Cash flow management is extremely important in the world of e-commerce, as it can mean success or failure for your business. Below are some tips and best practices to help you successfully manage and streamline your cash flow process.
- Review the cash flow statement at least monthly.
- Track cash conversion cycle at least monthly.
- Manufacturers should monitor production timelines closely.
Always negotiate with your suppliers. Small savings really add up! A 3% discount on a 1M order is 30K. Ask for terms net 30/60/90.
Know how fast you turn each SKU, and strategically dump any inventory that is not moving. Use liquidators to quickly get cash if no other options.
Carefully use debt financing for inventory.
Have at least 6 months of operating cash on hand in order to cover any economic downturns.
Minimize out of stock situations by carrying one to two months average sales on hand.