ecommerce business owner managing cash flow

A Quick Guide To Cash Flow Management For Your Ecommerce Business

Truth be told, ecommerce businesses have lower overheads compared to brick and mortar stores. With that being said, they tend to enjoy stronger profit margins.

Although just like any other business, ecommerce  also has its own “downs.” Let’s just say, it’s not exempted from experiencing cash flow problems. This is where the importance of cash flow management comes into play.

Whether it’s problems raising money to pay your bills, or thinking about the perfect moment to invest in your business’ growth initiatives, having a good cash flow forecast may help your business become sustainable and successful.

You may not know this yet, but cash flow management can even be more important than the profit your business makes!

Like always, we at Clearinity are here to thrive towards the success of your business. We believe that it’s of utmost importance for you to understand your own cash flow as we seek to make sure you get your money RIGHT.

With the help of proper accounting practices, we guarantee you can make better decisions for your business that can help you become more aware of warning signs that your business might be in danger.

What Is Cash Flow Management?

Did you know that according to a study made by the U.S Bank, about 82% of businesses fail due to poor cash flow management? You can say, this is without a doubt a sobering statistic for any business owner living in the ecommerce world.

Without the proper understanding of cash flow management, business owners will not be able to detect any cash flow problems happening in their business.

One thing you should always remember is that an ecommerce business isn’t always about just generating revenue or merely shipping products to your customers. Ecommerce business is also about managing your money behind the scenes.

Because ecommerce businesses can become quite unpredictable, the financial health of your business can also fluctuate from time to time. But by having the proper cash flow management and cash flow forecasting, the status of your business can be more foreseeable. 

But, what is cash flow management exactly?

Cash flow management refers to the process of tracking the amount of money that goes in and out of your business. By doing this process, you can easily identify the amount of cash that will be available to your business in the future.

Aside from that, it also becomes easier to detect the amount of money that your business needs when it comes to covering payments that involve your suppliers, employees, and other debts.

The process of cash flow management involves calculating your cash flow by the beginning and end of a specific period. The more cash your business has at the end of a certain period will automatically mean a more positive cash flow.

10 Tips To Improving Your Cash Flow

In the world of ecommerce business, cash is always king. 

Why you may ask?

That’s because the lack of cash may somehow lead to:

  • Unpaid bills
  • Running late on the payroll for your staff
  • Having less work productivity.

Trust us when we say that this is something you don’t want your business to experience. Thus, managing your cash flow is highly important to the success of your ecommerce business.

Getting a good cash flow is one of the best things you can do for your business. With that being said, we have come up with 10 tips to help you manage your cash flow. By doing this, you get a more valuable and clearer picture of your business’ situation, so you can start adjusting your approaches when it comes to money matters.

  1. Start By Forecasting Your Expenses

The first step you can take to improve your cash flow is laying out all your current financial obligations. These could include your business’ rent, salary for your staff, software fees, etc. Simply gather everything that comes out of your bottom line.

Apart from gathering all of your expenses, try to indicate the exact amount you need to settle with its due date. To avoid forgetting items to put on your list of expenses, we highly recommend that you review your bank and credit card statements too.

  1. Forecast Your Revenue

Try to consistently forecast your weekly revenue as accurately as possible. 

While no business is free from experiencing fluctuations in sales, it is your responsibility to consider your guaranteed revenue. The more your business is established, the easier this step becomes.

Your guaranteed revenue would include your long-term contracts with your customers. Doing this will help you estimate what’s coming to your business, and serves as a great idea for you to know what to expect in the upcoming weeks and months.

A good practice you can do to assist your cash management is by looking at your past data to help you identify your future projections. Oftentimes, historical data and annual cycles help your business expect dips or shoot up in sales. Thus, giving you better chances at forecasting your revenue.

  1. Plug In Your Data

Remember to always plug in your data. You have the freedom to customize how you want to put each expense and revenue source depending on the tool or software you prefer to use. Be as detailed or as broad as you like.

Aside from that, make sure that you add the revenue to your week as soon as it becomes available to you. Similarly, you must remember to fill out your expenses too. Don’t forget to add the miscellaneous expenses that can pop out from time to time.

Doing all these things will help you automatically predict your cash flow based on your revenue and expense projections.

  1. Practice Exemplary Bookkeeping

With exemplary bookkeeping, you successfully set your business with the most accurate accounting that makes sure your cash flow calculations are on point.

Without doing this process, it will appear as if you’re aimlessly steering the wheel to your ecommerce business. Getting hold of important financial data will help you as a business owner, discover and validate your business’ SWOT (strengths, weaknesses, opportunities, threats.)

Remember – business decisions that aren’t backed by data are merely guesswork.

  1. Safeguard Margins On Your Calculations

When you’re calculating your cash flow and your reserves, you don’t expect to trim all the fat right? With that being said, you always need to prepare for bad days, months, or even quarters for your business.

Keep in mind that the soundness of your ecommerce business can be affected by the size of your margin safety. Shall your business experience fall in your sales, you’ll still have profit as long as you safeguard your margins.

  1. Secure Automated Payments

Automated payments include your invoices, bills, expenses, and other receipts. The best thing about securing automated payments for your business is the fact that it guarantees your money moves in the right direction, helps you with your digital bookkeeping, and even safeguards your peace of mind.

There are a lot of automated tools you can explore and use for this effort.

  1. Make Sure Your Customer Pays On Time

Your payment deadlines to customers will highly affect your cash flow planning. With that being said, you should create automated bills, invoices, or even secure automated payment reminders for your customers.

As late payments are out of your control, there are countless creative ways you can explore to shore up outstanding bills.

  1. Always Use Balance Reports And Cash Flow Projections

Securing financial reports for your ecommerce business is highly important. 

By using accounting software that helps you track your sales and expenses, you successfully get to balance your sheets and other reports about your business’ finances.

Aside from that, viewing your business’ historical patterns, products, and seasonality can help you make better decisions.

  1. Decrease The Duration Between Business Expense And Getting Paid

The ultimate goal of any business is to secure a healthy cash flow.

Suppose you sell physical products, this would mean getting them off the shelves as soon as possible. If you overstock an item without anyone buying anything, you get a higher chance of losing money with a lack of sales and unpaid payments.

  1. Organize Your Expenses On A Duration That Works Perfectly With Your Revenue Patterns

When do you get the most customer payments? Do you usually get it by the beginning of the month? Middle of the month? Or at the end of the month?

The best thing you can do for your business is to line up your highest expense and make it more parallel with your highest inflow to avoid your cash flow from dipping.


Without a doubt, the path towards a successful ecommerce business can somehow be tricky. 

Even if you’re a growing business expecting a shoot up in profit – you’re never safe from experiencing cash flow problems. With that being said, securing an exemplary cash flow in your ecommerce business is critical to your survival and growth.

Here at Clearinity, we want to let you know how important it is to successfully track and manage your cash flow. We’re here to challenge you to make your accounting department the most profitable department in your business. When you exert efforts to manage your cash flow, you can ultimately win at scaling and growing your ecommerce business.