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What Is a Refundable Customer Deposit?

If your business buys regularly from another business — and you have idle cash on your balance sheet — there is a structured way to put that cash to work with that supplier rather than leaving it in treasury. A Refundable Customer Deposit (“Deposit”) is the instrument that documents the arrangement. This guide explains exactly what it is, what it is not, and when it makes sense.

The Substance, in Plain Terms

A Deposit is a commercial loan documented as a deposit-and-repayment arrangement between two trade counterparties. The mechanics:

• The Buyer transfers a principal amount to the Supplier.
• The Supplier acknowledges receipt and is obligated to repay the principal at the end of an agreed term.
• Interest accrues on the principal at the rate the parties select. The repayment structure (monthly, quarterly, or bullet at maturity) is captured at the time of the offer.
• The Supplier and Buyer e-sign the executed Refundable Customer Deposit agreement. Both parties receive the signed PDF and a Confirmation Receipt by email.

What a Deposit Is Not

A Refundable Customer Deposit, as documented through the Service:

• Is not a bank deposit. The funds are with the Supplier — your trade counterparty — not in a bank account in your name. There is no FDIC or NCUA insurance.
• Is not a security. It is a commercial arrangement between two trade counterparties documenting an existing trade relationship. It is not offered to the public and is not registered under federal or state securities laws.
• Is not held in trust or escrow by Featherbrooke. Featherbrooke is the software you use to negotiate, document, and e-sign the agreement. Featherbrooke at no time receives, holds, or transfers the Deposit amount.
• Is not loan-against-receivables, factoring, or invoice purchase. No invoice is sold; no receivable changes hands. The arrangement is forward-looking from the moment principal is advanced.

Who Bears the Risk

The Buyer bears the full credit risk of the Supplier. If the Supplier becomes insolvent, files for bankruptcy, or otherwise fails to repay, the Buyer's claim is an unsecured general claim against the Supplier. Recovery in a Supplier insolvency can be partial, delayed, or zero. There is no third-party guarantee, no first-loss tranche, and no insurance.

This is why Profit Flow is restricted to established trade counterparties. The trade context — the fact that the Buyer regularly buys from the Supplier in the ordinary course of business — is captured as an attestation at the time of the offer and printed in the audit trail. A Deposit is appropriate when you have independent, ongoing visibility into your counterparty's creditworthiness through the trade relationship itself.

What Profit Flow Does (and Doesn't)

Profit Flow is software. Concretely, the Service:

• Generates the offer, captures both parties' attestations, and produces the executed PDF agreement;
• Provides a four-digit e-sign verification flow with server-side attempt lockout;
• Maintains an immutable audit trail (SHA-256 hashes, timestamps, party identifiers, event types) for at least seven years;
• Sends transactional emails (offer invitation, signature requests, executed-agreement delivery) and notification emails to the parties.

Profit Flow does not:

• Move money. Buyer and Supplier settle wire transfers directly, outside of the Service.
• Underwrite the Supplier or the trade relationship. Counterparty selection and credit assessment are solely the parties' responsibility.
• Set or recommend the interest rate, the term, or any other commercial term. Templates and defaults inside the Service are software conveniences, not advice.
• Guarantee any repayment or recovery. Featherbrooke is not a party to the Deposit.

When It Makes Sense

A Refundable Customer Deposit can be appropriate where, taken together:

• The Buyer and Supplier already have an established, ongoing ordinary-course trade relationship;
• The Buyer has idle cash that would otherwise sit in treasury and is comfortable bearing the Supplier's credit risk for the term selected;
• The Supplier has a productive use for working capital over the term selected and is comfortable with the fixed repayment schedule;
• Both parties have independently evaluated the commercial terms and confirmed they are appropriate for the specific relationship.

Before You Use Profit Flow

Read the Risks & Waivers page carefully. The complete description of the product, the risks the parties acknowledge, the express waivers, and the limitation of Featherbrooke's role appears there. The Terms, Risks & Waivers document and the Acceptable Use Policy also apply.