Cash Flow for Online Sellers: The Inventory Trap

The most common complaint from ecommerce founders is: "My accountant says I made a $50k profit, but my bank account is empty. Where is the money?"

The answer is usually sitting on a shelf in your warehouse.

The Inventory Cash Trap

In ecommerce, cash flow is tied up in inventory. You have to pay your factory 30% upfront and 70% before shipping. Then you wait 4 weeks for sea freight. Then you wait 3 months to sell the goods. That is a 4-5 month "Cash Conversion Cycle" where money goes out but doesn't come in.

Improving Cash Flow

1. Trade Finance: Use specific ecommerce loans (like Wayflyer, Shopify Capital, or Trade Finance) to fund inventory purchases. This keeps your operating cash free for marketing.
2. MOQ Negotiation: Negotiate lower Minimum Order Quantities (MOQs) with suppliers to order smaller batches more frequently.
3. Clear Dead Stock: Holding stock that isn't selling costs you money (storage fees + opportunity cost). Run a aggressive sale to convert that dead stock back into cash, even if you break even.