Ecom Cash Cycle
EcommerceHow to use the Ecom Cash Cycle
Growing an ecom brand means buying stock long before customers pay you for it. This shows exactly how many days your cash is out of the business, how much of it is sitting in the cycle right now, and how fast your own profit can fund the next order without borrowing.
Your Business Inputs
Rough is fine. The shape is what matters.
Talk this through with a CFO
Thirty minutes, free. We will pressure-test these numbers against your real books and tell you which lever to pull first.
Book a callWhere your cash sits
One order, from the day you place it to the day the money reaches your account.
The average wait between your money leaving for stock and coming back from the sale.
Stock only. If you pay for ads before you pay your supplier, your real cycle runs longer than this.
You order $100,000 of stock on day 0. $100,000 leaves on day 7. It arrives on day 25 and sells over 30 days, so the average sale happens on day 40 and the $250,000 it earns reaches you around day 43. Averaged across your payments, your cash is out for 36 days.
- You buy $100,000 of stock a month
- It takes 36 days to turn back into cash
- So $120,000 is always out there, on a boat or a shelf
What frees it up
- Sell through faster
- Longer supplier terms
- Pay less of the order up front
- $120,000 of stock supports your $250,000 a month
- Your $25,000 of monthly profit buys more stock
- Enough for $52,083 more revenue a month
Ways to go faster
- Keep more profit, or shorten the cycle
- A credit line or inventory loan
- A card you clear in full each month