain supplier discounts. Worse yet were the effects on personal cash flow: the owners couldn’t pay themselves on time. “Overall, we were experiencing a cash flow nightmare,” Josh recalls.
In addition, the web interfaces offered by their banking vendors lacked the intuitive interfaces they were accustomed to using with other software providers. “At times, it took forever to find a transaction,” Josh says, referring to how their bank’s cumbersome user experience online was costing him valuable time.
Despite these hurdles, the business continued to grow, and it became clear that FreeTheRoots needed to expand into a larger facility, especially with the busy holiday sales season coming up. Josh and his brothers looked for outside funding to help facilitate their move to a new location and to stock up on holiday inventory. But they were hesitant to partner with a traditional lender or bank, considering how such institutions hadn’t proven to understand their business needs very well thus far.
The Solution: Shopify helps streamline access to funds
FreeTheRoots received a financing offer through Shopify Capital2 and were able to apply through their Shopify admin within minutes. Once approved, they received funding in time to stock up for Black Friday and the rest of the holiday season. This cash infusion would be the first of several strategic loans through Shopify that helped fuel the company’s growth.
Receiving financing through Shopify Capital set the stage for FreeTheRoots to begin leveraging more financial solutions from Shopify. They had faced operational inefficiencies for a long time due to their bank’s complex online interface and lack of integration with their ecommerce activities. Since they were already using Shopify Payments to accept payments online, they were also eligible for Shopify Balance, the free financial account built into Shopify,3 where payments and transactions can be managed in one place.
Creating a Balance account integrated with Shopify Payments and using it as their payout account provided FreeTheRoots with faster and easier access to their sales revenue. They took advantage of Balance’s customizability to set up additional accounts for specific expenses like loan payments and advertising expenses. The modern interface and QuickBooks integration included with Balance further empowered them to stay on top of their finances.
Not long after, FreeTheRoots also signed up for Shopify Credit—the pay-in-full cashback Visa® card through Shopify4—to manage their advertising and other expenses more effectively. “We moved all of our ad expenses to Shopify Credit mainly because of the cashback benefits and the flexibility it offered in scaling up our advertising efforts,” Josh says.
The Results: Increased Liquidity Opens New Path for Growth
FreeTheRoots’ implementation of Shopify Balance and other solutions from Shopify led to significant improvements in cash flow and operational efficiency. “When we switched to Shopify Balance, our access to funds dropped from a matter of days to hours,” Josh says.1 Instead of waiting five to six business days and missing out on strategic buying opportunities, FreeTheRoots was able to buy in larger quantities. This netted them better margins and helped ensure a more steady income for the team as well.
Untangling their financial account information has had other benefits as well. “Shopify Balance made it much easier to keep our accounts organized and find transactions in a heartbeat,” Josh says. The integration between FreeTheRoots’ Shopify Balance account and QuickBooks has also been a game-changer in the bookkeeping process. “When our accountant gives me a list of transactions that need to be categorized, it no longer takes me hours to complete the task,” Josh says. “I think our accountant is very happy about that.”
Thanks to its ease of use and wide range of benefits, Josh says Shopify Balance has come to overshadow FreeTheRoots’ original business checking as their account of choice by a ratio of ten to one. While the brand moved all ad expenses to Shopify Credit to maximize their cashback, the vast majority of other expenses are now being paid through Balance. “Shopify Balance has been easier to use than any bank we’ve ever worked with,” Josh says. He adds that the APY reward5 the company has earned by simply holding money in their Balance account is “a nice cherry on top.” After all, he says, “any additional money in our account is always good.” Indeed, with the benefits of Shopify Balance, Capital, and Credit at their fingertips, more good things are on the horizon for FreeTheRoots.
Shopify Balance keeps our finances extremely well-organized and helps us find any transaction quickly. To be honest, it’s easier to use than any bank account I’ve ever worked with, which is why we made it our main business expense account.
With Shopify, FreeTheRoots saw results fast.
- Gained faster access to sales revenue: from up to six days to as little as six hours1
- Improved profit margins by up to 3% due to bulk purchase discounts
- Saved up to eight hours per week managing transactions and financial reconciliations thanks to Balance’s ease of use
- Obtained funding needed to increase sales capacity and make strategic investments, including larger warehouse and higher employee headcount
Between the access to cash, capital loans, and credit, Shopify has empowered us to grow to who we are today.
1 Shopify Plus merchants receive payouts the next business day by default upon opening a Balance account. Payout speed may be subject to change without notice and varies for every merchant.
2 Results may vary for every merchant. All loans through Shopify Capital in the United States are issued by WebBank.
3 Shopify partners with Stripe Payments Company for money transmission services and account services with funds held at Evolve Bank & Trust and Fifth Third Bank, Members FDIC. Shopify Balance Visa® Commercial Credit cards are powered by Stripe and issued by Celtic Bank pursuant to a license from Visa U.S.A. Inc. Shopify Balance has no monthly, transfer, or hidden fees. Shopify doesn’t charge any ATM withdrawal fees, but you may be charged by an ATM provider.
4 Shopify Credit Visa® Commercial Credit cards are powered by Stripe and issued by Celtic Bank pursuant to a license from Visa U.S.A. and are subject to credit approval. See Issuing Bank Terms and Shopify Credit Program Terms. “Cashback” refers to rewards earned as a percentage discount on eligible purchases in the form of a statement credit. Restrictions apply. See Rewards Program Terms for details.
5 Shopify provides a reward in the form of an annual percentage yield (APY) on the money you hold in Shopify Balance and it is not interest. The reward accrues daily, and is compounded and paid monthly in the form of a credit to your Balance account.