The short answer
Stacking is a merchant taking an additional advance while an earlier one is still running, so two or more daily remittances draw on the same receipts. Funders object because it dilutes the receivables they purchased and raises default risk on a position already deployed. For brokers it matters because undisclosed positions are the fastest way to lose a submission and a funder relationship.
Stacking is the most loaded word in this industry and it describes something quite mundane: a merchant with more than one advance running at once.
Why funders treat it as a risk
A funder buys a share of future receipts. A second funder buying a share of the same receipts does not create new revenue — it divides what was already committed. The first funder underwrote a merchant whose receipts could carry one remittance and now has one carrying two.
What a second position does to the same receipts
What agreements usually say
- Many contain restrictions on taking additional financing while the advance is outstanding.
- Some treat a new position as an event of default, which can accelerate the balance.
- Some require notice or consent rather than prohibiting it outright.
- Enforcement varies widely, and the existence of a clause is not the same as it being acted on.
It is not automatically wrong
A merchant with one modest position and strong receipts taking a second, disclosed, at a price that reflects it, is an ordinary transaction. The problems are concentration and concealment rather than the number two.
What genuinely damages merchants is the fourth and fifth position, where remittances consume so much of the daily take that the business cannot operate — and each new advance exists largely to service the previous one. That pattern is visible in bank statements and it is what underwriters are scanning for.
Handling a merchant who already has positions
- Establish how many and roughly what the remittances total, on the first call.
- Expect a higher factor and a smaller offer. That is arithmetic, not a negotiation.
- Consider whether a consolidation makes more sense than another position.
- Place it with a funder that knowingly takes second and third positions, rather than hoping one that does not will make an exception.
- Never submit hoping the statements will not show it. They will.