7 Fatal Cashflow Mistakes E-Commerce Owners Make
Free guide · For online store owners
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1. Not watching cash flow
Margins are thin and competition is fierce. Profit on paper and cash in the bank are not the same number, and the gap is where online stores fail.
2. No vendor payment terms
Net 30 or Net 60 negotiated with suppliers, and a purchase order system behind it, so stock is paid for after it has had a chance to sell.
3. Business and personal money mixed
One bank account and one card for the business. Mixing them distorts every report, complicates the return, and hides what the store actually earns.
4. Inventory bought without a plan
Just-in-time only works with forecasting behind it. Without one you choose between cash tied up in a warehouse and stockouts that cost you the sale.
5. Guessing the ad budget
What to spend on Facebook, Google or YouTube, worked back from customer acquisition cost and lifetime value rather than from what is left over.
6. The wrong pricing strategy
Cost-plus is not the only option, and it is often the wrong one. Price against cost of goods, competition, demand and who you are selling to.
7. No budget, no forecast
A budget you compare against, and a forecast far enough ahead to see the squeeze coming while you can still do something about it.
CPA Gurus does bookkeeping, tax and advisory for online stores — settlement-based books, inventory costing, nexus and sales tax, closed monthly.